Education Loans by Bank
Leading Indian banks play a vital role in supporting the educational aspirations of students through extensive education loans.
These loans, designed for both domestic and international higher education, offer generous repayment tenures of up to 20 years, starting at an attractive interest rate of 10.50% per annum.
The inclusivity of these loans is evident, with courses ranging from nursery to full-time, part-time and higher education, accommodating the diverse needs of working professionals.
What is an Education Loan?
Education loans are a type of financial aid designed to help students and their families cover the costs of higher education, including tuition fees, books, supplies, and living expenses. These loans are typically offered by banks, credit unions, and government agencies, and can be used to finance undergraduate, graduate, and professional degree programs.
List of Expenses Covered in Education Loan
Here’s what the loan amount will cover:
- Tuition Fees: Education loans usually cover tuition fees charged by the educational institution for the academic program.
- Books and Study Materials: The cost of textbooks, reference materials, and other study resources required for the course may be included in the loan amount.
- Laboratory and Examination Fees: Expenses related to laboratory facilities, equipment, and examination fees are often covered by education loans.
- Accommodation: Many education loans include provisions for covering accommodation expenses, such as hostel or dormitory fees, or off-campus housing rent.
- Living Expenses: Loans may provide funds to cover living expenses, including meals, transportation, utilities, and personal expenses, especially for students living away from home.
- Travel Expenses: Some education loans offer coverage for travel expenses incurred during the course of study, such as commuting to and from the educational institution or participating in internships or study abroad programs.
- Laptop or Computer Purchase: In the digital age, many educational programs require students to have access to computers or laptops. Some education loans may allow funds to be used for purchasing electronic devices necessary for academic purposes.
- Health Insurance: Education loans may include provisions for health insurance coverage to ensure students have access to medical care during their studies.
Miscellaneous Expenses: Other educational expenses, such as project work, research expenses, study tours, or participation in extracurricular activities, may also be covered by education loans.
Compare Top Education Loan Offers 2024
Name of Bank | Interest Rate (p.a.) | Processing Fees |
SBI | 8.15% p.a. to 11.75% p.a. |
|
Central Bank of India | 8.10% p.a. to 10.60% p.a. |
|
PNB | 9.20% p.a. onwards |
|
Canara Bank | 9.25% p.a. onwards |
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IDFC FIRST Bank | 10% p.a. to 15% p.a. | Up to 1.5% of the loan amount |
IDBI Bank | 11.10% p.a. |
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Bank of Baroda | 8.55% p.a. onwards |
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Bank of India | 10.95% p.a. to 11.75% p.a. | No processing fee for studies in India |
ICICI Bank | 9.40% p.a. onwards | Up to 2% + GST |
Bank of Maharashtra | 9.45% p.a. to 11.45% p.a. | Contact the bank |
Axis Bank | 13.70% p.a. to 15.20% p.a. | 2.00% of the loan plus GST |
HDFC Bank | 9.50% p.a. |
|
Kotak Mahindra Bank | Up to 16% p.a. | Nil |
Federal Bank | 12.55% onwards | Contact the bank |
Tamilnad Mercantile bank | 12.60% p.a. to 12.85% p.a. | 1% of the sanctioned loan amount above Rs. 7.50 lakh for studies abroad |
Note: a) These interest rates are effective from January 2024 and are subject to change as per the rules and regulations of the bank. b) Depending on the bank or financial institution, you may have a fixed interest rate package or a fluctuating interest rate package. Most floating rates are based on the repo rate, with a spread applied before the final effective interest rate (EIR) is presented to you.
List of Expenses Covered in Education Loan
Here’s what the loan amount will cover:
- Tuition Fees: Education loans usually cover tuition fees charged by the educational institution for the academic program.
- Books and Study Materials: The cost of textbooks, reference materials, and other study resources required for the course may be included in the loan amount.
- Laboratory and Examination Fees: Expenses related to laboratory facilities, equipment, and examination fees are often covered by education loans.
- Accommodation: Many education loans include provisions for covering accommodation expenses, such as hostel or dormitory fees, or off-campus housing rent.
- Living Expenses: Loans may provide funds to cover living expenses, including meals, transportation, utilities, and personal expenses, especially for students living away from home.
- Travel Expenses: Some education loans offer coverage for travel expenses incurred during the course of study, such as commuting to and from the educational institution or participating in internships or study abroad programs.
- Laptop or Computer Purchase: In the digital age, many educational programs require students to have access to computers or laptops. Some education loans may allow funds to be used for purchasing electronic devices necessary for academic purposes.
- Health Insurance: Education loans may include provisions for health insurance coverage to ensure students have access to medical care during their studies.
Miscellaneous Expenses: Other educational expenses, such as project work, research expenses, study tours, or participation in extracurricular activities, may also be covered by education loans.
Features & Benefits of Study Loan
- Flexible Loan Amount: Study loans typically offer flexibility in loan amounts, allowing students to borrow the required funds to cover tuition fees, living expenses, and other educational costs.
- Competitive Interest Rates: Many lenders offer study loans at competitive interest rates, making them more affordable for students. Some loans also offer fixed or variable interest rate options.
- No Collateral Requirement: Unlike traditional loans, study loans often do not require collateral, especially for smaller loan amounts. This makes them accessible to students who may not have valuable assets to pledge as security.
- Flexible Repayment Options: Study loans usually come with flexible repayment terms, including grace periods and extended repayment periods after graduation. Some loans also offer income-based repayment plans, allowing borrowers to repay based on their income levels.
- No Prepayment Penalties: Many study loans do not have prepayment penalties, allowing borrowers to make early repayments without incurring additional fees. This flexibility can help students save on interest costs over the loan term.
- Quick and Easy Application Process: Online application processes for study loans are typically straightforward and convenient, with quick approval times. Some lenders offer instant approval decisions, allowing students to access funds promptly.
- Use for Various Educational Expenses: Study loans can be used to cover a wide range of educational expenses, including tuition fees, books, study materials, accommodation, travel, and other related costs.
- Builds Credit History: Timely repayment of study loans can help students build a positive credit history, which can be beneficial for future borrowing needs, such as obtaining a mortgage or car loan.
- Financial Support During Education: Study loans provide students with the financial support they need to pursue higher education without worrying about immediate financial constraints. This allows them to focus on their studies and achieve academic success.
- Potential Tax Benefits: In some countries, the interest paid on student loans may be tax-deductible, providing potential tax benefits for borrowers. Students should consult a tax advisor or financial professional to understand the tax implications of their study loans.
Tax Benefits on Education Loan
- Interest Deduction: In many countries, borrowers can deduct the interest paid on qualified education loans from their taxable income. This deduction is often subject to certain limitations and eligibility criteria, such as income thresholds and the purpose of the loan.
- Maximum Deduction Limit: There is usually a maximum limit on the amount of interest that can be deducted annually. This limit may vary depending on the country’s tax laws and may be subject to change over time.
- Qualified Expenses: Generally, only the interest paid on qualified education expenses is eligible for deduction. Qualified expenses may include tuition fees, books, supplies, and other educational expenses required for enrollment or attendance at an eligible educational institution.
- Eligible Borrowers: To claim the interest deduction, the borrower must be legally obligated to repay the loan. Typically, the borrower, the borrower’s spouse, or a dependent can claim the deduction if they meet all other eligibility criteria.
- Income Limits: Some countries impose income limits or phase-out thresholds for claiming the education loan interest deduction. Borrowers whose income exceeds these limits may not be eligible for the deduction or may receive a reduced deduction amount.
- Tax Filing Requirements: Borrowers must meet certain tax filing requirements and report the interest paid on their education loans accurately on their tax returns to claim the deduction.
- Form 1098-E: Lenders typically provide borrowers with Form 1098-E, which summarizes the amount of interest paid on the education loan during the tax year. Borrowers should use this form to report the deductible interest on their tax returns.
- Tax Credits: In addition to the interest deduction, some countries offer tax credits or other incentives for higher education expenses. These credits may be available for tuition fees, qualified expenses, or education-related expenses incurred during the tax year.
Courses Covered Under an Educational Loan
- Undergraduate degrees
- Postgraduate degrees
- Undergraduate diplomas
- Postgraduate diplomas
- Vocational training courses
- Skill development courses
- Doctoral programmed
Eligibility Criteria for Education Loans
- Age: Generally, applicants should be within a certain age bracket, typically between 18 to 35 years, although this can vary among lenders.
- Academic Qualifications: Applicants should have completed their higher secondary education (12th grade) or equivalent from a recognized board or institution.
- Admission to Recognized Institution: Applicants must have secured admission to a recognized educational institution in India or abroad for a specific course.
- Co-Applicant: Most education loans require a co-applicant, usually a parent, guardian, or spouse, who acts as a joint borrower and shares the responsibility for repaying the loan.
- Creditworthiness: Lenders assess the creditworthiness of both the applicant and the co-applicant based on factors such as credit history, income stability, and existing financial obligations.
- Course and Institution: The course and institution selected by the applicant must be approved by the lender. Typically, education loans cover a wide range of courses, including undergraduate, postgraduate, professional, and vocational programs.
- Loan Amount: The loan amount may be subject to certain limits based on factors such as the course fee, educational institution, and the applicant’s repayment capacity.
- Collateral: Depending on the loan amount, lenders may require collateral or security to be provided by the applicant or co-applicant. This can be in the form of property, fixed deposits, or other assets.
- Documentation: Applicants need to submit various documents, including proof of identity, address, income, admission letter, course details, academic records, and collateral documents (if applicable).
- Residency Status: Some lenders may require applicants to be Indian citizens or residents to be eligible for an education loan.
- Other Requirements: Depending on the lender’s policies, applicants may need to fulfill additional requirements, such as attending counseling sessions, maintaining a certain attendance record, or providing post-dated cheques for loan repayment
- Loans are provided for approved undergraduate programs, postgraduate programs, Ph.D., diploma courses of six months or more duration, job-oriented courses, and technical/professional courses.
- Applicants must be enrolled or secure admission into accredited institutions, government institutions, professional institutions, and international colleges and universities.
- For undergraduate courses, applicants must have completed 10+2 (12th class), and for postgraduate courses, a degree is required.
List of Documents Required for Education Loan
Here is an indicative list of documents that most lenders ask for:
- Admission letter from the educational institution
- Marksheets (previous education – school/college)
- Age proof
- ID proof
- Address proof
- Signature proof
- Salary slips
- Recent bank account statements
- ITR with the income computation
- Audited balance sheet
- Recent bank statements
- Proof of turnover (service tax return/sales receipt)
- Completed application form with signature
- Latest passport-size photographs
- Appropriate Visa for studies abroad For More Information ➡️
How to Apply for an Education Loan
To apply for an education loan through the official bank website, follow these steps:
- Step 1: Access the bank’s official website.
- Step 2: Locate the education loan product page.
- Step 3: Complete the application-cum-consent form by entering your personal and contact information.
- Step 4: Provide your academic and financial details when contacted by the bank.
- Step 5: Choose between the doorstep service option for a study loan or visit the bank in person to finalize the loan approval process.
How to Apply for an Education Loan Offline
You can apply for an education loan offline by following the steps given below:
- Step 1: Visit your chosen bank branch.
- Step 2: Request a student loan application form.
- Step 3: Fill out the form with personal, academic, and financial details.
- Step 4: Confirm loan terms with a bank official.
- Step 5: Submit the completed application form and documents.
- Step 6: Receive a formal student loan agreement once approved.
What is an Education Loan EMI Calculator
Education loan EMI (Equated Monthly Installment) calculator is a financial tool that is used to calculate the monthly installment amount that an individual needs to pay to repay his education loan. It helps borrowers to estimate their monthly loan payments based on various factors such as loan amount, interest rate and repayment period.
- Loan Amount: The borrower enters the total amount of the education loan they wish to avail from the lender.
- Interest Rate: The borrower enters the applicable interest rate offered by the lender for the education loan. This rate can be fixed or floating, depending on the terms of the loan agreement.
- Loan Tenure: The borrower selects the repayment tenure or the number of months/years over which they plan to repay the loan amount. Education loan tenures typically range from 5 to 15 years, depending on the lender and the loan amount.
Based on the input provided, the Education Loan EMI Calculator then calculates the Equated Monthly Installment, which includes both the principal amount and the accrued interest. The formula used to calculate EMI is based on the amortization schedule, which spreads out the total loan amount and interest over the chosen repayment period.
The EMI amount remains constant throughout the loan tenure, but the proportion of principal and interest components changes over time. In the initial stages, a larger portion of the EMI goes towards interest repayment, while in later stages, more of the EMI is allocated towards reducing the principal amount.
Using an Education Loan EMI Calculator allows borrowers to:
- Estimate their monthly loan repayment obligations before availing the loan.
- Plan their finances effectively by budgeting for the EMI amount.
- Compare different loan options from various lenders based on the EMI amount and repayment tenure.
- Understand the impact of changes in the loan amount, interest rate, or tenure on their EMI obligations.
How to Use the Educational Loan EMI Calculator
Using an Educational Loan EMI (Equated Monthly Installment) Calculator is straightforward. Here’s a step-by-step guide on how to use it:
- Enter Loan Amount: Input the total amount of the education loan you wish to avail from the lender. This is the principal loan amount you plan to borrow.
- Specify Interest Rate: Enter the applicable interest rate offered by the lender for the education loan. This rate can be fixed or floating, depending on the terms of the loan agreement.
- Choose Loan Tenure: Select the repayment tenure or the number of months/years over which you plan to repay the loan amount. Education loan tenures typically range from 5 to 15 years, depending on the lender and the loan amount.
- Calculate EMI: Click on the “Calculate” or “Compute” button to let the calculator determine the Equated Monthly Installment (EMI) based on the loan amount, interest rate, and repayment tenure provided.
- Review Results: Once you click on the calculate button, the EMI calculator will display the monthly installment amount you need to pay towards repaying the education loan.
- Analyze Repayment Schedule: Some advanced calculators may also provide a detailed amortization schedule, showing the breakup of each EMI into principal and interest components for each month of the loan tenure.
- Adjust Parameters: If you want to explore different scenarios, such as varying the loan amount, interest rate, or tenure, you can make adjustments and recalculate to see how they affect the EMI amount.
- Compare Options: Use the calculator to compare different loan options from various lenders based on the EMI amount and repayment tenure. This will help you choose the most suitable loan option that fits your budget and financial goals.
- Plan Finances: By knowing the EMI amount in advance, you can effectively plan your finances and budget for the monthly loan repayment obligations.
- Make Informed Decision: Armed with the EMI calculations, you can make an informed decision about availing the education loan and ensure that it aligns with your financial capabilities and long-term objectives.
How to Calculate Educational Loan EMI
Understand the Components:
- Principal Loan Amount (P): The total amount borrowed as an education loan.
- Annual Interest Rate (R): The interest rate charged by the lender per annum.
- Loan Tenure (N): The number of months or years over which the loan will be repaid.
Convert Annual Interest Rate to Monthly Rate:
- Convert the annual interest rate to the monthly interest rate by dividing the annual rate by 12 (number of months in a year) and then by 100 to convert it to a decimal.
Calculate Monthly Interest Rate (r):
- Monthly Interest Rate (r) = Annual Interest Rate (R) / (12 * 100)
Calculate EMI Using Formula:
- EMI = [P * r * (1 + r)^N] / [(1 + r)^N – 1]
Plug in Values and Solve:
- Substitute the values of Principal Loan Amount (P), Monthly Interest Rate (r), and Loan Tenure (N) into the EMI formula.
- Use the appropriate units for Principal Loan Amount (P) and Loan Tenure (N) to maintain consistency (e.g., if the loan tenure is in years, convert it to months for the formula).
- After plugging in the values, solve the equation to find the EMI.
Example:
- Let’s say you borrow an education loan of ₹5,00,000 at an annual interest rate of 10% for a tenure of 5 years (60 months).
- Convert the annual interest rate to a monthly rate: 10% / 12 = 0.0083333 (approximately).
- Monthly Interest Rate (r) = 0.0083333
- Loan Tenure (N) = 60 months
- Using the formula, calculate the EMI: EMI = [500000 * 0.0083333 * (1 + 0.0083333)^60] / [(1 + 0.0083333)^60 – 1]
- Solve the equation to find the monthly EMI amount.
Check Results:
- Verify the calculated EMI amount and ensure it aligns with the expected monthly repayment amount.
Use Online Calculators:
- Alternatively, you can use online EMI calculators available on financial websites or provided by lenders to quickly calculate the EMI for an education loan by inputting the loan amount, interest rate, and tenure.
What do the Lenders Consider to Approve the Loan?
- Credit Score: A good credit score demonstrates responsible credit behavior and increases the chances of loan approval. Lenders typically look for a credit score above a certain threshold.
- Income and Employment Stability: Lenders evaluate the borrower’s income and employment status to ensure they have a stable source of income to repay the loan. Salaried individuals may need to provide salary slips or income tax returns, while self-employed individuals may need to provide business financials.
- Co-applicant/Guarantor: Having a co-applicant or guarantor with a stable income and good credit history can strengthen the loan application and increase the likelihood of approval. The co-applicant/guarantor agrees to repay the loan if the primary borrower defaults.
- Educational Institution and Course: Lenders may assess the reputation of the educational institution and the course the borrower intends to pursue. Institutions with accreditation and courses with good employment prospects may be viewed more favorably by lenders.
- Loan Amount and Repayment Capacity: Lenders evaluate the loan amount requested by the borrower and their repayment capacity based on their income, existing financial obligations, and expenses. The loan amount should be reasonable and aligned with the borrower’s financial capabilities.
- Collateral or Security: Some lenders may require collateral or security, such as property, fixed deposits, or investments, especially for high-value loans. Collateral provides assurance to the lender and can lower the interest rate.
- Loan Purpose and Documentation: Borrowers need to provide relevant documents, such as admission letter, fee structure, academic records, and identity/address proof, to support their loan application. Lenders assess the loan purpose and documentation to ensure it meets their criteria.
- Debt-to-Income Ratio: Lenders calculate the borrower’s debt-to-income ratio, which is the ratio of monthly debt obligations to gross monthly income. A lower debt-to-income ratio indicates better repayment capacity and may improve the chances of loan approval.
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Education Loans by Bank
Education Loan Articles
The eligibility criteria vary depending on the course you’re applying for. Generally, applicants must have completed [mention specific requirements such as high school graduation or equivalent]
No, you don’t have to pay anything.
Typically, you’ll need to submit documents such as mark sheets/transcripts of your previous academic qualifications, a copy of your ID proof, passport-sized photographs, and any other documents specified in the application form
Admission decisions are typically communicated within a specified timeframe after the application deadline. You’ll receive an email or notification regarding the status of your application.
Absolutely! We encourage prospective students to visit our campus and explore our facilities. You can schedule a campus tour by contacting our admissions office and arranging a convenient time.