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Education Loan Overview

Quality education is a must for a complete and successful life. For many, it is equivalent to graduating from a top institution. The cost of education is, however, increasing rapidly. In fact, the cost of studying at reputed institutions is already quite high. According to studies, the cost of education is increasing at an average of 15% per annum. The tentative cost of an MBA is up  from Rs 2.5 lakh to Rs 20 lakh in 15 years. So if a couple starts saving Rs 2,000 per month for 15 years, at an average rate of 12%,  they will be able to save approximately Rs 9.5 lakh.
What does an education loan cover?
It covers the basic course fee and other related expenses such as (college) accommodation, exam and other miscellaneous charges.
Secured and unsecured both options available.

Education Loan Finance Process

  • Application form & document submission
  • CIBIL report check
  • Residence verification
  • Office verification
  • Collateral valuation & legal check
  • Eligibility calculation ( more weightage to, collateral Credit history and type of course)
  • Personal discussion
  • Credit decision
  • Disbursement

Criteria for Education Loan

  • An Indian Resident 
  • A student is the main borrower. A parent, spouse or sibling can be the co-applicant. Minimum age of 21 years
  • It is offered to students who want to study in India or pursue higher education overseas. The maximum amount offered for studies in India and overseas are different and varies from one bank to another.
  • It can be taken for a full-time, part-time or vocational course and graduation or post-graduation in the fields of engineering, management, medical, hotel management, architecture, etc.
  • Some banks offer the loan even before one has secured admission into the university.
  • As per the Reserve Bank of India (RBI) guidelines, there are no restrictions on the upper age limit, but some banks may have it.
  • Once the loan application is accepted, the banks disburse the amount directly to the college/university as per the given fees structure
  • Benefits under Income-tax Act Section 80E of the I-T Act allows for deduction on the interest paid on the repayment. This deduction is allowed only for the individuals paying interest on the loan for himself, spouse or children or for the student to whom you're a legal guardian.
  • You can deduct the entire interest amount paid from your taxable income. This deduction is allowed for a maximum of 8 years. The principal amount does not qualify for any tax deduction.
  • Required last 2 years profit making business
  • Tenure for education loan from 120 month to 180 months 
  • Rate of interest between 9%* to 13%
  • Processing fees range from 0.2% to 2.0% + GST

Documents required for Education Loan

  • Company Profile of parents
  • PAN Card – For Company/Firm/Individual (Parents, Student/Guarantor)
  • Legal proof of - For Company/Firm/Individual (Parents, Student/Guarantor)
  • Identity & Address Proof of (Parents, Student/Guarantor)
  • Latest 12 months bank statement - (Parents, Student/Guarantor)
  • Last 3 Years Income Tax Return - Company/Firm/ (Parents, Student/Guarantor)
  • Proof of Continuation
  • Existing Loan / Obligation Details