The world is changing, people are changing and so our motherland-India. And in the swiftly changing society Bread, Cloth and Shelter are not enough as basic needs anymore. Now People are quite aware of the importance of education in their life. Education is not merely essential for individual growth but equally important in the development of the country, “Kyuki Padhega India tabhi to Badhega India”.
The need for education in India increasing rapidly and its cost is also rising simultaneously. Pursue quality education from reputed colleges or institutions is a desire for every student but studying cost is a huge barricade set between the path of their dreams. And there are only two options available to solve this major problem one is scholarship and another one is Education loan.
Importance of an Education Loan in India –
The majority of India belongs to the middle class and lower class and they can’t educate their children in expensive colleges as they don’t have sufficient funds to pay the high fees. So education loan helps those children in fulfilling their dreams by financing in their studies in India as well as overseas.
Banks list for an Education Loan –
There are numerous banks in India offering education loan and it creates lots of difficulties to find the right one. But the best banks can be identified by several features such as offers low-interest-rate, high loan amount limit, no or less additional charges, longer repayment period option, benefit schemes, etc. The banks that top the list are:
- State Bank of India
- Bank of Baroda
- HDFC Bank
- Vijaya Bank
- Axis Bank
- Punjab National Bank
- Canara Bank
- Avanse Financial Services
- Credila
- Kotak Mahindra Bank
- Allahabad Bank
- ICICI Bank
(Note – The government also launched different schemes for easy availability of Education Loan. Such as:
Pradhan Mantri Vidya Lakshmi Karyakram – Under the scheme, an online portal is inaugurated for students seeking Education Loan. Named as ‘Vidya Lakshmi Portal’, a first of its kind platform where students can view, apply and track the education loan applications to banks anytime, anywhere. It also provides linkages to the National Scholarship Portal.
Education Loan Subsidy Scheme – Education Loan Subsidy Scheme by Central Government help students in repaying the loan amount without any complications. Under the scheme, students can take advantage of the subsidies in the form of interest rate subsidies, loan forgiveness or rebate on repayment.)
Expenses covered by Education Loan –
Well, while applying for the loan one thing must be kept in mind that it doesn’t finance every expense of a student’s education. Only essential expenses to complete the program are granted for finance like Tuition fee, Examination fee, library and lab charges, Cost of stationery, uniforms, and miscellaneous charges. Some banks also fund the hostel charges.
If anyone wants a loan to study abroad then travel expense is covered by the bank. This facility does not apply to domestic education.
Eligibility criteria for providing Education Loans by banks –
- Candidate should be a citizen of India
- Having a secured admission into a recognized university
- Completed the higher secondary level of school
- Must have a co-applicant, either one of the parents or siblings or spouse
- In India, the course is approved by the UGC and all regular courses in abroad (Some banks has its own list of courses)
Documents Required –
- Admission Confirmation Letter
- Fee Structure
- Identity Proofs
- Passport Size Photographs
- 10,12 and any last qualification mark sheets, degree or diploma
- Bank Statement
- ITR or Salary Sleeps of Co-applicant
- Collateral Documents (If the amount of the loan is more than Rs.7.5 lakh)
Rate of Interest on Education Loan –
The education loan interest rates depend on the banks and their different schemes. But it is always between 8% to 16% range.
Some banks give a concession on interest rates under different policies assigned in their favor.
(Note – Bank with low-interest rate is more helpful)
Education Loan Benefits –
Funding for the student’s education is not the only advantage of this loan but there are some other benefits too.
- It can ease the parent’s financial burden and helps them to achieve their long-term financial goals such as retirement, buying assets, etc with their savings
- It is the best option to get admitted into a dream college especially for the deserving candidates with economically backward sections
- It is easily available and a priority product of all banks
- It also finances travel expenses for studies overseas
- The repayment process is also easy as it does not need to be payable immediately. A borrower gets a moratorium period from 6 months to 1 year after the completion of the course. So that he gets a good job and become financially capable of repaying the amount
- Under Section 80E of the I-T Act, the amount of interest you pay for education loan will be deducted from the income tax, maximum for 8 years
Some important facts related to the Education loan –
- Maximum loan amount limit differs from one bank to another
- There should be a third-party guarantor for loans above Rs 4 lakh up to Rs 7.5 lakh
- Collateral is necessary for loans above Rs. 7.5 lakh
- Insurance is mandatory to study outside the country
- Repaying period is generally 5 to 7 years but can also be extended
- If someone not able to repay the amount, it affects student as well as a co-applicant credit history and creates difficulties in future loans
If you are looking for an education loan keep these points in your mind and choose the right bank and right scheme which is profitable for you.
