Scholarship Examination in India

How Can I Get Education Loan For My College To Pursue Higher Studies In India?


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Education Loan: Apply Online in India. One of the major problems faced by students while going abroad is to manage finances. Since studying abroad is very costly and the competition for scholarships very high, many students rely on education loan to fund their studies. Education loan: Here’s all you need to know about an education loan. Here are the major frequently asked questions about student loan.


What is an Education Loan and How To Get Education Loan From Bank?

Education loans are offered by banks to students to enable them to pay for higher studies such as graduation and post graduation courses, both in India and overseas. Apart from the tuition fees, other aspects of expenses such as hostel charges, equipment purchases and other course related expenses may also be covered by the education loan. Education Loan Scheme, Scholarships & Education Loan. In case of overseas studies, many education loan providers include the price of a return ticket into the education loan corpus.

As most students have no previous credit history, the parent or guardian has to co-sign for an education loan as a guarantor. Moreover, education loans also require key lender approved collateral such as property documents, fixed deposits, etc. Though there is an interest free (moratorium period) for an education loan, if you service the interest accrued on an education loan during the period, you may receive a further discount on the education loan.



What are the Objective of education loan?

To provide the much needed financial support to deserving students for pursuing higher professional or technical education in India and abroad. The education loan would be provided to those students who have obtained admission to career-oriented courses e.g. medicine, engineering, management etc., either at the graduate or post-graduate level.

Right support at right time ensures success for students. No deserving students should be stopped to pursue their dreams due to lack of money.



Whom can I approach for education loan?

How to Apply for Education Loan in India? Most of the banks and financial institutions provide student loan. Banks such as HDFC, Bank of India, SBI, Punjab National Bank etc are in the forefront in providing education loan for study abroad.



Is it necessary to have an account with the bank to avail of an educational loan? 

Earlier, having an account in the bank from where the borrower was hoping to get a loan used to be an important criterion. Now it is no longer a mandatory requirement. If you have an account with the particular bank, it usually becomes easier to get the loan sanctioned. This is because of your prior relationship with the bank, your past financial records and transactions can be analysed faster to make a decision.



What are the courses for which an education loan can be availed?

Education loan can be availed for all courses recognized by the UGC in case of India and all regular courses abroad. Each lender has its own list of educational institutions and courses that they would provide a loan for whether overseas or within India.   


What costs are covered under an education loan?

Read here about everything you need to know about educational loan. The educational loan covers the tuition fee, examination fee and hostel/accommodation fee. Some banks also provide one-way air fare for the students. However, it varies from bank to bank. The disbursement of the education loan is directly to the educational institution.



Who is eligible for an education loan?

How Can I Get Education Loan For My College To Pursue Higher Studies In India? Every bank has its own eligibility criteria for dispensing education loans, but a few common parameters are:

  • Applicant should be an Indian national.
  • Applicant should have confirmed admission in a college/educational institution at the time the loan application is made.
  • Applicant should be in the age bracket 16–35 years.
  • The Applicant should have a co-borrower such as a parent who acts as guarantor for the loan
  • Collateral in the form of a fixed deposit etc. is required for loan amounts higher than Rs. 4 lakhs.



What are the important documents that I need to provide?

You will need to furnish the following documents along with the completed application form. Relevant information would relate to the guardian and the student both, when the loan is jointly taken.


  1. Mark sheet of last qualifying examination for school and graduate studies in India
  2. Proof of admission to the course
  3. Schedule of expenses for the course
  4. Copies of letter confirming scholarship, etc.
  5. Copies of foreign exchange permit, if applicable.
  6. 2 passport size photographs
  7. Statement of Bank account for the last six months of borrower
  8. Income tax assessment order not more than 2 years old
  9. Brief statement of assets and liabilities of borrower.
  10. If you are not an existing bank customer you would also need to establish your identity and give proof of residence.



Do I need a guarantor to get an education loan?

Yes, you must have a guarantor to apply for education loan. In case the applicant fails to repay the loan amount, the guarantor is responsible for paying it back. The guarantor is selected on the basis of the net income of a person.



 Is there a maximum limit on an education loan that a lender can disburse?

Most lenders have a maximum limit of Rs 10 lakhs to Rs 15 lakhs for studies within India, while the maximum limit on education loans for overseas studies is between Rs 20 lakhs to Rs30 lakhs. In case of some lenders, the applicant can get a higher loan amount sanctioned provided bank-accepted collateral is provided.




What is the tenure of an education loan?

The average tenure for an education loan is between 5-7 years in case of most lenders. However, some lenders can offer a longer tenure of up to 15 years in case of higher loan amounts.




What are the expenses covered by education loans?

  • 100% College Tuition Fees payable
  • Accommodation charges
  • Exam and library fees
  • Books and equipments including computer
  • Travelling expenses abroad
  • Other reasonable expenses required to complete course



How much loan can I get?

Education Loan In India With Lowest Interest Rates/Subsidy

  • Upto Rs. 4 lakh – No security, but in this case parents needs to be a joint borrower
  • Between 4-7.5 lakhs- along with parents collateral security in form of third party guarantee
  • Above 7.5 lakhs- Parents to be joint borrowers + tangible collateral security of suitable value required.

Security for the Loan is determined by the quantum of amount required and the credit worthiness of the principal borrower. Following types of Collateral are accepted:

  • Residential property ( house/flat/apartment)
  • Fixed Deposit
  • Life insurance (sum assured being at least 100% of the education loan amount)
  • Non agricultural land



What is the interest rate of education loan?

The interest rate of educational loan depends on two factors: the amount taken by the student and the bank that has issued the loan. Usually, the interest rate of student loan varies from 11.25% to 13.5%.

  • Different banks have different interest rates on your study loan.
  • Interest Rate = Base rate + Mark Up
    • Base rate: 9.5 to 10%
    • Total interest rate comes between 11.75 per cent and 14.75 per cent, depending on the bank, loan amount and the college concerned.
  • Girl students may avail of slightly cheaper rates—by up to 0.50%.



Does an education loan require security ?

The requirement of collateral varies from one bank to another, however, the following is generally the thumb rule:

  • For loans up to Rs. 4 lakh – No collateral or Third Party Guarantee is required.
  • For loans from Rs. 4 lakh to Rs. 7.5 lakh – Collateral is not needed but third-party guarantee is required
  • For loans above Rs. 7.5 lakh – Collateral is required. Some of the key types of collateral accepted by banks include LIC/NSC/KVP, Fixed Deposit held with the lender, property documents owned by the applicant or co-signor.



 Is any incentive available for a girl student applying for education loan?

Banks generally provide a 0.5% concession on the applicable education loan interest rate to girl students pursuing higher education in India and abroad.



Do education loans have any Income Tax benefits?

Loan borrowers can avail tax benefits on interest paid on education loan under Sec 80E of the Income Tax Act. This benefit is available over and above the Rs. 150,000 deduction allowed under Section 80C. Tax benefits can be availed once the borrower starts paying the interest on the education loan. Further, the deduction is available until the borrower pays off the full interest amount on the loan or for a maximum period of 8 years, whichever is earlier.



When should I start repaying the loan?

The student has to repay the loan in EMIs (Equated Monthly Installment) once the course gets over. Usually, banks ask the student for the repayment of loan within six months to one year after completing the course. The student will get 10 to 15 years to repay the education loan, again depending on the bank from which he/she took the loan.  If the candidate fails to complete his/her studies, the loan repayment must start immediately. But, some banks give grace period up to six months to the candidates to start the repayment.



Are there any special privileges for students in the Scheduled Caste/Scheduled Tribe (SC/ST) category who avail education loans? 

Yes. Eligibility criteria and loan margins on education loan are relaxed for Scheduled Caste/Scheduled Tribe students availing education loans in India. The eligibility criteria are lowered from first/second class to pass class for SC/ST category students seeking education loan for graduate and post graduate studies, while, margin money is sometimes lowered than the regular percentage or nil.



Banks Website with Education Loan Details

  • HDFC Education Loan: Link
  • Axis Education Loan: Link
  • SBI Education Loan: Link
  • Punjab National Bank Education Loan : Link
  • Non Banking Finance Company (NBFC): Avanse
  • First Dedicated Education Loan Company: Credila

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