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Education Loan
An education loan is a form of financial assistance that provides the student with funds to pursue higher education. The funds raised on the student loan for study abroad can finance tuition, exam, library, and activity fee, including other facilities such as accommodation/dorm, courses, equipment, etc.
It is paid back in EMIs(Equated Monthly Installments) with interest once the student starts earning i.e by definition between 6 to 12 months after the student who has obtained the student loan for study abroad has graduated, known as the moratorium period. There are various education loan types available for students, and these loans vary from bank to bank. However, on average, the loan acquired is usually between Rs.1 lakh and Rs.5 lakh, extended as required. The interest rates on loans are currently between 8% to 10% which the student will be required to repay over the principal amount when the repayments begin.
Since most students do/do not have an income when pursuing higher studies and the lender may be required to assess the repayment capabilities of the borrower, the borrower may take out a joint loan along with an immediate family member(Parent/Spouse) to increase income level on the agreement contract.
Unique Points & Features
Loans up to 90% of the cost of education
Avail of an education loan of up to 90% of the cost of education from several leading lenders at lower interest rates and flexible repayment tenures of periods extending up to 15 years.
Easy repayment terms
Find preferential rates with any banker of your choice for top-ranked universities with flexible security and co-signer terms.
Moratorium/Pay after graduation
The loan repayment period will start after 6 months to 12 months after graduation. This scheme will allow the student to repay the loan post-course completion without financial stress during the course period.
Tax exemptions
Several tax exemptions can be availed by declaring the education loan details and salary brackets of the applicant(s).
Flexible collateral options
The applicant need not liquidate valuable assets to avail of the loan. Most banks offer education loans by retaining FD, Government bonds, or insurance without requiring tangible assets that you may consider valuable.
Subsidy schemes
The Indian government has introduced several subsidy schemes for the benefit of students belonging to backward sections of society. The benefits of subsidies may allow the student to escape moratorium interest rates.
No processing fee
Most banks offer education loans without processing or disbursement fees. Contact Loanz360 to find the best deals on your loan at lower interest rates.
Affordable interest rates
Education loans have competitive interest rates that allow the student to pay readily once employed.
High LTV
Find options with maximum loan limits of up to 1.5 crores to perform quality education from top-tier universities for any field or department requiring higher funds.
Types
Type By Security
Loan against security: The borrower can submit collateral in Bonds / FD / Insurance / Debentures /equity shares to avail of an education loan.
LAP Loan: LAP or Loan against property is another type of collateral scheme where the borrower can submit a property or immovable asset(owned by him/co-applicant) such as a house or land as collateral against the loan acquired.
Loan against deposit: Gold/fixed/recurring deposits can be submitted as a security against the loan.
Type By Education
Domestic Loan: Domestic loan is acquired for educational purposes of the borrower pursuing education within the country.
International Student Loan: Students studying higher studies or courses abroad may avail of a study abroad education loan with a secured seat among the eligible or listed universities or colleges by the bank or the lender.
Type By Course
Graduate Loan: Students who have completed undergraduate programs can avail of a graduate loan if they are willing to pursue advanced degrees at institutions around the country.
Undergrad Loan: Undergraduate loans are intended to aid students who have completed their secondary education and decide to pursue further education over a strict curriculum period.
Career Education Loan: Professional or career education loan is for individuals enrolled in career-oriented programs (training/courses) within or outside India.
Type By Scheme
Dr. Ambedkar Central Sector Scheme: EBC or OBC candidates intending to pursue studies overseas can avail of this loan with added benefits and flexibility on the terms and conditions of the loan.
Central Sector Scheme Of Interest Subsidy: For ECB candidates with a family income limited to 4.5 L.P.A, this subsidy applies to avail of loan benefits over grad, undergrad, or combined courses in India.
Vidya Lakshmi Scheme: Over 38 banks provide financial assistance under this scheme. First initiated by PM Narendra Modi, Vidya Lakshmi Scheme offers various benefits on loans without any security or collateral up to Rs. 7.5 Lakhs.
Padho Pardesh Scheme: ECB candidates eligible for this loan can avail of tax benefits supported by study abroad programs. To be eligible, the minority member should produce a self-declaration certificate, merit certificates, and yearly family income proof(of not more than 6 L.P.A).
Note: Contact Loanz360 for more detailed information on the loan types and schemes offered by our financial partners.
Eligibility Criteria
Age: 18 – 35 years
Nationality: Citizen Of India
Student Requirement:Â
- The student should pass the required qualification exams (GRE/TOEFL/GMAT, if applicable)Â
- The student should receive admission to a recognized university (India/Abroad)
- The student preferably should have a good academic record
- The student should apply for a loan with a co-application(parent or spouse) with a stable income (as requested)
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Eligible Courses:
- Bachelor’s Degree (B.Tech, B.Com, B.A, B.E, B.Sc, MBBS, etc.)
- Master’s Degree (M.B.A, MCA, M.Com, M.Sc, M.S, etc.)
- Doctorate (Ph.D., D.A, DBA, JCD, etc.)
- Diploma (Any)
- Certificate Course (Any)
- Medical & Aviation
- Vocational Courses, Etc.Â
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Income: The income requirements may vary with the type of loan, student academic background, amount requested, applied candidate, type of collateral, admitted university, etc.
Note: Contact Loanz360 to know more about Income requirements. Conditions applied.
Collateral: Loan against deposit/security/property
Credit/CIBIL Score: Any profile
Note: The eligibility criteria mentioned above are generic and may vary from lender to lender. Please reach out to us at Loanz360 for a personalized eligibility chart.
Documentation
Applicable to students and parent/guardian/co-borrower.
ID & Age Proof : Passport/Voter ID/Aadhar/Driving License/PAN Card/Form 60
Address Proof: Rental Agreement/Electricity Bill/Ration Card/Copy of Telephone Bill/Insurance Bond/Latest Copy Of Bank Statements (Student/Co-Borrower)/Gas Book
Income Proof: Copy of latest Salary Slips/Form16 (Co-Borrower),Copy of latest 6 months bank statement of the borrower(s), Copy of updated ITR/ITR Assessment Order of 2 years(Co-Borrower), Any asset or liability documents (If applicable)
Merit Proof: Copy of scholarship(If applicable)/Copy of latest merit certificates (10th/12th/GRE/TOEFL/etc), as applicable/Copy of foreign exchange permit(If applicable)/Proof of admission to foreign university with course details/Statement of Expenses
Additional Requirements: Duly filled application form/Passport sized photographs (2)/Signature proof
Charges & Interest Rate
CURRENT EDUCATION LOAN INTEREST RATES START @ 8.50% P.A ONWARDS. Compare interest rates and check more deals offered on student loans by our financial partners at Loanz360 in 2022. The interest rates mentioned in the table below are subject to change with parameters such as loan scheme, select institutes, pledged collateral, backdrops, etc.
Bank Name | Interest Rate (P.A) |
HDFC | 9.55% onwards |
SBI | 8.86% |
Bank Of Baroda | 9.15% |
Kotak Mahindra | 16.00% |
Karur Vysya Bank | 11.50% |
IDFC First Bank | 8.50% |
ICICI | 9.25% |
Axis Bank | 13.70% |
Karnataka Bank | 9.49% |
Tata Capital | 11.25% |
Bajaj Finserv | 10.10% |
Fullerton India | 11.99% |
PNB | 8.45% |
Allahabad Bank | 8.95% |
IDBI | 9.45% |
IOB | 10.25% |
Punjab And Sind Bank | 10.25% |
Andhra Bank | 8.70% |
Oriental Bank Of Commerce | 9.70% |
Federal Bank | 10.65% |
UCO Bank | 10.60% |
Syndicate Bank | 10.25% |
Corporation Bank | 10.25% |
Canara Bank | 9.95% |
Note: Our financial partners are not limited to the above-mentioned banks. Contact Loanz360 to discuss options.
FAQ
What is the moratorium period?
The moratorium period is the grace period after graduation during which the student can look for a job or apply for work before starting his repayment term.
Do interest rates apply in the moratorium period?
Yes. Interest rates are calculated for the moratorium period. However, if you took a loan under any scheme applicable for ECB or OCB candidates, you can skip interest during the moratorium period.
Are there any concessions on the education loan?
Yes. Concessions can be availed on the loan depending on the type of loan scheme, collateral pledged, co-borrower income, admitted university, etc.
What are the highest loan amount and repayment period?
The highest loan amount that can be acquired on a student loan is 1 crore 50 lakhs for study abroad at premier institutes and certain fields of studies that require higher funding. The loan however can be repaid in EMIs, balloon payments, or flexible terms, in 10 to 15 years after the moratorium period.
Is CIBIL score important?
Many banks check the CIBIL score of the co-applicant. Though banks offer loans for any profile, they might request additional alternatives if the co-applicants credit score is poor or bad.
What happens if the applicant has a poor CIBIL score?
If the applicant has a poor credit score, the burden falls on the collateral. If the collateral pledged is safe on the loan, then the lender will not stress more on the credit score, however, may charge an extra interest rate on the loan.
Is collateral compulsory for a student loan for study abroad?
In most cases, yes. However, the person need not specifically submit only property, he may submit it as a deposit or security, as he may wish. If the applicant fails to submit collateral and the loan amount is low, it may not be an obstacle, but if the loan requested is higher, the applicant may have to bring a guarantor or collateral with him.
Can NRI apply?
Yes. NRIs can apply for a student loan with many banks. Interest rates and terms are subject to conditions. Contact Loanz360 for more information.
Should I have an admit letter before I apply for a student loan for study abroad?
Most banks will ask for proof of admission to sanction the loan amount. They will check if the university applied or admitted is reputed and known and have to perform a background check to ensure credibility. Thus, having an admission letter will benefit the loan.
Are income documents compulsory?
Yes. The co-applicants will be requested to submit a copy of income documents to the bank for the bank to verify their repayment capabilities and authenticity.
Who can be a co-applicant for an education loan?
The co-applicant for the education loan should be an immediate family member or a blood relative. Parents, siblings, guardians, spouses, or in-laws are generally preferred.
What happens if I don't pay after the moratorium period?
Generally speaking, for the period you don’t pay or make late payments for any loan, the interest penalty will be added or additional penalties may be added for the time off until you pay off in full. And if the applicant has defaulted on his pay, like any other loan type, the lien holder(lender) will auction the collateral and recoup his losses.
What happens if my family income is low?
There are several schemes, government and private, for students with low family net income. Check type by the scheme in types of education loans to know more about the loan schemes offered under education loan interest subsidies.
What are some banks registered under government schemes offered by Narendra Modi?
ICICI, IDBI, HDFC, Axis, Canara Bank, Kotak Mahindra, Karur Vysya, PNB, RBL, Yes Bank, UCO, Federal Bank, Allahabad Bank, IOB, and Andhra Bank, are a few of the 40 banks offering capital assistance to students under Education Loan Scheme.
