Education Loan is the one service which has helped for years to aid aspiring students in achieving their academic pursuits. Many-a-times students stop from pursuing higher education because of financial limitations. But its a curious and enlightening fact that many eminent personalities like Barack Obama and Ted Cruz have studied with education loans and achieved great feats. Students who have more information about education loan norms and are ambitious enough to attain good education are always able to pay back their education loan. All information about knowing the education loan phenomenon is listed below so that you can asses if you can avail an education loan in India to attain the kind of worthy education you deserve.
Loans are termed as money or assets shared with any demandant/applicant with a promise of repayment in future by a certain timeline. Although the financial system has turned this simple definition to a more twisted technical concept, the core idea remains the same. Students in need of huge consolidated funds for pursuing their education generally take the education loan in India, from banking institutions. Applicants with aspirations to pursue courses with outcomes of employability or business generally are able to secure these loans for their higher education.
Study loans can be of as many types as the education programs they fund. There are skill based student loans, student loans for study abroad programs, student loans for diploma courses etc. In a broader category, they are put together as:
These study loans can be further categorized based on the educational level of the applicant as well. They are also categorized based on secured loans and non-secured loans depending upon the necessity and availability of collateral/guarantee from the applicant. There are other categories as well described below:-
Education loans help students pay not only academic fees but also non-academic expenses during their studies. The provision of student loan, like any other loan, comes on the payment terms of an interest amount over the originally borrowed money. Commonly known as Study Loan EMIs, the monthly installments paid against the student loan allow applicants to repay the loan amount borrowed step-by-step.
Education loans in India are only limited to higher education, albeit scholastic education in India being equally expensive. Study loans are provided to students who’re at least pursuing a professional course approved by government bodies after completing their SSC (10th class or equivalent) and HSC (12th class or equivalent).
Banking institutions in India which are allowed to provide education loan have to be approved by Indian Banking Association (IBA). These banking institutions are obligated to follow the CSIS (Central Sector Interest Subsidy Scheme) and other regulatory norms to provide the services which are in the best interest of student loan applicants. The two common types of institutions which are allowed to provide study loans in India are:-
It is strongly suggested that students should apply for study loan at a banking institution regulated by IBA and RBI. Only these institutions provide loans which are considered safe in terms of financial security and anti-theft norms.
Best banks providing study loans generally fall in the category of registered banks but there are other NBFCs too, which are becoming more popular with their quick service and easier norms. There is another method by which students can find the best possible blend of services provided by both NBFCs and registered banks. They can opt for Student Loan Experts or Student Financing Institutions. Education loan experts like Buddy4Study EduLoans provide the best of what NBFCs and ‘Registered Banks’ have to offer.
Education loans cover all sorts of academic expenses of any student. Almost all banking institutions provide loans that cover not only tuition fees but other institutional expenses as well. Students should still check if the bank of their choice covers all expenses they are meant to incur. Higher education especially abroad includes following vivid academic expenses that student loans cover:-
Education loans are mostly identified by their core terms and conditions, as these decide the extra amount that students have to pay while repaying the loan. These terms and conditions are laid out in the form of:
A detailed account of what a study loan comprises is listed below:-
A student loan is only provided to students who show a possible surety of repaying the loan back to the bank. To confirm this possibility, banks cite eligibility norms for applicants. These eligibility norms are not only meant for loan sanction but also the student loan tax benefits and subsidies, which are discussed in a later section.
General student loan eligibility criteria for Indian banks is:
|Eligibility type||Details of loan eligibility|
|Age-based eligibility|| |
|Course-based eligibility|| |
|Institution-based eligibility|| |
|Bank Name||Education Loan eligibility|
|State Bank of India|| |
|HDFC Bank|| |
|Canara Bank|| |
|Axis Bank|| |
‘Interest rates of education loan’ means the percentage amount that will be charged from the applicant for borrowed principal amount. The interest rates in India are floating and based on changes as regulated by IBA (Indian Banking Association) and RBI (Reserve Bank of India).
Most banks charge a standard percentage over the regulated MCLR (Marginal Cost of fund based Lending Rates) as the interest rate for student loans. Applicants who wish to apply for loans to pay for their education should always keep a tab on the changing MCLR of various banks. Standard rates of interest for study loan in India are mentioned below.
|Loan Type||Loan interest rate and other details|
|Interest rate (Domestic study loan)||Min: 8.35% Max: 15.8%|
|Interest rate (Study abroad student loan)||Min: 9.7% Max: 16.2%|
|Education loan duration (domestic/foreign)||Min: 1 year Max: 20 years|
|Maximum loan amount for domestic education||Min: INR 20,000 Max: INR 45,00,000 (45 lakhs)|
|Maximum loan amount for foreign education||Min: INR 1,50,000 Max: 1,50,00,000 (1.5 crore)|
Interest Rates of some popular Indian banks providing student loans to higher education aspirants are:
|Bank providing loan||Interest Rate: Domestic Education (Average ROI)||Interest Rate: Foreign Education (Average ROI)|
|State Bank of India||10.14%||10.70%|
|Punjab National Bank||10.35%||11.10%|
Student loans generally work like any other bank loan where applicants have to pay regular EMIs (Easy Monthly Installments) till the complete loan amount including interest is paid off. Each monthly installment includes some portion of the principal amount and some portion of interest. Students can choose the amount of their study loan EMI based on their affordability. The higher the EMI amount, the higher will be the principal component and the faster applicant will be able to pay back the loan. Some peculiar details of student loan repayment process are:-
Education loan application process involves three major steps. Each of these steps can be followed via online or offline channels. Applicants have always preferred to use the offline loan application methods but online features with low turn-around-time and transparency of information are catching on among parents and students. The three major steps involved in study loan application are:-
Applicants (students) or co-applicants (parents/guardians) can research by both offline channels and online channels. But visiting each bank and finding details of student loan services is a very exhausting and time-consuming method. Following are the steps that students can follow to find the best education loan:
Education loan calculators are available on various unofficial websites but students should only rely on authentic calculators to make estimates about their loan. Some banks have their own study loan calculators but to get standardized results it’s better to access IBA (Indian Banking Association) loan calculators. You can use these study loan tools at the website of IBA by following these steps:
Education loan applications can be filed via various channels. Applicants should always compare the best offers and benefits while choosing these channels.
Education loan offline process includes application by visiting the respective bank branch and following these steps:-
Online application of education loan from bank’s official website is just re-routing of the loan request. You just provide them with personal and academic details so that bank can approach you and proceed with an offline application process. However, the online application process can work with the banks:
Students can visit any bank’s official website and look for the education loan section for the online application. Commonly banks have an online application form asking for applicant’s details and permission consent for call-back.
Central Government of India has an online platform which combines the services of many banks to provide study loans. Students can find most banks on this platform and can apply directly for study loans here without the need to visit the bank branch. There are other benefits for study loan application from Vidyalakshmi Portal, you can read about it from Buddy4Study archives. Steps to apply for a student loan from Vidyalakshmi Portal are:
The direct Loan amount will be transferred to your bank account if the process is verified by the bank.
Applicants looking for customized student loan services which help in covering extra expenses and provide easier loan terms can avail student loan expert services. Generally, banks have limits of loan amounts (both upper and lower) which keeps students from applying for study loan services. Students also face problems with loan repayment with conventional student loans. Student loan experts provide students with the financing options selected from a wide pool of loan providers. Thus, they are able to provide applicants with services which best suit their requirements.
The application process for EduLoan experts is:-
The Indian government has laid provisions for applicants to avail interest subsidy on education loans. Many private and centralized banks also provide study loan subsidies to applicants. These subsidies are generally in the form of a reduction in interest rate charge or reimbursement of interest paid on the student loan. Various government schemes for study loan subsidy are mentioned below:-
Provided by: Ministry of Human Resource and Development, Govt. of India
Subsidy Eligibility: Indian Students pursuing professional/technical education are eligible for this subsidy scheme. Family income of the applicant from all sources should not be more than INR 4.5 Lakhs per year.
Provided by: Ministry of Social Justice and Empowerment, Government of India
Subsidy Eligibility: Overseas students of India, studying at recognized universities/colleges/institutions can avail this subsidy. Students need to be enrolled in Master’s programs at foreign institutions. Only students belonging to OBC (Other Backward Classes) or EBC (Economically Backward Class) can avail this subsidy. Maximum family income for OBC applicants is INR 6 Lakhs per year and maximum family income for EBC applicants is INR 2 Lakhs per year.
Provided by: Ministry of Minority Affairs, Government of India
Subsidy Eligibility: Students enrolled in Master’s programs or above in International Universities/Colleges/Institutions outside India are eligible for this subsidy. Only students from Minority Communities (like Parsi, Jain etc.) can avail this scheme. Maximum family income allowed for applicants is INR 6 Lakhs per year.
Students need to apply for all these subsidies by separately asking for the subsidy application form while applying for study loan offline. If applicants are taking online student loan application service then they don’t need to separately apply. Students need to present the following documents to avail these education loan subsidies:
Education loans are not the only means to manage one’s academic expenses. Students can avail the benefits of various scholarships, fellowships and grants available every year. The application process and eligibility of scholarships are more relaxed than the study loans. It is not compulsory for students to only look for a scholarship based on merit, as there are scholarships based on means as well which help financially weaker sections. Many banks also provide options to adjust student loan payments by using scholarship amount as well, so that loan repayment becomes easier.
Did you know: There are 19000 crores worth of scholarships released every year for students in India through various private and government schemes? More than 6000 such scholarships and fellowships are listed on Buddy4Study so that students can find suitable options to finance their education.
With all this information for the student loan, we hope that students will be able to find the best education loan service for themselves. For more information regarding loans for students, you can also visit the online archives of Buddy4Study and check out the education loan information regarding all popular banking institutions.
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