While under the ideal condition learning experience of students should be holistic, funding through education loans play a vital role in the selection of course choice after Class 12 in particular. At the same time, it is always advisable to fund your academic dreams gradually rather than resorting to investing a lump sum in the case if one has the money or the required resources. According to a 2023 report by AICTE (All India Council for Technical Education), the annual tuition fees for professional courses like engineering and management can range from ₹1,00,000 to ₹10,00,000 or more, depending on the institution and degree programme. This doesn’t include living expenses, books, and other course materials, which can significantly inflate the overall cost incurred. Therefore it is important to consider fee financing through education loans offered at zero percent or nominal interest rates or in many cases at marginal interest rates for that matter depending on where one wants to study after Class 12.
The cost of higher education in India has been steadily increasing. According to a 2022 report by Credit Suisse, approximately 23% of students pursuing higher education in India depend on education loans to finance their education. Education loans in India play a crucial role in financing higher education especially for students hailing from families with limited financial means. Education loans meant for students aim to close the affordability gap between the increasing cost of education and the financial resources possessed by a family.
Education loans in India are offered by various public and private sector banks, Non-Banking Financial Company (NBFC), private corporate bodies and government agencies. Besides, there are organisations like Buddy4Study that have collaborated with banks and NBFCs to offer education loans at very rationalised interest rates. Public sector banks like the State Bank of India (SBI) and Bank of Baroda, along with private banks like ICICI Bank and HDFC Bank offer education loan schemes at reasonable interest rates. The Government of India also provides financial assistance through several initiatives including the Vidya Lakshmi Portal. Scholarship portals such as BuddyStudy also offer education loans in collaboration with banks, private corporate house, NBFCs, for example, Buddy4Study-PNB Education Loan Programme, Buddy4Study-Auxilo International Education Loan Programme etc. Interested students can refer to the link provided hereafter. Buddy4Study Education Loan Programme
Let us consider a breakdown of some of the key aspects of education loans provided in India:
- Loan Amount: The maximum loan amount offered by the banks can vary depending on the course, institution, and the student’s academic record. It can range from a few lakhs for domestic studies to over ₹2 crore for pursuing studies abroad.
- Interest Rates: Interest rates on education loans in India on an average range from 8.5% to 12% per annum, depending on the lender, the loan amount, and the borrower’s credit profile.
- Repayment or Moratorium Period: Most of the education loans usually come with a moratorium period, which allows the student to defer repayment until they complete their studies and find employment. Repayment periods can extend up to 15 years following after the moratorium period.
Education Loan after Class 12 – Types of Education Loans
Education loans come in different categories to cater to diverse needs of the students community. They are as under:
- Education Loans Meant for Studies in India: These types of education loans cover tuition fees, expenditures incurred on living and accommodation, examination fees, and other education-related costs for courses pursued within India. Loan amounts vary depending on the courses and institutions.
- Education Loans Meant for Studies Abroad: Study abroad education loans are designed for students willing to pursue their higher education abroad. These loans typically cover higher costs associated with international education. This includes tuition fees, living expenses, travel allowance, and sometimes even cover health insurance along with the loan amount offered.
- Education Loans for Specific Courses: Lenders also offer education loans that are specifically meant for students willing to pursue professional courses offered in STEM subjects, medicine, engineering, management etc. These loans may be offered with relaxed eligibility criteria and attractive interest rates.
Also Read: CGFSEL Education Loan Scheme
Education Loan after Class 12 – Eligibility Requirements:
Interested education loan seekers in India willing to apply for an education loan must follow and fulfill the eligibility criteria mentioned below in order to avail the benefits:
- Applicants must be Indian citizens.
- Age criteria generally fall within the range of 18 to 35 years at the time of application. Some of the lenders may include variations in this range.
- Loan applicants should have completed their Class 12 from a recognised board.
- He or she should have secured a minimum qualifying mark that may vary depending on the lender. It generally falls between 50% to 60% aggregate marks in Class 12 Board Exam. Some of the lenders may consider giving weightage to marks scored in specific subjects relevant to the chosen course.
- Candidates should possess a valid admission letter from a recognised university/institution for a degree or diploma programme. The program should be approved by relevant authorities like the University Grants Commission (UGC) or the All India Council for Technical Education (AICTE).
In most of the cases, seeking education loans require a co-applicant, usually a parent or legal guardian with a stable income source. Their financial strength significantly impacts the loan amount offered. Lenders assess the credit history of the co-applicant, income tax returns, and employment status and their overall earning potential. Some of the education loan providers might ask for a guarantor willing to share the loan repayment responsibility in case of default and therefore the guarantor’s creditworthiness is also evaluated.
| Note:- Eligibility criteria can vary depending on the eligibility criteria and the loan providers. It’s always advisable to research and compare loan offers of different banks and NBFCs thoroughly in order to find one that best aligns with your profile and educational aspirations. |
Consideration of Important Factors before Applying for an Education Loan
The following factors are required to be considered in the process of applying for an education loan:
- Interest Rate: This is the most important deciding factor that impacts the overall loan repayment cost. It is always good to compare interest rates offered by different lenders and choose the one offered with the most rational interest rate.
- Loan Amount: Applicants must assess the financial needs carefully and borrow only to the extent what is indispensable. Over-borrowing must be avoided to ensure prevention of a heavy debt burden after graduation.
- Repayment Period: A longer repayment period translates to lower monthly installments but higher overall interest amount. Therefore, applicants must choose a repayment period that is in harmony with affordability and timely repayment obligation.
- Processing Fees and Other Charges: Some lenders levy processing fees, prepayment charges, and other administrative costs. Hence, it is always wise to consider these factors.
- Scholarship and Grant Opportunities: Exploring options of scholarships, grants, or financial aid programmes offered by the government, educational institutions, or private organisations can significantly offset the burden of education loan.
Also Read: Bihar Credit Card Loan Scheme
Education Loan after Class 12 – General Documentation Requirements
Gathering all the necessary documents as per the requirements of loan providers is necessary before applying for an education loan meant for pursuing studies after Class 12. This list of documents generally includes the following:
- Duly filled and signed application form with photographs
- Academic documents including marksheets of Class 10 and 12, and entrance exam score cards (if applicable)
- KYC documents of the Applicant (Identity and Address Proof etc.)
- Co-applicant identity proof such as an Aadhaar Card, PAN card, etc.
- Admission offer letter received from the university/college
- Fee structure of the course from the college
- Income proof documents of the co-applicant (latest salary slips, Form 16, ITR for the past 2 years).
- Documents showcasing the assets and liabilities of the co-applicant/guarantor (if applicable)
Education Loan after Class 12 – Loan Approval and Disbursement
- Processing and Verification: The bank will evaluate the eligibility, verify the documents submitted and process your application. This might involve contacting the educational institution or your references.
- Loan Approval & Sanction: If the loan application meets the requirements, the bank will sanction the loan amount and communicate the decision on time and manner of disbursal.
- Loan Agreement & Disbursement: Once approved, applicants must sign a loan agreement based on the terms and conditions outlined. The loan amount will be disbursed according to the agreement. This might involve:
- Direct credit to your bank account in a phased manner or all at once
- Transfering the credit to the institute’s account directly to pay the fees on behalf of the applicant
Education Loan after Class 12 – Application Process
Availing an education loan in India involves due diligence. It includes careful preparation, application, and disbursement stages. Here’s a detailed breakdown to guide you through the process:
Preparation (Before Applying):
- Ensuring that you meet the lender’s criteria on citizenship, academic performance, admission confirmation in a recognised institution etc.
- Exploring different loan products offered by various banks and government scholarship programs.
- Considering and comparing factors like interest rates (fixed or floating)
- Repayment Terms (loan duration and monthly installments)
- Processing fees associated with application
- Special Benefits (scholarship components, interest waivers, co-applicant benefits)
Application Process:
- Gathering all necessary documents and submitting these along with application
- Applicants can submit their application form using two modes:
- Online Application: Many banks allow online applications through their websites.
- Offline Application: Visit your chosen bank’s branch and submit the application physically.
Last but not the least, selection of an appropriate institute and funding platform is important, however it is vital to consider the ease and convenience of EMIs repayment obligation on the offered education loan, mortgage and interest rates etc. It can not be overemphasied that payment of EMIs and educational insurance of getting better returns in the process of acquiring the best learning experience at the best price. Education as a basic necessity must be accessible to everyone universally without distinction of sorts. We can only leave our past behind and progress into the future with adequate financial support.
Also Read: Avanse Education Loan Programme
Education Loan after Class 12 – FAQs
What is an education loan?
An education loan is a type of financial assistance that helps students cover the costs of higher education. This can include costs incurred on tuition fees, laptops, books, living expenses, including travel costs for that matter. Education loans are offered by banks and non-banking financial institutions (NBFCs) and are repaid over a defined time period after the completion of studies. They are a valuable supporting tool for students to pursue their ambition.
Which bank is best to take an Education loan in India with minimum interest?
It is always incumbent upon research done with due diligence simply because interest rates offered keep on varying. There are several banks, NBFCs including organisations like Buddy4Study that offer extremely affordable education loans at a very rationalised rate of interest.
However, some of the banks that are generally known for offering competitive interest rates on education loans are as under:
- Central Bank of India offers education loans with rates starting at 8.30% and offers concessional rates for female students.
- State Bank of India (SBI) offers a range of education loans with interest rates starting around 8.30%. They also have schemes for specific institutions such as IITs, IIMs, NITs, etc. that might offer slight variations.
- Bank of India: Their Star Vidya Loan offered by the bank boasts of rates starting from 8.25%, making it a strong contender for minimal interest.
Is it really difficult to take an education loan in India?
Obtaining an education loan in India is not difficult if you meet the basic requirements. Banks generally ask for good grades, proof of admission in a recognised institute, and a co-signer with a stable source of income. You’ll also need documents like mark sheets and fee receipts. There are various loan options offered with varying interest rates and repayment plans to suit your needs. Research and compare options offered by different banks and government schemes to find the best deal.
What is the procedure to apply for an education loan?
Applying for an education loan in India involves meeting eligibility criteria such as good grades, admission proof, availability of co-signer, choosing a lender, collecting documents including transcripts, ID proof etc., submitting the application, and getting approval for an education loan.
How do you get an education loan for pursuing your studies after Class 12 in India?
Securing a student loan for pursuing your studies after Class 12 in India involves meeting eligibility requirements and following the process of application duly. First of all, you need to be an Indian citizen with a strong academic record and an offer for admission to a recognised institution. Research and compare loan options offered by banks and government scholarship programs. You should have your documents like your marksheets, admission letter, and co-signer’s income proof. Submitting your application and documents to the chosen lender, who will assess your eligibility and sanction the loan if approved. Finally, the loan amount will be disbursed as per the agreement, covering your educational expenses. It is important to research and plan carefully before you apply and submit your application for an education loan.