No icon

Things to know if you are planning for an Education Loan in India

Acquiring quality education is very important for everyone as it not only provides a better carrier, it plays a pivotal role to build a healthy society. If you talk about education in India, you have two options- either crack the entrance exam of government institutes or spend a lot of money to get admission in private institutes. There is very tough competition in government entrance exams and it not only requires a lot of talent and skills, luck is also a very big factor. Only one mark is enough to make a huge difference. Everyone can’t afford the fee of private colleges. If you are looking to make your carriers in Engineering, you need a minimum of ₹ 5 to 8 lakh, while under graduate medical course will cost you at least ₹ 30-40 lakh. For most of the Post Graduate Courses, you require approx. ₹ 10 lakh.

Although it is not easy to afford the fee of private colleges, you have an option of applying an Education Loan at your Bank. Here are some points to be noted if you’re looking to apply for the education loan.

  • You will have to provide the name of co-applicant(s) on the application form. The co-applicant can be your parents, sibling or your spouse.

  • If you are applying for a loan of between ₹ 4 to 7.5 lakh, you need to provide a third-party guarantor. And if you are availing a loan of above ₹ 7.5 lakh, you need to provide a collateral.

  • Your repayment cycle will start six months to one year prior to the completion of the course.

  • Any mistake or default in payment will hit the credit history of student and co-applicant badly.

  • Insurance is compulsory for those who are moving abroad for study.

  • Make sure that you college is recognized by the University Grant Commission and all the documents related to acceptance of the loan are clear.

  • Once the loan is sanctioned, the fee will be paid directly by the bank to the college.

Some must have documents for application of loan:

  • Applicant’s passport size photograph.

  • Admission letter handed by the university.

  • PAN card of the candidate.

  • Any of the following documents as the proof of identity:

    • Passport

    • Driving license

    • Voter ID card

    • Aadhar card

Courses covered under the education loan scheme:

  • Diploma/Degree/Graduation/Post-Graduation from any recognized college or university affiliated from UGC/AICTE/IMC/Govt.

  • Regular Degree or Diploma courses offered by prestigious institutes of India like IITs AND IIMs.

  • Fine Arts, Pure Science, Medicine, Engineering, Computer Science, Management, Architecture, Agriculture, Hotel Management, Hospitality, Design and other disciplines.

  • Vocational and other Technical courses like Teacher Training, Nursing, Shipping, Aviation, Air-Hostess etc.

What does it cover?

  • Complete tuition fee of college.

  • Accommodation charges.

  • Examination fee as well as library fee.

  • Conveyance and other travelling expenses while studying in abroad.

  • All other important expenses till the course completion.

Interest Rates and Processing Fee:

  • Interest rates may vary from bank to bank.

  • The interest rates of public banks are usually 1% to 2.5% lower than private banks.

  • Interest rates at public bank usually charges  are between 8.5% to 10.5%.

  • The processing fee remains same in both public and private banks.

  • The processing fee is usually 1 to 1.5% of total loan sanctioned by the bank.

Keep all these points in mind before applying for an education loan and make a proper decision.