Education Loan – Types, Rates, Features, and Eligibility: High quality education is essential for everyone. Students will go the extra mile in order to attain that. A loan for education may be the best option, as the rising cost of education makes it difficult to afford.
Students can apply for an educational loan to help them meet their financial obligations. To help educate the next generation of leaders and innovators, many banks and NBFCs offer education loans at affordable rates.
Education Loan – Types, Rates, Features, and Eligibility
Types and Conditions of Education Loans
1) Based on location
Domestic Education Loan
These loans are available for students who want to study in India. The applicant must be admitted to an Indian education institution and meet all other criteria.
Overseas Education Loan
Students can use these loans to help them realize their dreams and pursue their goals at a foreign institution. Students who want to study abroad can apply for the loan.
2) Based on Course
Undergraduate loans
This type of education loan can be used to provide financial assistance to students in order to complete their undergraduate degrees. An undergraduate degree can be 3-4 years long and include a variety of specialisations. A bachelor’s degree is a great way to get a job and begin earning.
Graduate Loans
Many undergraduates wish to continue their education through a postgraduate course. This is typically a 2-year-long course in India. A postgraduate degree is required to gain deeper knowledge in your area of interest.
Career Development Loans
Many professionals who have been working for a few decades in corporate jobs will choose to stop their career and go to professional courses and training to enhance their prospects of employment. They would work hard to gain admission into prestigious technical schools and businesses to enhance their skills and achieve greater success in their career.
3) Based upon Collateral
Secured Loans, Deposits and Property
You can pledge immovable property such as land, houses, or agricultural land to obtain financing for your education.
Third-Party Guarantee
A letter of guarantee from an employee of the bank, or a home banking institution can be helpful in securing an education loan.
Benefits and Features
1) For international students, the loan amount can reach Rs.1 crore and for domestic students it can reach Rs.50 lakh.
2) For certain conditions, 100% financing is available
3) Other expenses like student travel expenses or a laptop are covered by the financing
International disbursements may be eligible for preferential forex rates
5) The loan repayment terms can extend up to 12 year after completion of the course within six months.
6) The parents should be joint borrowers of the education loan.
Lists of expenses covered under the Education Loan
1) Fees to educational institutes
2) Examination/library/laboratory fee.
3) Travel expenses/passage funds for study abroad.
If applicable, student borrowers may be charged an insurance premium.
5) Caution deposit and building fund/refundable deposits supported by institution bills/receipts. Total expense should not exceed 10%
6) Purchase of books/equipment/instruments/uniforms (total expense should not exceed 20% of total loan).
7) Buy a computer at an affordable price if necessary to complete the course (total expenses should not exceed 20%).
8) Any additional expenses necessary to complete the course (e.g., study tours, thesis work, etc. Total expense should not exceed 20%.
9) When computing loan requirements, scholarships, fee waivers, etc., are available to student borrower.
Eligibility for Education Loans
1) Indian nationals only
2) Invite/securing admission from university in approved college/university for degree/diploma courses
3) Education
4) Approved courses leading to graduate/post-graduate degree and PG diplomas were conducted by recognised colleges/universities recognised by UGC/Govt./AICTE/AIBMS/CMR.
5) Courses like ICWA, CA, CFA etc.
6) Courses taught by IIMs or IITs.
7) Regular degree/diploma course, such as shipping, pilot training, or aeronautical.
8) Degree/diploma in nursing or any other discipline approved by Director General of Civil Aviation/Shipping/Indian Nursing Council or any other regulatory body as the case may be if the course is pursued in India.
The course list above is an indication and not exhaustive.
Documents
1) KYC documents
2) Fill out the marking sheets for 10th,12th, graduation, and entrance exams
3) Admission letter
4) Fee structure
5) Income proof and KYC for co-applicants in certain cases
In certain cases, additional documents might be required.
Educational Loan – Tax Benefits
Once you have begun repaying your education loan, the interest portion you pay monthly towards it can be used to qualify for an income tax deduction under Section 80E. This deduction is not available for principal repayments.
You can also claim interest repayment on education loans up to a maximum amount. You will need to get a bank certificate as proof. The loan facility is only available for eight years starting from the date you begin repaying the loan.
How To Apply
Either you can visit the bank to inquire about the loan process. Or, you can apply online. After your loan application has been submitted, the bank will review your documents, evaluate your course of study, and provide collateral. Once the application is submitted, the bank will notify you.
Study Loan Repayment Scheme
Some lenders allow a 6-month grace period to help you find a job or start your repayments. Lenders may have different grace periods. Once you get a job within the grace period, you can start the repayment process via EMIs.
You can contact the bank to request a recommendation on an EMI based upon your monthly income. Once you have agreed to this suggestion, you will be able to start paying the monthly installments. If you are not satisfied with the amount, you can negotiate. In all cases, the maximum amount of repayment permitted is eight years.