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Leading Indian banks significantly support students’ academic dreams by providing comprehensive education loans. These loans, designed for both domestic and international studies, come with a generous repayment period of up to 20 years and start at a competitive interest rate of 8.10% per annum. What makes these loans truly inclusive is their wide coverage, which spans from Nursery to full-time, part-time, and higher education courses, thus catering to the diverse requirements of working professionals.
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Education loans serve as a financial lifeline, covering a broad range of expenses including tuition fees, hostel charges, travel costs, insurance premiums, and more. With loan amounts reaching up to Rs. 1 crore and a flexible repayment tenure of up to 15 years, students receive substantial support throughout their academic journeys.
Additionally, tax benefits under Section 80E of the Income Tax Act provide relief through deductions on the interest paid.
These loans cater to a variety of educational paths, including undergraduate, postgraduate, vocational training, and skill development courses. Eligibility criteria include enrollment in recognized institutions and completion of 10+2 or a degree, among other factors.
The application process, accessible online and offline, requires essential documentation such as admission letters and academic records.
An Education Loan EMI Calculator helps borrowers estimate monthly repayments, offering insights into the overall loan cost. The repayment journey, typically starting 12 months after course completion, offers flexibility through various modes such as internet banking, cheques, direct debit, and demand drafts.
Lenders, recognizing the importance of education, adopt a comprehensive approach in approving loans. They consider factors such as the chosen course, institute, loan amount, academic performance, family’s repayment capacity, assets, and annual income.
In essence, education loans create a supportive framework, alleviating financial constraints on students’ educational pursuits.
| Name of Bank | Interest Rate (p.a.) | Processing Fees |
|---|---|---|
| SBI | 8.15% p.a. to 11.75% p.a. |
|
| Central Bank of India | 8.10% p.a. to 10.60% p.a. |
|
| PNB | 9.20% p.a. onwards |
|
| Canara Bank | 9.25% p.a. onwards |
|
| IDFC FIRST Bank | 10% p.a. to 15% p.a. | Up to 1.5% of the loan amount |
| IDBI Bank | 8.50% p.a. onwards |
|
| Bank of Baroda | 8.15% p.a. onwards |
|
| Bank of India | 11.05% p.a. to 11.85% p.a. | No processing fee for studies in India |
| ICICI Bank | 9.85% p.a. onwards | Up to 2% + GST |
| Bank of Maharashtra | 8.10% p.a. onwards | Contact the bank |
| HDFC Bank | 9.50% p.a. | Maximum up to 1% of the loan amount |
| Axis Bank | 13.70% p.a. to 15.20% p.a. | 2.00% of the loan plus GST |
| Kotak Mahindra Bank | Up to 16% p.a. | Nil |
| Federal Bank | 12.55% onwards | Contact the bank |
| Tamilnad Mercantile bank | 11.75% p.a. to 13.00% p.a. | 1% of the sanctioned loan amount above Rs. 7.50 lakh for studies abroad |
Note: These interest rates are effective as of June 2024 and are subject to change according to the bank’s rules and regulations.
Depending on the bank or financial institution, you can opt for either a fixed interest rate package or a fluctuating interest rate package. Most floating rates are based on the Repo Rate, with a spread applied before the final effective interest rate (EIR) is presented to you.
Here’s what the loan amount will cover:
The interest you pay on your student loan can be deducted under Section 80E of the Income Tax Act of 1961. This benefit is available only to individual borrowers and exclusively for higher education purposes. The deduction applies to all fields of study, both domestically and internationally, covering both vocational and academic courses.
It’s important to note that the tax deduction only applies to the interest portion of the EMI, not the principal. There is no limit to the number of times you can claim this benefit. To qualify, you’ll need a certificate from your bank or financial institution that separates the principal and interest components of your EMIs.
This benefit is available for eight years from the start of your loan repayment or until the interest component is fully paid off, whichever comes first.
Loans are provided for sanctioned undergraduate programs, postgraduate programs, PhDs, diploma courses with a duration of six months or more, job-oriented courses, and technical/professional courses.
Applicants must be enrolled in or have secured admission to recognized institutions, government institutions, professional institutions, or international colleges and universities.
For undergraduate courses, applicants should have completed 10+2 (12th standard), and for postgraduate courses, a degree is required.
Here is an indicative list of documents that most lenders ask for:
The repayment period for education loans typically begins 12 months after completing the course or 6 months after gaining employment, whichever comes first. Different lenders offer varied moratorium periods for loan repayment. Payments are made in Equated Monthly Installments (EMIs).
The preferred repayment method can differ among lenders, so it’s advisable to confirm with your lender when taking the loan.
If financial constraints are the only hurdle between you and your career ambitions, consider an education loan. These loans often come without collateral requirements, meaning you won’t need to provide security, and your repayment schedule won’t commence immediately after graduation.
Lenders consider the following factors when approving a loan:
The Equated Monthly Installments (EMIs) that you will pay will depend on a few key factors.
The higher the loan amount, the higher your EMI will be. Similarly, the shorter the loan tenure the higher the EMI.
To calculate the EMI on your car loan, you can use the formula:
EMI=P×R×(1+R)N(1+R)N−1\text{EMI} = \frac{P \times R \times (1+R)^N}{(1+R)^N – 1}
where:
Manual calculations can be error-prone, complex, and time-consuming, so using an online personal loan EMI calculator is preferable. This calculator requires only a few basic details such as the interest rate, loan amount, and loan tenure.
Once these details are entered, the EMI amount is calculated instantly. Additionally, the calculator provides the total interest amount and an amortization schedule for easy reference.
Yes, the RBI’s moratorium on retail loans, including education loans, was applicable from March 2020 to August 2020 due to financial challenges caused by the Covid-19 pandemic.
No, banks levy interest on education loans. There are no interest-free education loans offered by banks.
No, generally education loans for courses abroad offer higher amounts than for comparable courses in India, considering higher fees and expenses abroad.
Yes, under the Credit Guarantee Fund for Education Loan (CGFEL) Scheme, you can avail a collateral-free loan of up to Rs. 7.5 lakh. Amounts above this typically require collateral.
Education loans for courses abroad are typically disbursed in the local currency of the country where the institution is located.
The moratorium period for education loans varies by lender. If you take a sabbatical, discuss the extension of the moratorium with your lender.
Education loans in India generally require the applicant to be an Indian national. Non-Resident Indians (NRIs) may face eligibility restrictions depending on the lender’s policies.
If you discontinue the course and gain employment during the grace period, you must start repaying the loan immediately.
Yes, you can transfer your education loan to another bank with lower interest rates. However, there may be a refinancing fee charged by your current bank.
Student loans in India can be waived under certain government schemes, employment in specific sectors, financial hardship, disability, and institutional policies. Eligibility and terms vary; consult your lender for details.
Yes, education loans can cover up to 100% of the education expenses, although some lenders may have a margin requirement for expenses exceeding a certain limit.
