Education Loan Interest Rate

A loan taken to meet tuition fees, hostel fees, and other related expenses for pursuing a specified educational course in an institution is called Education Loan. Banks offer student loans for pursuing pre-specified courses in India and abroad from certain institutions. Banks release a list of permitted courses and institutions for which it will give education loans. So, the course you want to pursue is within the bank’s list along with the institution you wish to join, then you can apply for an education loan.

Determinants of Eligibility for Education Loans
Age of the Applicant	Upto 35 years for non-employed personnels Upto 45 years in case of working employees/ executives
Who is eligible	An Indian National having secured admission to professional/technical courses in recognized institutions Students seeking admission for higher studies Permanent employees who are employed for not less than three years with any organisation and who intend to acquire higher professional qualifications and have secured admissions in a reputed institute
Maximum Loan Amount	Typically upto ₹ 10 Lakh for studies in India; with minimum margin money (own contribution by student/ family) of 5% of total cost Typically upto ₹ 20 Lakh for studies abroad, some banks offer upto ₹ 30 Lakh with minimum margin money (own contribution by student/ family) of 15% of total cost Upto ₹ 30 Lakh for studies at IIT's, IIM's and ISB's with minimum margin money (own contribution by student/ family) of 5% of total cost
Which Cost Heads/ Expenses are Funded by Bank	Admission fees including Monthly Fees and Examination Fees Books, Stationery and Equipments Airfare for joining the course abroad Purchase of PC, laptop as essential for the completion of the course.  Boarding & lodging expenses of authorized hostel or boarding house Caution or building deposit/ refundable deposit supported by the bill/receipts from the institution. Subject to the amount not exceeding 10% of the tuition fee. Insurance premium, if opted by the student.  Other required expenses like study tour, project work, thesis, etc.
Co-borrower/ Guarantor/ Security	Loans upto ₹ 4 Lakh: Parents or guardian or husband/in-laws in case of married woman required need to be co-borrower Loans above ₹ 4 Lakh and upto ₹ 7.50 Lakh: Parents or guardian or husband/in-laws in case of married woman need to be co-borrower and a third party guarantee needed as collateral Above ₹ 7.50 Lakh: Parents or guardian or husband/in-laws in case of married woman need to be co-borrower and tangible security equivalent to 100-133% of loan amount as collateral
Repayment Frequency	Quarterly or monthly rests Repayment typically starts 1 year after completing the course or six months after getting a job, whichever is earlier
Repayment Period	Varies from bank to bank - can range from 7 to 15 years There is no prepayment penalty or charge on early prepayment or foreclosure
Key Appraisal Criteria	Good academic record with atleast 50% marks in the qualifying examinations Admission letter from bonafide educational institution Passport/visa/i-20 form for studies abroad Net-worth and credit history (CIBIL) of the guarantors

• Attach your admission letter received from the college or institution along with your application.
• Keep the primary documents like PAN card, age proof, address proof, etc., ready.
• Compare various education loans based on the interest rate, tenure, loan amount, etc.
• The mark-sheet of 10th and 12th would come handy. Keep them ready for attesting.

• Interest paid on education loan can be claimed as deduction from income of borrower (student) as per Section 80E of the Income Tax Act, 1961
• Rebate can be claimed without any upper ceiling or cap
• Rebate is available for full time courses, part time courses and vocational courses pursued in India and abroad
• Rebate can be claimed within eight (8) years post moratorium period subject to actual payment of interest
• Rebate is available for interest paid on loans for education of self, spouse, children or for the student of whom he/she is the legal guardian
• No rebate is available for principal repayment

• Duly filled the application form along with two passport size photographs of the applicant and co-applicant.
• Admission Letter from the Institute. It should have the institute name and address on the letterhead.
• The detailed cost breakup of the course from the Institute, which specifies the tuition fee, the term of the course, year-wise charges, and expenses.
• The academic record of the applicant/student, which should include 12th Marksheet, certificate of any subsequent education like graduation or post-graduation, mark sheet of the entrance exam (if any), and any scholarship document.
• An affidavit or a declaration that no loan has been availed from any other bank or financial institution.
• Any ID proof like PAN card, Aadhar card, Driving License, passport, etc.
• Any address proof like Ration Card, Driving License, Passport, Aadhaar Card, etc
• For age proof Birth Certificate or 10th Class certificate.

✅What courses are eligible for education loans?

Some examples of the courses eligible for education loan are:

• Graduation and Post-graduation courses
• Professional courses
• Diploma/degree courses by recognized institutions.

✅Can I avail tax benefits on education loan?

Yes, you can avail tax benefits under section 80C and 80E of the Income-tax Act, 1961 for education loan’s interest and payment.

✅What is the age limit for availing education loan?

For availing student loan/education loan, usually, the age of 30 is the limit. However, in some cases, it may be higher.

✅What can I do if my loan application is rejected?

Usually, banks provide a reason when they reject an education loan application. In case you were not informed by the bank about the reason, you can file an RTI petition.

✅Can I transfer my education loan to another bank with a lower rate of interest?

Yes, you can transfer your education loan to another bank. But in such a case, your current bank will charge a certain fee and also the new bank will charge a processing fee. Thus, consider all the factors and expenses before making a decision.

✅What are the factors that lenders consider for approving an education loan?

Some of the factors that lenders consider while assessing an education loan application are:

• The Institute and the course
• The Loan amount
• Repayment capacity of the family
• Academic Performance
• Estimated income after completion of the course and securing the job.

✅What can I do if an education loan is not available for me or loan application is rejected?

In case you want to finance your education, but the course or the institution you wish to join is not in the bank’s list, then you can consider the option of availing a personal loan.

Also, if you or your parents own a property, then loan against property is also an excellent option to finance your education.

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