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Education Loan

Education Loan Details

Last Updated 31st Jul 2021

  • An education loan or student loan is a loan designed to help students to finance their post-secondary education.
  • Students can avail an education loan for courses in both India and Abroad.
  • Banks provide student loans for a tenure ranging from 7 to 15 years.
  • An education loan funds the expenses such as admission fees, cost of books, stationery, purchase of PC, laptop, study tour, project work, thesis, etc.
  • To avail an education loan, you need to provide co-borrower security based on your loan amount.
  • Interest paid on education loans is eligible for tax deductions under Sec 80E of the Income Tax Act.
  • New Education Policy 2020
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Education Loan In India

Quality education is the fundamental right of every individual. However, high fees at higher education keep the underprivileged students out of the education system. Most of them even struggle to complete primary education as well. Thus, an education loan fills the gap between the shortfall and the required amount for completing the education.

An education loan covers all the expenses related to tuition fees, admission fees, hostel expenses, exam fees and other miscellaneous charges. Students can avail the education loan for pre-specified courses for higher studies both in India and abroad. Before applying for an education loan, it is however essential that students must check the eligibility of the educational course with the lender.

Compare Top Education Loan For Students

Here are top banks that provide an education loan to pursue education for different courses in India as well as abroad.

Bank Name Maximum Loan Amount Education Loan Interest Rates in India Education Loan Interest Rates in Abroad
Avanse DHFL ₹ 50,00,000 12.65% 12.65%
Axis Bank ₹ 75,00,000 13.70% 13.70%
Bank of Baroda ₹ 80,00,000 7.70% 8.35%
Bank of India ₹ 20,00,000 9.05% 9.05%
Bank of Maharashtra ₹ 20,00,000 8.55% 8.55%
Canara Bank ₹ 20,00,000 8.50% 8.50%
Central Bank of India ₹ 20,00,000 8.50% 8.50%
Corporation Bank ₹ 20,00,000 8.80% 8.80%
Federal Bank ₹ 20,00,000 10.05% 10.05%
IDBI Bank ₹ 20,00,000 6.90% 8.40%
Indian Bank ₹ 25,00,000 7.15% 7.15%
Indian Overseas Bank ₹ 40,00,000 10.65% 10.65%
Karnataka Bank ₹ 20,00,000 9.85% 9.83%
Karur Vysya Bank ₹ 20,00,000 10.75% 10.75%
OBC ₹ 20,00,000 7.05% 10.65%
PNB ₹ 20,00,000 7.05% 10.65%
SBI ₹ 40,00,000 7.00% 8.80%
UCO Bank ₹ 20,00,000 9.30% 9.30%
Union Bank of India ₹ 30,00,000 8.40% 8.05%
United Bank of India ₹ 20,00,000 10.65% 10.65%

Education Loan Eligibility Criteria

The eligibility for a student loan varies for every lending institution based on the course pursued and educational institution. Some of the basic eligibility parameters for availing an education loan include:

  • Applicant: An Indian National who has secured admission to professional/ technical courses in recognized institutions or seeking admission for higher studies can apply for an education loan. Also, permanent employees who are employed for not less than three years with any organization and intend to acquire higher professional qualifications and have secured admissions in a reputed institute are eligible for an education loan.
  • Age: To apply for an education loan, the age of the applicant of non-working professional and working employees/ executives should be upto 35 years and 45 years, respectively.
  • Loan Amount: The loan amount for an education loan varies according to the course pursued. For doing higher studies in India, banks provide upto ₹ 80 Lakh. The eligibility for loan amount for studying abroad and pursuing studies at IIT's, IIM's and ISB's is upto ₹ 80 Lakh and ₹ 80 Lakh respectively.
  • Co-borrower Security: To avail education loans upto ₹ 4 Lakh, the applicant would require co-borrower security of parents or guardian or husband/in-laws in case of a married woman. For loans above ₹ 4 Lakh and upto ₹ 7.50 Lakh, co-borrower security of parents or guardian or husband/in-laws along with a third-party guarantee is required as collateral. In case the applicant has applied for an education loan above ₹ 7.50 Lakh, then he/she needs to provide co-borrower security and tangible security equivalent to 100-133% of the loan amount as collateral.
  • Tenure: The tenure of an education loan varies from bank to bank, and it can range from 7 to 15 years.

How to apply for an Education Loan?

Before applying for an education loan, you must compare various education loans based on the interest rate, tenure, loan amount, etc. and keep your documents ready. Once you have checked your loan eligibility and compared the education loan rates, you can apply for an education loan by using the below-mentioned methods.

  • Online: One of the easiest methods to apply for an education loan is to visit the bank website and check the eligibility criteria of the loan. After reviewing your eligibility, you can fill an application form for the loan and submit the required documents online. If you have any doubts, you can fill all the personal details and then the lender will contact you to discuss the terms and conditions of the loan.
  • Offline: You can also apply for an education loan by visiting the nearest bank branch. As you visit the bank, discuss all the terms and conditions, eligibility criteria etc. and then fill the application form and necessary documents required for an education loan. As the banks evaluate your eligibility criteria, they will contact you to discuss the terms and conditions of loan such as loan amount, tenure, rate of interest, other charges etc.

Features of Education Loan

An education loan provides the following benefits and features to the students.

  • Courses: Banks provide an education loan for full-time, part-time, vocational courses, graduation or post-graduation for studies in diverse fields such as engineering, medical, hotel management, fashion designing etc. both in India and abroad.
  • Costs Covered: An education loan funds the expenses such as admission fees including Monthly Fees and Examination Fees, cost of books, stationery, purchase of PC, laptop, Boarding & lodging expenses of the authorized hostel and other required expenses like study tour, project work, thesis, etc.
  • Prepayment Charges: There are no penalties on prepayment or foreclosure of an education loan.
  • Tax Benefits: Under Section 80E of the Income Tax Act, 1961, Interest paid on loans for education of self, spouse, children can be claimed as deduction from income of the borrower.
  • Moratorium Period: Banks provide a moratorium period of 1 year after completion of their studies to find a job to pay off the liabilities of an education loan.
  • Concessional Rates: Several banks provide concessional rates to women students and employees of banks for an educational loan. The interest rates for an education loan starts at 7.95%.

Documents Required For Education Loan

Here is a list of standard documents that you will be required to submit to avail an education loan.

  • Duly filled the application form along with two passport size photographs of the applicant.
  • Admission Letter from the Institute with 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.
  • Identity Proof: PAN card, Aadhar card, Driving License, passport, etc.
  • Address Proof: Ration Card, Driving License, Passport, Aadhaar Card, etc
  • Age Proof: Birth Certificate or 10th Class certificate.
  • Documents related to academic record: 12th Marksheet, certificate of any subsequent education like graduation or post-graduation, mark sheet of the entrance exam (if any), and any scholarship document.


How is EMI calculated for education loans?

The EMI on education loan depends on the loan amount, rate of interest and the tenure of the loan. Borrowers can calculate the EMI by using an Education Loan Calculator of the respective bank at the bank's website.

Can we get an education loan without security?

To get an education loan upto ₹ 4 Lakh, you need to provide co-borrower security of your parents or husband and does not require any third-party guarantee or tangible security.

Is the property required for an education loan?

To get an education loan above ₹ 7.50 Lakh, you need to provide co-borrower security and tangible security equivalent to 100-133% of the loan amount as collateral. The tangible security is provided in the form of property, shares, fixed deposits etc.

How many days does it take for an education loan to be approved?

The time of approval of an education loan varies from the lender to lender based on the course pursued, whether the loan is taken for studies in India or abroad, loan amount etc. Usually, it takes around 10-15 days to get an education loan approved in India.

Can a student apply for an education loan?

Yes, a student can apply for an education loan for studying in India and abroad if they meet the eligibility criteria for a student loan such as to qualify as an Indian resident, have age upto 35 years, provide co-borrower security etc.

Education Loan News - Jul 2021
  • 2021-07-16 : Amalgamation of Bank of Baroda, erstwhile Vijaya Bank and erstwhile Dena Bank
    Bank of Baroda, on its website, stated that the IFSC codes of the erstwhile Vijaya Bank and Dena Bank were discontinued on March 1, 2021. Customers have been asked to apply for cheque books with the new MICR code at the earliest.
  • 2021-07-16 : UBI update on change in IFSC code for merged banks - Andhra Bank and Corporation Bank
    Union Bank of India (UBI) on Friday said the IFSC codes of the erstwhile e-Andhra Bank and e-Corporation Bank branches will change with effect from July 1, 2021. Customers of the erstwhile banks will have to get new cheque books with changed IFSC and MICR codes
  • 2021-07-16 : Bandhan Bank total loans rise 8% to ₹80,128 crore in Q1, deposits up 28%
    Bandhan Bank witnessed an 8% rise in its loans and advances to ₹80,128 crores in the June quarter this fiscal. The loans and advances during the same period of 2020 stood at ₹74,331 crore. Compared sequentially, it was down by 8% from ₹87,043 crores in the March quarter. Total deposits grew by 28% year-on-year to ₹77,336 crores, while the CASA (current account and savings account) deposits jumped by 48% to ₹33,197 crores in the first quarter of 2021-22.
  • 2021-07-15 : Indian Bank merger with Allahabad Bank - Change in IFSC
    The Indian Bank, which has merged with the Allahabad Bank, carried out a software migration over the weekend. As the merger got completed, new rules had been issued by the bank with regard to its services. Existing customers were asked on July 1 to get a new IFSC code to carry out online transactions smoothly.
  • 2021-07-15 : OBC & UBI merged with PNB
    After the merger of OBC and UBI with PNB in April 2020, PNB has now updated the IFSC codes of all the branches of PNB and UBI. New IFSC codes have come into effect from July 1, 2021.
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