Hello friends, here we are going to know what is education loan, how to take education loan and all that you want to know.
Friends, illiteracy is a curse because it spoils the future of children, even today there are lakhs of such children in our country who have infinite talent.
But due to poor family situation and inability of parents to get higher education, they are not able to complete their studies, they are unable to enhance their talent.
In such a situation, education loan helps them and helps those children to study further, complete their education, hone their abilities and become successful in life.
So let us know in detail what is education loan, how to take education loan, who can take education loan, what is the interest rate of education loan.
What is education loan
The loan taken from any government or private bank for completing higher education and for meeting its fees etc. is called education loan.
Through education loan, parents can get higher education for their children and they do not have to bear the burden of bearing the cost of education.
You can take an education loan to pursue higher education anywhere in the country or abroad, the process of taking an education loan is also easy, which makes it even easier.
A special feature of education loan is that to pay it, you do not have to pay monthly installments immediately after getting the loan, the installments of its payment start after the completion of the child’s studies and getting a job.
How to take Education Loan?
If you also want to take an education loan for yourself or your children’s higher education, then the same question will be in your mind that how to take education loan. By doing understand.
Education loan eligibility
First of all you need to know whether you are eligible to take education loan or not for which you have to fulfill the following conditions of education loan =>
To take any type of education loan in India, first of all you must have Indian citizenship i.e. you must be a citizen of India.
You can take education loan for undergraduate, post graduate or any higher education abroad, but it is mandatory for you to pass higher secondary for education loan.
No age limit has been set by RBI for eligibility to take education loan, but banks also have their own policies according to which your age should be between 16 years to 35 years to take education loan.
Admission is confirmed
To take education loan, you must have got admission in any official university in the country or abroad i.e. you should have admission letter or offer letter of the institute.
If you are looking to take a small loan (up to 4 lakhs) then you do not need any guarantor but if you want to take more than 4 lakhs, then you will also have to present a guarantor for the loan up to 7.5 lakhs and then Documents also have to be given.
If you want to take a loan of more than 7.5 lakhs, then you will also have to submit the documents of property etc. as security.
Required documents for education loan
For education loan, if you fulfill all the conditions mentioned above, then you have to prepare all the necessary documents for this, then let us know what documents are required for education loan =>
Student ID Proof like Aadhar Card, Address Proof, Age Proof, 2 Photographs and Academic Records (Marksheets)
After that, the ID proof (Aadhaar card, driving license), address proof (electricity bill, water bill) and income proof (income tax return) of the parents will have to be collected.
Copy of admission letter, complete details of college and course.
Those going abroad for education will have to submit visa approval copy, GRE, GMAT etc. score report and travel documents.
If the loan is more than 4 lakhs, then the documents of the guarantor’s ID proof, address proof, income proof.
If any fees have been paid earlier, then the receipt thereof.
Full tuition fee details.
Generally, the same documents are required for education loan, but where you are applying, if any other document is also asked for, then it should be submitted.
Education loan approval process
For education loan, you have to first take the application form from the bank and fill all the information in it.
After that attach all the above mentioned documents in the application form and submit the application form.
After that the bank will verify your application form and all the documents.
Will check your college, course, admission letter etc.
Then based on the income of your guardian or guarantor, etc., it will decide how much loan you can get.
After checking all the documents and everything is in order, your education loan is approved.
Now you must have understood what is education loan, how to take education loan and what is its process.
How much do you get education loan?
Now the question will be in your mind that how much education loan can be got or what is the education limit, so let’s know about it.
To study in the country
If you want to take education loan to get education from any recognized institution of the country while staying in India, then you can take loan up to 10 lakhs.
To study abroad
If you want to go abroad for higher education and want to take a loan for it, then you can get a loan of 20 lakhs to 25 lakhs.
Note – This limit of loan amount is given on the basis of average limit of education loan provided by banks. Some banks and NBFC companies can give you more loan than this.
What is the interest rate of education loan?
The interest rate varies from bank to bank, but the average interest rate for education loan ranges from 11% to 14%. Let us see what is the education loan interest rate of different banks =>
Education loan lending bank education loan interest rate
State Bank of India 6.65% to 8.65%
Punjab National Bank Starting At 7.30%
Bank of Baroda 6.75% to 9.85%
Bank of India 9.05% to 9.85%
ICICI Bank Starting At 10.50%
Axis Bank 13.70% to 15.20%
HDFC Bank 9.40% to 13.34%
Kotak Mahindra Bank up to 16%
Union Bank of India 6.80% to 10.05%
Note – Education loan interest rate of all banks is based on the information provided on their website.
In some banks, if you take an education loan for the education of a girl child, then you get a discount of up to .50% in the interest rate like in State Bank of India.
The processing fee on the loan of every bank is different, as well as the limit for granting education loan is also different, so before applying for a loan in any bank, take information about the processing fee.
Education Loan EMI Calculator
We have put up the Education Loan EMI Calculator for you in the sidebar to calculate the EMI of your loan.
Also Read – What is Personal Loan How to Apply for Personal Loan
Education Loan Payment Methods
There are mainly 2 modes of repayment of Education Loan =>
Full payment after studies
In this mode of payment of education loan, you do not have to pay anything till your studies go on, but after completing your studies, if you are able, then you can pay off your entire education loan in one go.
You can also do this by paying interest monthly from the beginning so that later you have to pay only the principal amount.
Pay in monthly installments after studies
In this mode of repayment of education loan, as long as your studies are going on, you do not have to pay anything, along with this, even after completion of studies, the bank gives you six months to one year.
To find your job and get better and after that your monthly installment starts in which some part of the principal gets deposited along with your interest.
And till the end of the loan tenure or installments, your loan gets repaid with interest.
For how long the education loan is available
Now this question must also be in your mind that what is the duration or time limit of education loan or say for how long education loan is available.
Earlier the duration of education loan used to be 7 to 8 years i.e. you used to get education loan for 7 to 8 years but now the duration of education loan has been extended and now education loan is available for 15 to 20 years.
This makes your monthly installments less so that you do not have much burden and at the same time the bank also does not have the risk of sinking the loan.
Let us now know what are the advantages and disadvantages of education loan and what precautions should be taken while taking education loan.
Benefits of education loan
- Education loan is easily available as compared to other loans.
- There is no pressure on the parents to pay the fees.
- The student can concentrate on studies without worrying about fees.
- Students get a chance to hone their talents by getting higher education.
- There is no pressure to pay installments till the completion of education.
- Loan is available at low interest rate.
- On completion of education and job placement, the student can repay the loan himself.
- Section 80E of Income Tax provides for exemption from income tax on education loan, the benefit of which is available to the borrower for 8 years. That is, he can get exemption in income tax on the amount given as interest for 8 years.
Disadvantages of education loan
- Many private banks and other financial companies have higher rates of interest.
- Processing fees are also high in many banks and financial institutions.
- There is always this pressure on the student that he should get loan after studies you have to pay.
In the absence of a good job, it becomes very difficult to pay off the loan and meet other needs.
Things to keep in mind while taking an education loan (Precautions)
- Before applying for the loan, get complete information about the interest rate and processing fee of the bank.
- First take information about everything in two or three banks and then apply where there is low fee and low interest rate.
- Get complete information about the college in which you are taking admission, its ranking in the country, job placement ratio, package, companies coming for job placement etc. through internet or other means.
- If you are good in studies and you have full faith in yourself that you will be successful then study by taking loan.
- Before taking a loan, prepare yourself completely and then forget all the things and just focus on your goal and work hard from your side.
We have given here all the important facts related to education loan like what is education loan, how to take education loan, who can take education loan, what is the interest rate of education loan, repayment of education loan Efforts have been made to explain the methods etc.
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