A good education not only ensures a good and lucrative career, and thereby a secure future, but also fetches you a lot of respect in society. But higher education, given that inflation is rising day by day, doesn’t come cheap. In fact, it is very expensive, whether you wish to pursue your higher education in India or abroad. Most parents find it difficult to fund the higher education of their children, leaving the children with no alternative but to take an education loan.

Aspects of An Education Loan in India

Eligibility: Most financial institutions in India offer education loans to students for higher studies in India or overseas. If you are between 16 to 35 years of age, you can apply for a loan for pursuing studies post higher-secondary schooling. The loan can be availed for graduate, vocational or even for diploma courses.

Amount of loan: The education loan amount varies as per the cost of the education in the institution in which you wish to pursue your higher studies.

Interest rate: The education loan interest rate also differs between banks, and usually ranges between 9 and 15 percent. The concerned bank usually gives a holiday period, or a moratorium, on the payment of interest. This moratorium is normally between 6 months after you land a job to a year after you successfully finish your course, whichever is earlier. You can calculate your EMI with the help of an education loan EMI calculator. The EMI is calculated with effect from the day the moratorium period ends. Women applicants can even avail a special discount from some banks on their education loan.



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Guarantor: If your plans are to study abroad, then it is mandatory for you to have a co-applicant on your loan, who has to be a member of your immediate family. It is likely that some banks may require third party security also. However, for amounts below 7.5 lakhs, many banks offer unsecured loans, that is without security. Over that amount, though, you may be required to submit additional security, such as an LIC policy or fixed deposit receipts for availing the education loan.

Income Tax breaks: You can avail an income tax benefit on the interest component of your education loan EMI under Section 80E of the Income Tax Act of India.

Necessary Documents: The main documents needed when applying for an education loan are the duly filled application form, mark sheets, proof of admission to the institution where you wish to pursue your higher education, the details of expected expenses, guardian’s bank statements for the last 6 months, photographs, any other achievements, and identity and address proof.

How to apply: Most banks and lending institutions allow you to download the application form for the education loan from their website, but you can collect it personally from the bank’s branch too. After you have decided on the best option to suit your needs, you can pay a visit to the bank’s branch office to meet a representative and get further details and submit your application form with all the proper documentation. If your papers are in order, your loan should be disbursed within 15 days.