Education Loan

Education Loan – Types, Rates, Features, and EligibilityEligibility 

Quality education is of prime importance to any individual, and students go the extra mile to achieve that. However,

the cost of education is on the rise lately and opting for an education loan seems to be the single best solution.

An education loan is a loan that students apply to meet the financial requirements to complete their course. Many

banks and NBFCs in India offer education loans at competitive rates to help educate the upcoming innovators and

leaders.

Types of Education Loans

Based on Location

Domestic Education Loan

Students who would like to pursue education in India can apply for this loan type. The loan will get approved only if

the applicant is admitted to an Indian educational institution and meets all other lender criteria.

 Overseas Education Loan

Such loans help students realise their dream of pursuing the course of their desire in a foreign institution. The loan

covers the airfare, accommodation, and tuition fee for students who wish to study abroad only if they satisfy the

eligibility criteria.

Based on Course

Undergraduate Loans

This type of education loan is provided for students to give financial aid to students so they can complete their

undergraduate degrees. An undergraduate degree will usually be a 3 to the 4-year long course under various

specialisations. Having an undergraduate degree helps individuals to land a decent job and start earning.

Postgraduate Loans

Many undergraduates would like to continue their education with a postgraduate course, usually a 2-year long

course in India. An advanced degree is desired to get more profound knowledge in the area of interest.

Career Development Loans

Many professionals who work for a few years in corporate jobs prefer to pause their career and take up professional

courses and training to improve their employment prospects. Such individuals would strive hard to get into reputed

business and technical schools to polish their skills and reach greater heights in their career.

Features and Benefits

The loan amount can go up to Rs.1 crore for international students and up to Rs.50 lakh for domestic students.

 100% financing available for certain conditions.

 The financing covers other expenses, such as student exchange travel expenses and laptop.

 Preferential forex rates may be available for international disbursements.

Loan repayment tenure can go up to 12 years after six months from completing the course.

 Parents should be joint borrowers for the education loan.

Tax Benefits on Education Loan

When you start repaying the education loan, the interest segment you pay towards the loan every month can be used

to claim income tax deduction under Section 80E. However, the deduction cannot be claimed on the principal

repayments.

Also, there is no limit on the amount you can claim for interest repayment on an education loan. As proof of this, you

need to obtain a certificate from the bank. The facility is available only for eight years from the year you start repaying

the loan or until the interest is fully repaid, whichever comes first.

Education Loan EMI Calculator

The education loan EMI calculator is a smart tool that calculates your monthly EMI amount payable to the lender. It’s

a slider where you enter the values, Principal amount (P), Time duration (N), and Rate of interest ®, to find out your

EMI and figure out your finances in advance.

How to Apply

You can either go to the bank of your choice and enquire about the loan process, or you can apply online. Once the

loan application is submitted, the bank will initiate the process by verifying your documents, evaluating the course of

study for which you wish to take the loan, and collateral you can provide. The bank will, then, keep you notified.

Study Loan Interest loan and Repayment System

Some lenders provide a 6-month grace period after completing the course to land a suitable job and start the repayment process. This grace period may vary with the lender. Once you land a job within this period, you may start the repayment process in the form of EMIs. 

You can get in touch with the bank officials, and based on your monthly income, the bank officials will suggest a certain EMI. If you agree with this suggestion, you can start making the monthly repayments. Otherwise, you may negotiate with the amount. In any case, the maximum repayment tenure allowed is eight years in general. Interest rate vary from 7 % to 10 % pa