Introduction: Education Loan in India which in other words is also known as the student loan and is referred as the amount of money taken to cover the financial burden of education like paying fees of schools and colleges. These loans are often taken from the National and Private Banks and other financial organizations with minimum documentation and eligibility criteria. Government of India also offers special schemes to cover the education of Indian nationals. Mostly in India the students take education loan to cover the high cost of education if they want to pursue a certain degree abroad.
Individual dreams of creating a great future if they get engineering degree, medical degree or MBA degree from countries like Australia, Canada, America, Netherland, Singapore etc. even students who wants to study in India also avail the service of Students Bank Loan to cover the education expense. The Banks in India keeping in mind that the loan is for education purpose tries to keep the interest rate as low as possible but they scrutinise the application very stringently so that only deserving candidates can avail the loan.
Other ways to fund the education is through the scholarships provided by the universities and third parties where students can apply and put up their case and defend as to why they deserve to be sponsored for the education.
Education loan in India Eligibility Criteria
Students must be aware that the Indian Banks follow almost same eligibility criteria for Education loan but still there could be different criteria depending upon the bank’s policy. However, mostly follow common eligibility criteria mentioned below.
- The applicant must be an Indian national.
- If the loan applicant is under 18, then his or her parents must apply for the loan on their behalf.
- The applicant must have a strong academic record.
- The applicant must have received admission to a reputable overseas college, university, or institution.
- The applicant’s chosen course must be technical or professional since banks favour programmes that prepare students for employment.
- A graduate, postgraduate, or post-graduate credential must be the aspirant’s goal.
- A strong academic record enables quicker loan approval.
- Full-time students must have a co-applicant, who may be a parent, a guardian, a spouse, or a parent-in-law (in case of married candidates). The co-applicant needs a steady source of income.
Education loan in India Documents Required
There are common set of documents required almost by every bank. Bank Loan Application also mentions the documents required to apply for the loan. Below are the lists of documents required by the financial organizations.
Documents Required for Students Applicants:
- Proof of Identity (either): PAN/ Passport/ Driver’s License/ Voter ID card
- Proof of Residence/ Address (either): Recent copy of Telephone Bill/ Electricity Bill/Water Bill/ Piped Gas Bill or copy of Passport/ Driving License/ Aadhaar Card
- Income Proof
- Valid Indian Passport
- Academic Records: 10th Result and 12th Results
- Graduation Result: Semester-wise (if applicable)
- Entrance Exam Result through which admission has been secured including GMAT, GRE, TOEFL, IELTS scores
- Proof of admission: Offer Letter or Admission Letter from the Institution. A conditional admission letter may be considered in the case of studying abroad.
- Statement of cost of study/ Schedule of expenses
- 2 passport-size photographs
- If any previous loans from other Banks/Lenders, then the Loan A/C statement for the last 1 year
Documents required from Co-applicants:
- Proof of Identity (any one): PAN/ Passport/ Driver’s License/ Voter ID card
- Proof of Residence/ Address (any one): Recent copy of Telephone Bill/ Electricity Bill/Water Bill/ Piped Gas Bill or copy of Passport/ Driving License/ Aadhaar Card
- 2 passport-size photographs
- If any previous loans from other Banks/Lenders, then the Loan A/C statement for the last 1 year
- Income Proof documents that would be required from the Co-applicant as part of the Education Loan process.
Documents required for Income Proof for Salaried Co-applicant/ Guarantor:
- Salary Slip or Salary Certificate of last 3 months
- Copy of Form 16 for the last 2 years or a copy of IT Returns for the last 2 financial years, acknowledged by IT Dept.
- Bank account statement for the last 6 months (of Salary Account)
OR
Documents required for Income Proof for Self-employed Co-applicant/ Guarantor:
- Business address proof (If applicable)
- IT returns for the last 2 years (if IT payee)
- TDS Certificate (Form 16A, if applicable)
- Certificate of qualification (for C.A. / Doctor and other professionals)
- Bank account statement for last 6 months
Education loan in India Interest Rates of Various Banks
| Bank Name | EMI (Rs 20 lakh Education Loan) | Interest Rate (per annum) |
| SBI | INR 31,472 | 8.30% |
| ICICI Bank | INR 32,688 | 9.50% |
| PNB | INR 31,472 | 8.30% |
| Bank of Baroda | INR 32,026 | 8.85% |
| UCO Bank | INR 32,739 | 9.55% |
| Federal Bank | INR 35,627 | 12.30% |
| Axis Bank | INR 37,149 | 13.70% |
| Canara Bank | INR 32,332 | 9.15% |
Note: Interest rates are subject to change
Official link to RBI Education Loan Guidelines: https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=369
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