Education Loan Interest Rates Comparison 2020
Introduction
A loan taken to meet tuition fees, hostel fees, and other related expenses for pursuing a specified educational course in an institution is called Education Loan. Many banks offer student loans for pursuing pre-specified courses in India and abroad from certain institutions. Banks release a list of permitted courses and institutions for which it will give education loans. So, the course you want to pursue is within the bank’s list along with the institution you wish to join, then you can apply for an education loan.
Education loan is the best way to pursue higher education without getting your finances disturbed. You can take an education loan for courses in India or abroad. For unemployed students, their guardian or parents need to be guarantors.
Interest Rates Comparison for Education Loan Education Loan Eligibility
Age of the Applicant – Up to 35 years for non-employed personnel, up to 45 years in case of working employees/ executives.
Who is eligible –
An Indian National having secured admission to professional/technical courses in recognized institutions
Students seeking admission for higher studies
Permanent employees who are employed for not less than three years with any organisation and who intend to acquire higher professional qualifications and have secured admissions in a reputed institute
Maximum Loan Amount –
Up to Rs. 10 lakhs for studies in India; with minimum margin money (own contribution by student/ family) of 5% of the total cost
Upto Rs. 20 lakhs for studies abroad, some banks offer up to Rs. 30 lakhs with minimum margin money (own contribution by student/ family) of 15% of the total cost
Up to Rs. 30 lakhs for studies at IIT’s, IIMs and ISB with minimum margin money (own contribution by student/ family) of 5% of the total cost
Cost Heads/ Expenses Funded by Bank –
- Admission fees including Monthly Fees and Examination Fees
- Books, Stationery and Equipment
- Airfare for joining the course abroad
- Purchase of PC, laptop as essential for the completion of the course.
- Boarding & lodging expenses of authorized hostel or boarding house
Caution or building deposit/ refundable deposit supported by the bill/receipts from the institution. Subject to the amount not exceeding 10% of the tuition fee.
Other required expenses like study tour, project work, thesis, etc.
Co-borrower/ Guarantor/ Security –
Loans up to Rs 4 lakhs: Parents or guardian or husband/in-laws in case of married woman required need to be co-borrower
Loans above Rs. 4 lakhs and up to Rs. 7.5 lakhs: Parents or guardian or husband/in-laws in case of married woman need to be co-borrower and a third- party guarantee needed as collateral
Above Rs. 7.5 lakhs: Parents or guardian or husband/in-laws in case of married woman need to be co-borrower and tangible security equivalent to 100-133% of the loan amount as collateral
Repayment Frequency –
Quarterly or monthly
Repayment typically starts 1 year after completing the course or six months after getting a job, whichever is earlier
Repayment Period –
Varies from bank to bank – can range from 7 to 15 years
There is no prepayment penalty or charge on early prepayment or foreclosure
Key Appraisal Criteria –
Good academic record with at least 50% marks in the qualifying examinations
Admission letter from a bonafide educational institution
Passport/visa/i-20 form for studies abroad
Net-worth and credit history (CIBIL) of the guarantors
Process for Availing Education Loan
Here is the commonly followed process to avail an education loan:
Attach your admission letter received from the college or institution along with your application.
Keep the primary documents like PAN card, age proof, address proof, etc., ready.
Compare various education loans based on the interest rate, tenure, loan amount, etc.
The mark-sheet of 10th and 12th would come handy. Keep them ready for attesting.
Documents Required for Education Loan
Filled in application form along with two passport size photographs of the applicant and co-applicant.
Admission Letter from the Institute. It should have the name of the institute and address on the letterhead.
A detailed fees breakup of the course from the Institute, which specifies the tuition fee, the term of the course, year-wise charges, and expenses.
The academic record of the applicant/student, which should include 12th standard Marksheet, certificate of any subsequent education like graduation or post-graduation, mark sheet of the entrance exam (if any), and any scholarship document.
An affidavit or a declaration that no loan has been availed from any other bank or financial institution.
Any ID proof like PAN card, Aadhar card, Driving License, passport, etc.
Address proof such as Ration Card, Driving License, Passport, Aadhaar Card, etc
For age proof Birth Certificate or 10th Class certificate.
End Note
Education and academic excellence are considered to be very important in India. An education loan helps facilitate young minds to pursue their academics further, either in India or aboard by providing them with a loan amount to fund their higher education. This is especially helpful when the child does not have adequate funds to pursue his/her higher education.
