Education and development in India go hand in hand. Although India is far away from achieving its set literacy goals but still Indian professionals are considered among the best in the world. Quality education proves to be the foundation for a flying high career. In India students as well as parents go to long lengths to achieve best possible education. Most of the time this dream costs a fortune and sometimes students are forced to drop their aspirations or other times parents are obliged to mortgage/sell their belongings to fulfill the complex fee structure of the educational institute.
Education loan is the most profound way to meet your education expenses if you are not fortunate enough to earn a scholarship. Many nationalized and private banks in India provide education loans for higher studies in India and abroad. Education loan can be sought for graduate, post-graduate and any specialized courses. The education loan provided by banks in India cover the fee payable to the college, school or hostel. It covers the tuition fee, examination fee, library fee, lab fees, caution deposits, refundable deposit asked by the institution. Building fund supported by Institution bills or receipts, purchase of Books, equipments, instruments, uniforms, travel expenses/passage money for studies abroad, purchase of computers and any other expense required to complete the course – like study tours, project work, thesis, etc. are also covered.
Like all other loans, interest has to be paid on the education loan too but for the repayment of education loan the banks provide a ‘moratorium period’ or a ‘repayment holiday’ which is for a year after completion of your education or 6 months after you bag a job, whichever in earlier. Interest amount can be paid during the course tenure and actual EMI starts after completion or you can opt for payment of EMI after your course starts, in this case the interest rates are lower. Commonly the maximum loan limit for studies within India is ₹ 10 lacs and abroad is ₹ 20 lacs. The students need not give any collateral for amount up to ₹ 4 lacs. Generally, a personal guarantee is needed for loan amounts above ₹ 4 lacs. Parent or guardian are treated as co-applicant.

Education Loan Providers in India

Cent Vidyarthi – Central Bank of India

  • ₹ 10 lacs for studies in India and ₹ 20 lacs for studies abroad.
  • No margin up to loan of ₹ 4 lacs. For above ₹ 4 lacs, in India-5% and in abroad-15%.
  • Rate of interest: For males- 10.25%+2% and for females- 10.25%+1.5%.
  • Maximum repayment period of up to 10 years for loan amounts up to ₹ 7.5 lacs, about this repayment period can be up to 15 years.
  • Zero processing fee.

SBI Student Loan Scheme- State Bank of India

  • IT exemption under section 80(E).
  • Maximum amount of loan given is ₹ 30 lacs. Requirement of collateral depends on the type of institute and student record.
  • Repayment period can vary from 10 to 15 years.
  • Rate of interest: For loans up to ₹ 7.5 lacs- 11.15% and for loans above ₹ 7.5 lacs- 10.85% per annum.
  • 0.5% concession for girl students.
  • Loan margin requirement is 15%.

Axis Bank Education Loan

  • Minimum loan amount is ₹ 50,000 and maximum is ₹ 10 lacs for India and ₹ 20 lacs for studies in abroad.
  • Zero margin for loan up to ₹ 4 lacs. Above that, 5% margin in India and 15% for abroad.
  • Effective rate of interest: for loan up to ₹ 4 lacs-16.5%, for loans between ₹ 4 lacs to ₹ 7.5 lacs-17.5% and loans greater than ₹ 7.5 lacs-15.5%.
  • 0.5% concession for girl child.

CREDILA – HDFC Bank Education loan for Foreign Education.

  • Doorstep service and flexible loan terms.
  • Tax benefits under section 80(E).
  • Loans over 20 lacs also available.
  • Flexible collateral and co-borrower terms.
  • Maximum repayment time is 10 years.
  • Rate of interest: Varies from 11.75% to 13.25%.

Vidya Jyothi- Indian Overseas Bank Education Loan

  • Maximum loan of ₹ 30 lacs in India and ₹ 40 lacs in abroad.
  • Zero margin for loan up to ₹ 4 lacs. Above that, 5% margin in India and 15% for abroad.
  • Effective rate of interest: for loan up to ₹ 4 lacs-11.55%, for loans between ₹ 4 lacs to ₹ 7.5 lacs-12.05% and loans greater than ₹ 7.5 lacs-12.3%.
  • Repayment tenure varies from 5 to 7 years.

Other players in the market are Bank of Baroda, Allahabad Bank, Bank of Maharashtra, Dena Bank, Canara Bank etc.