Saturday, March 31, 2012

Education Loan: How and How much..

Education loans have become a popular method of funding higher education in India with the cost of educational degrees going higher.. The spread of self-financing institutions (which has less to no funding from the government) for higher education in fields of engineering, medical and management which has higher fees than their government aided counterparts have encouraged the trend in India. Most large public sector and private sector banks offer educational loans.

Education loan includes courses fees, hostel charges, books and stationary costs. Few Banks also provide loan for vehicle (up to Rs.50, 000.) like State Bank of India.

Eligibility for Education Loan (In India)

  1. Must be Indian citizen.
  2. Maximum age is around 35.
  3. The college, for which Loan required, must be a government or approved by Indian government.
  4. Education loan is available only for Regular Courses, not for Distance Education.
  5. Education loan is available only for Professional, Graduation or Post-Graduation Courses.

Papers to be Ready:

  1. All certificates of previous education, Photographs, Address proof and ID proof.
  2. Authority Letter / Loan Letter from College where candidate applying for the Admission.
  3. If candidate is going for Foreign Education, then Passport and Visa.
  4. If Education loan exceeds 5 Lakhs then candidate have to show Father’s or Guardian’s Income Certificate, last six months Salary Slip / Bank Statement or one can show Property papers.

Courses eligible for Education Loan:

RBI provides sets of Rules for the Education Loan in India which must be followed by the Government or Non-Government Banks. But some private Banks have their own Rules.

For Example:

State Bank of India (SBI) provides Education loan for Graduation, Post Graduation, PhD, Professional Courses, and Diploma etc in recommended colleges approved by AICTE. Whereas some private Banks provides Education Loan only for Professional Course which have some future aspects.


As per RBI Rule, if Education Loan is under 4 Lakhs then there is no need for Guarantee in any Banks (Government or Private Banks).
For Education Loan more than 4 Lakhs, then Father, Guardian (which includes Mother, Older Brother, Father-in-law, Mother-in-law) become as Guarantor.
Banks keeps Property papers, Salary slip/ Bank statement or ITR as Education loan Guarantee.  

Repaying Education loan:

Every Bank or financial company have its own Rules. Mainly they start recollecting the loan after One year of course completion or after Six months of Employment, whichever comes first. Few Banks also uses the Scholarship given to the students in between the course period.

Education Loan Limit:

State Bank of India, Bharatiye State Bank, Punjab national Bank, State Bank of Hadryabad, State Bank of Bikaner, Indian Overseas Bank, City Bank, HDFC Bank, Karanataka Bank provides up to 10 lakhs for studying in India and for Aboard upto 20 lakhs.

Federal Bank provides 12.5 lakhs for India and 25 lakhs for Aboard.

Axix Bank, Oriental Bank of Commerce, Lakhmi Vilas Bank, Vijaya Bank, Bank of Maharashtra, Canara Bank, Dena Bank and Karoor Vasya Bank provides up to 7.5 lakhs for studying in India and up to 15 lakhs for Aboard.

Yes Bank and Ing Vasya Bank do not provide Education Loans.

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