Education loans are one of the popular financial products among students who wish to study in prestigious education institutions within India and outside the country. They help you pursue higher studies, otherwise it may be difficult for many to arrange a huge corpus to complete their studies. When you decide to study in top-ranking colleges, you needn’t pay just the college fees; there are considerable expenses also, such as hostel fees, travel and food expenses, exam fees, and laboratory charges etc.
To meet this cost, you need to get an education loan. One of the key eligibility criteria for an education loan is that the individual should be an Indian. Any student who is a citizen of India can apply for an education loan. Also, the collateral or documents submitted as security must be enforceable in India.
Expenses Covered In Education Loan
Often everything from your college fee to exam fee and other additional costs are covered under the education loan. However, it is vital to clarify this from your lender much before signing up the loan agreement. Some of the additional fees covered are as per the details below:
- Hostel fees
- Exam fees,
- Library fees
- Cost of books, uniforms, projects.
- Travel etc.
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Factors For Approval
It may differ from bank to bank or other financial institutions, but lenders typically look at the following things.
- The Institute
- Your Course
- The Total Amount/Expenses
- Your Academic Records
- Family Income
- Assets etc.
The repayment period often starts after 12 months once you complete your course or six months after the employment, whichever is first. Different lenders may have their own repayment rules. Once the repayment starts, you must pay back your loan in EMIs.
The interest part can be deducted under Section 80E of the Income Tax Act of 1961. This is available to individual borrowers and is only offered for higher education. Whether you are studying within India or outside, this deduction is available for all types of courses if the lender approves it.
You can make part payments towards your education loans. The applicant can pay back a lump sum amount to make part payments.
It is essential to compare the interest rates and negotiate better deals with the lender. If your income and employment are stable and your credit score is high, lenders will be happy to lend you the loan at a competitive interest rate. The table below compares the interest rates of different banks along with EMIs.
Interest Rates & EMI on Education Loan
Compiled by BankBazaar.com
Note: Interest rate on Education Loan for all listed (BSE) Public & Pvt Banks considered for data compilation; Banks for which data is not available on their website are not considered. Data collected from respective bank’s website as on 24 Jan 2023. Banks are listed in ascending order on the basis of interest rate i.e. bank offering lowest interest rate on education loan (irrespective of loan amount and tenure) is placed at top and highest at the bottom. EMI is calculated on the basis of interest rate mentioned in the table for a Rs 20 Lakh Loan with a tenure of 7 years (processing and other charges are assumed to be zero for EMI calculation).