Need Education Loan? Learn Interest Rates, Eligibility and More

Everything about Education Loan in India

Category-

Does your child want to pursue a professional course to build a career? Do you not have the funds to enroll your child in a professional course to build their career? Enrolling in a professional course to build a career is not an easy task. In this era of intense competition, not every student can secure admission in government institutions where the fees for professional courses are lower. In such a situation, even talented students have to look towards private institutions, where the fees are significantly higher compared to government institutions. In such cases, education loans prove to be helpful for those who wish to study in good institutions to build their careers. Let’s find out how much money you can get with an education loan and what the interest rates are.

How to Get Education Loan?

If you are planning to take an education loan for your child’s admission into a professional course, you might be wondering how much money you will get. According to a report by Paisabazaar.com, before granting an education loan to any student, the lending bank or financial institution assesses the ranking of the educational institutions, fee structure, hostel fees related to the course, cost of books, equipment, laptops, etc. Only after this evaluation is the education loan approved.

   

How Much Money You Can Get Through Education Loan?

If your child wants to enroll and study in an institution offering professional courses in India, an education loan of up to 10 lakh rupees can be obtained in their name. For studying abroad, a maximum amount of up to 20 lakh rupees can be granted. This loan amount can be even higher for courses at prestigious institutions like IIM, IIT, ISB, or foreign institutions.

Interest Rates on Education Loan

The interest rate on education loans is significantly lower compared to personal loans. The annual interest rate on education loans ranges from 7.15% to 15.20%. However, some banks and financial institutions offer an additional discount of around 0.5% on the interest rate for female students. Moreover, if female students pay only the interest during the moratorium period, they can get an extra discount of up to 1%.

Repayment Period

The repayment period for an education loan can be up to 15 years. With such a long duration and a lower interest rate, the EMI payments are lower. However, if you take a personal loan, you will have to repay the loan amount within seven years. Therefore, the EMI amount for a personal loan is higher.

Also read: Home Loan EMI Calculator: A Tool for Monthly Payment Plan

Moratorium Period in Education Loan

After taking an education loan, a student enrolled in a professional course is given up to one year to start paying the loan EMI after the completion date of the course. This one-year period is called the moratorium period. This means that there is no need to pay EMI for one year after completing the course. During this year, the student can find a job and then start paying the loan EMI from their regular income. Additionally, your bank or financial institution can extend the moratorium period in cases of medical emergencies, unemployment, and incubation periods, or if a student wants to start a startup after completing their course.

Documents Required for Education Loan

For a bank loan, students need several documents including the mark sheets of 10th and 12th grades, bank passbook, income certificate, identity proof (passport/driving license/voter ID), entrance test results, proof of clearing the entrance exam, age proof, and Aadhaar cards of both the student and parents. Additionally, the bank also checks whether the applicant has any previous loans.

Eligibility for Education Loan

The student applying for an education loan must be a citizen of the country. The applicant should have a good academic record. Additionally, the employment percentage of the course the candidate wishes to apply for is also considered.

-Advertisement

Related articles