With the increasing competition in the career world, quality education is a necessity nowadays. Students who want to study more can opt for education loans for their further studies. There are a number of banks both public and private sector from which a student can avail an education loan.
According to the Indian Banks’ Association norms, banks offer loans of up to Rs 10 lakh for courses in Indian colleges and up to Rs 20 lakh for studies abroad.
For undergraduate courses, the fees could be Rs 5-10 lakh, while for a five-year medical course at a private college, this could go up to Rs 50 lakh.
But for post-graduate courses such as those in management, banks offer loans of up to Rs 10-20 lakh.
The fees at private colleges are higher than in government colleges.
Education loans cover the following
Your education loans cover fees for tuition, examination, library, laboratory and hostel; money for purchasing books, equipment, instruments and uniform; travel expenses for studies abroad; caution deposit or refundable deposit, etc.
In some cases, there are limits on some of these items. The applicant’s education loan also pays for expenses on study tours and project work.
Basic criteria to get an education loan
There are a few factors that banks consider while giving an educational loan:
- An applicant who is applying for an education loan must be a resident of India.
- An applicant pursuing full-time courses needs to have a co-applicant who can be either parent/guardian or spouse/parent-in-law (in case of married candidates).
- Students academic background, his /her qualifications, track record of marks, credits and achievements.
- The college or university in which the student will study should be accredited and of good repute.
- Courses for which the loan is being sought should be worthy of studying and students chance of placement. The job prospects of the student so that the applicant can repay the loan.
Collateral for the loan
You do not need to place co-borrowers and guarantors as security for loans up to 4 Lakhs. In case if you have a loan above 7.5 Lakhs banks take collateral such as your house or a property a fixed deposit or a life insurance policy.
Education loan eligibility based on age
Students don’t have an age limit to finish their studies. But in India, students need to come from a certain age group for pursuing the respective education loans.
However, this is done to help students in managing their finances as well as complete their educational course in time to reduce penalties or extra expenses.
Educational courses (Age criteria for education loan eligibility)
Undergraduate courses–18-27 years
Post Graduate Courses–21-35 years
Doctoral courses–27-55 years
Postdoctoral courses–27-65 years
Repayment of loans
- The repayment process of the loan will immediately start after 6 months to 1 year of completion of the course, though it can be extended to 5 to 7 years.
- In case of non-repayment, applicants own credit history as well as his co-applicant’s history gets affected.
- But once the repayment starts, the applicant can avail of benefits under Section 80-E of the Income-Tax Act.