Leading Indian banks offer education loans to help students achieve their academic objectives. A school loan with a payback duration of up to 15 years starts at 6.60 percent per year in interest. Both in-country and out-of-country higher education can benefit from education loans.
The lender will determine which courses are qualified for an education loan. An education loan may be obtained for courses beginning in Nursery. You can acquire a loan for full-time or part-time courses, as well as loans for working professionals, for higher education.
|Name of Bank||Interest Rate (p.a.)||Processing Fees|
|PNB||Up to 16.90%||1% of loan amount|
|SBI||Up to 9.05%||Up to Rs.10,000|
|Axis||13.70% to 15.20%/td>||Nil to Rs.15,000 + GST|
|Bank of Baroda||8.85% to 10.85%||1% of loan amount up to Rs.10,000|
|HDFC||9.55% to 13.25%||Up to 1% of loan amount + tax|
|Kotak Mahindra Bank||Up to 16%||Nil|
|Federal Bank||16.05% onwards||Contact the bank|
Yes, the Reserve Bank of India’s moratorium on retail loans, due to people undergoing financial challenges due to the Covid-19 pandemic, is applicable to education loans as well. The moratorium on Equated Monthly Instalments (EMIs) could be availed from March 2020 to August 2020.
No, usually education loans for courses in India do not offer the same amount as for comparable level courses abroad. Education loans offer higher amounts for courses abroad as fees and other expenses may be higher there than for courses in India (which also depends on the educational institution).
Almost all education loans from banks and other lenders require a collateral which can be fixed deposits, property, shares, bonds, etc. However, you can still avail an education loan without having to give any collateral. This can be achieved through the Credit Guarantee Fund for Education Loan (CGFEL) Schemes which covers a collateral-free loan of up to Rs.7.5 lakh. This is only for education loans dispersed under the Model Education Loan Scheme of Indian Banks’ Association (IBA). To avail this, you have to apply for an education loan under this scheme through a scheduled commercial bank. You don’t need to provide security or collateral for amounts of up to Rs.7.5 lakh but anything above that will require a collateral.
For courses abroad, education loans are typically paid directly to the educational institution in the local currency of that country.
The moratorium period on education loans differ from lender to lender. However, it is usually until the borrower gets employed or for up to 1 year of the course being completed, whichever is earlier. If you choose to take a sabbatical and want an extension of your moratorium, it would depend on the bank whether to grant it or not, so it is best to have a discussion about this with the lender.
One of the eligibility criteria for education loans that are offered by banks and other financial institutions in India is that the individual should be an Indian national. This means that any student who is a citizen of India can apply for and avail an education loan from a lender in the country. Collateral or documents which can be taken as security should be those that are enforceable in India.
In case you choose to discontinue the course mid-way, you must start repaying the loan immediately after getting a job.
Yes, you can move your education loan from one bank to another. However, your current bank might charge a refinance fees. Therefore, it is important to consider all factors of the existing bank and the new bank before moving the loan.
Yes, education loans cover 100% of the education expenses. However, full coverage may only be provided for expenses under a certain limit. Lenders have a margin if the expenses go above the limit.