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Student loans in India, popularly known as 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
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 loan.
When it comes to all the building blocks that form a complete and successful life, nothing is as important as
quality education. However, education in India, at least the commonly perceived quality education as
imparted by acclaimed and influential educational institutions, is decidedly costly and not easily available to
everyone- especially those who deserve it based on merit alone. Thus, education loans are vitally important. A
barebones explanation for an education loan is thus, funds offered by financial institutions to meritorious
and/or deserving students so that the latter can pursue their basic/higher education, in India or abroad.
Almost all banks in India offer education loans, and the demand for it has remained stable with the Indian
student community.
Benefits of Education Loan:
When it comes to a complete education loan, the following conveniences are offered as part of the education
loan Anyone with a will to study can apply.
Education loans are provided to pursue all types of academic courses, in India and abroad. The
courses include graduation, post-graduation, vocational courses and other certificate courses.
Loan amounts can vary from a minimum of Rs. 10 lakhs to a maximum of Rs. 15 lakhs. For education
abroad, banks provide loans to the quantum of Rs. 20 lakhs.
The applicants annual family income and the course pursued are primary determinants for the
applicable loan amount.
Usually, female students are offered discounts and/or lower interest rates when it comes to
education loans.
Government sponsored subsidy schemes, such as Central Scheme to provide Interest subsidy (CSIS)
help students from the economically backward sections of society avail the benefits of a robust loan
for education.
The applicant need not repay the borrowed amount immediately. Post the completion of the course,
the repayment tenure can stretch upto 5-7 years.
Generally, loans below Rs. 4 lakhs do not require a security or guarantor.
Current Rate of Interest and Eligibility Criteria:
Upto Rs. 4 lakhs the rate of interest is not more than PLR (Prime Lending Rate). Above Rs. 4 lakhs the
rate is PLR + 1%. The amount of interest is debited to account quarterly / half yearly on simple basis
during the moratorium period. Penal interest @ 2% may be charged for loans above Rs. 4 lakhs for
the overdue period and amount.
Eligibility Criteria:
Should be an Indian National, individual whose loan has to be guaranteed by guardian or parent.
Should not have any outstanding education loan from any other bank.
Should have secured admission to professional college abroad though entrance test.
An education loan can not only fund your higher studies but also help save tax. The interest paid on the
education loan can be claimed as deduction, as per Section 80E of the Income Tax Act, 1961.
process. The website also provides a link to the national scholarship website where students can access
student loan schemes being offered by various government departments.
Thus education loan is instantly available, offers specialized help, is widely and easily available, and offers
timely help when it comes to a crucial pillar that promises a successful life- education.
Source: http://www.idbi.com/education-loan.asp