Get upto 30Lakhs in Education Loan: Step By Step Guide

Education Loan Eligibility

Education loans, sometimes known as student loans, are advances made to students by banks or other financial institutions to help cover the costs of their higher education.

High-achieving students are provided financial aid to attend universities in India and abroad under this unique loan program.

To qualified applicants, many Indian banks offer these loans at cheap interest rates with flexible terms and conditions.

In order for students to get their loan money as soon as possible, the documentation process is also kept to a minimum.

The vital education loan eligibility criteria that the candidates need to fulfil to get approval for the loan are listed here.

The candidate applying for the loan must be a resident of India.

He/she must have confirmed admission to recognised educational institutes in India or abroad.

The age of the candidate must fall within the bracket of 18 to 35 years during loan application.

He/she must be undergoing a graduate/postgraduate degree or a PG diploma.

The applicant should have secured admission to a college or university affiliated with University Grants Commission (UGC)/All India Council for Technical Education (AICTE)/Govt. etc.

Students pursuing full-time courses need to have a co-applicant who can be either a parent/guardian or spouse/parent-in-law (in the case of married candidates).

The co-applicant must have a regular income source.

A strong academic record facilitates speedy loan approval.

Education Loan Eligibility Tabular Representation

  • Nationality: Indian.
  • Age: Minimum- 18 years. Maximum- 35 years.
  • Academic record: Proven- good.
  • Qualification: Pursuing graduate/postgraduate degree or a PG diploma.
  • Income source: Parents/Guardians.
  • Income: Stable.
  • University Applied to: Recognised – In India/Abroad.
  • Admission Status: Confirmed.
  • Security: Tangible collateral or guarantor- depending on the loan amount and income source.
  • Minimum Interest Rate: 8.30% p.a.

Education Loan Documentation

Required Documents

Here are the mandatory documents that a student needs to provide to the banks while applying for a student loan.

Duly filled in and signed application form with affixed photographs.

  • Two photographs.
  • Copy of exam mark sheets of 10th / 12th or latest education certificate.
  • Statement of course expenses / cost of study.
  • Aadhaar Card and Pan Card of the student and Parent/ Guardian.
  • Age proof.
  • Copy of Aadhaar Card.
  • Voter ID.
  • Passport.
  • Driving Licence.
  • Identity proof.
  • Copy of Voter ID.
  • Aadhaar Card.
  • Driving Licence.
  • Passport.
  • Residence proof.
  • Rental agreement.
  • Bank statement of 6 months of the student or co-borrower.
  • Guarantor.
  • Copy of Ration card.
  • Gas Book.
  • Electricity Bill.
  • Tel Bill.
  • Income proof.
  • Most recent salary slips or Form 16 of the parent/ guardian/co-borrower.
  • Six months bank statement of the borrower or updated passbook of the bank.
  • Updated ITR (Income Tax Return with income computation) of two years or IT assessment order of last 2 years of parent/co-borrower/guardian.
  • Documents stating the assets and liabilities of the parent/co-borrower/guardian.

What will Improve your Eligibility for an Education loan?

To ensure that students receive financial aid, banks are vigilant while evaluating a candidate’s eligibility.

  • The general academic standing of the applicants, their intended course of study, and their present admission status are taken into account before authorizing a loan.
  • Scoring high grades/ranking in the qualifying exams.
  • Displaying good academic record.
  • Getting admission to a reputed/top-tier institute or university.
  • Strong financial background of parents/guardians/co-borrower.
  • Displaying good prospects for future employment/income generation.

How to Know your Eligibility for an Education Loan?

Before applying, you can determine whether you qualify for an education loan from one of the major banks.

You can find out if you qualify by conducting an online check on the BankBazaar website.

All you need to do is provide basic, essential background information to BankBazaar in order to be eligible for an educational loan.

Based on this information, results for approved school loan offers are presented in an easy-to-compare manner.

Afterwards, you may submit an online application for the enticing offer and benefit from special discounts provided by BankBazaar as a result of affiliations with partner institutions.

Procedure to Check Eligibility

Follow the steps mentioned below to check your eligibility for an education loan.

Step 1: Visit the official website of BankBazaar.

Step 2: Go to the ‘Loan’ section and click on ‘Education Loan’ from the dropdown menu.

Step 3: Click on ‘Education Loan Eligibility’.

Step 4: Based on your particulars, the site will then show you suitable loan offers from their bank partners.

Step 5: You can choose the most advantageous offer from the given options and then apply for the same through the BankBazaar portal.

FAQs on Education Loan Eligibility

Can I change the loan from a fixed rate to a floating rate?

Yes, you can change the education loan from a fixed rate to a floating rate.

Will the lender levy any processing fee on the education loan?

Yes, depending on the amount of loan that is availed, the lender may levy a processing fee.

Would there be any charges levied in the case of late payments?

Yes, lenders levy a penalty in the case of late payments. Depending on the lender, the charges may vary.

In case my loan application is rejected the first time, can I apply for a loan again?

Yes, you can apply for an education loan in case your application is rejected the first time.

Who can be the co-applicant if I wish to apply for an education loan?

Your co-applicant can be your parents, siblings, parent-in-law, or your spouse.

Do the documents for an education loan vary from one bank to another?

All banks typically ask for documents like proof of address, proof of age, and proof of income.

However, banks may also request a few documents in accordance with the education loan eligibility loan criterion.

How are education loan courses classified?

Education loans can be obtained for any course recognized by the UGC within India, as well as for regular courses abroad.

However, each lender has its own set of eligible educational institutions and courses for which they provide loans.

What expenses are included in education loans?

Education loans cover the following expenses.

Tuition fees, hostel expenses, exam fees, library fees, laboratory fees (if applicable), refundable caution deposits paid to the educational institute, cost of books, uniforms, and other essentials required for completing the course—travel expenses, including the cost of return airfare for international flights.

What is the maximum limit for education loans disbursed by lenders?

Typically, lenders have a maximum limit of Rs. 10 lakh to Rs. 15 lakh for studies within India.

In comparison, the limit for education loans for studying abroad ranges from Rs. 20 lakh to Rs. 30 lakh.

However, some lenders may sanction a higher loan amount if bank-accepted collateral is provided by the applicant.

What is the duration of an education loan?

The typical term of an education loan is between 5 years to 7 years for most lenders.

However, for higher loan amounts, some lenders may offer a longer duration of up to 15 years.

What is the maximum loan amount for studying abroad that can be availed?

Typically, banks fund up to 90% of the education expenses as a loan, while some lenders may offer loans for 100% of the education expenses.

However, the exact loan amount that an applicant is eligible for depends on various factors, such as the monthly earnings of the parents or legal guardians, the value of the collateral provided, the academic record of the applicant, and other relevant factors.

Is there a margin requirement for education loans?

Generally, lenders of education loans don’t demand a margin for loans up to Rs. 4 lakh.

Banks and NBFCs may have a margin of roughly 5%, meaning they only grant a loan amount equal to 95% of the course cost and the applicant is responsible for the remaining balance, for larger loan amounts up to Rs. 7.5 lakh.

Higher loan amounts may require the lender to impose margins on an individual basis in accordance with corporate standards.

Is the education loan amount disbursed in favour of the institute or college, or university or of the borrower?

The disbursement of the education loan is typically done directly to the educational institute, based on their fee structure and schedule, through a draft.

However, the borrower can claim and receive other components of the loan, such as expenses related to lab equipment, laptop computer, uniform, and travel expenses.

What is employment verification in an education loan?

The process of confirming the job information of the loan co-signer, who is typically the student’s parent, guardian, or spouse, is known as employment verification in the context of an education loan.

Some banks carry out this verification to make sure the supplied information is accurate, and it may have an effect on whether the loan application is approved.

Do education loans have any Income Tax benefits?

Under Section 80E of the Income Tax Act, borrowers of education loans are qualified to get tax benefits on the interest paid.

Over and above the Rs. 1,50,000 in deductions permitted by Section 80C, this advantage is provided.

Once they begin paying the interest on the college loan, the borrower may use this deduction.

Unless the borrower pays off the whole amount of the loan’s interest or for a maximum of 8 years, whichever comes first, the tax benefit may be claimed.

Is there a prepayment penalty on education loans?

Education loan providers generally do not charge a prepayment penalty.

However, borrowers should confirm with their lender if there are any charges for prepayment before availing of the loan.

Leave a Comment