In today’s era, obtaining higher education has become expensive. Whether you want to study engineering or medicine in India, or pursue higher education abroad, an education loan can help you fulfill your dreams.
What is education loan?
Education loan is a type of loan that helps students to meet their education expenses. This loan is provided by banks and non-banking financial institutions (NBFCs). Education loans can be used to meet tuition fees, books, living expenses, and other education-related expenses.
Types of Education Loan:
There are two main types of education loans:
- Secured Education Loan: For this type of loan, you need to deposit collateral to ensure your ability to repay the loan. Collateral may include property, deposits, or assets of the guarantor.
- Unsecured education loan: This type of loan does not require collateral. However, the interest rates on unsecured education loans are usually higher than those on secured education loans.
Eligibility for Education Loan:
Eligibility criteria for education loan may vary according to the lender. However, general eligibility criteria include:
- being an indian citizen
- Having admission letter from a recognized institute
- good educational qualification
- A stable source of income (if there is a guarantor)
How to apply for education loan:
You can apply for education loan online or by visiting the bank/NBFC branch.
Required Documents:
- application
- Identity Proof (Aadhar Card, PAN Card, Voter ID)
- Academic Documents (Marksheet, Admit Card)
- Income Ratio (Pay Slip, ITR)
- Collateral proof (if applying for secured loan)
Interest Rates on Education Loan:
Interest rates on education loans range from 7.15% to 15.20% per annum. Interest rates may vary depending on the lender, loan amount, loan tenure, and profile of the student.
Repaying Education Loan:
You have to repay the education loan in monthly installments after completing your education. Some lenders also offer a moratorium period to pay interest on the loan.
Things to keep in mind before taking an education loan:
- Select the loan amount as per your needs.
- Compare interest rates and terms from different lenders.
- Assess your ability to repay the loan.
- Read the loan agreement carefully.
- Repay loan on time.
Education Loan Government Schemes:
The Government of India runs several schemes to assist students in obtaining education loans. These plans include:
- Prime Minister Education Loan Scheme (PMSS)
- Credit Guarantee Fund Scheme for Educational Loan (CGFSEEL)
- Stand-up India Scheme