Banks offer loan for education for the studies in India as well as abroad. This education loan is only available to Indian students. Repayment process starts after a year of completing the studies or within 6 months of getting a job, whichever is earlier. The education loan is available for graduation, post graduation and for professional courses.
The limit for education loan is 10 lakh for studies within India and 20 lakh for studies abroad.
What’s include in education loan
Education loan includes all the education related expenses like admission fees, monthly fees, accommodation expenses, and travel expenses, purchase of books and equipments and insurance premium for the student.
Documents required
Admission letter
KYC documents (proof of ID and address proof)
Fees structure
Income documents like bank statements
Income tax return
All these documents with admission form
Margin money
No margin money required for a loan of Rs. 4 lakh or less. There is margin money of 5% of loan if the loan is above 4 lakh. Whereas if the loan is taken for studding abroad, margin money of 15% is required on the loan amount.
Security
No collateral security is required for the loan up to 4 Lakh. For loan 4-7.5 lakh, a third party guarantee is required of 100% of the loan. If the loan amount is above 7.5 lakh a suitable collateral security would be required.
Some points to be note
- On education loan, no loan processing fees are charged by the banks.
- Rate of interest on education loan is fixed as per respective base rate + certain add on. There is also a concession for females on interest on education loan at least 50 basis points.
- There is an income tax deduction available
