What is an Education Loan?
An Education Loan is a financial assistance provided by banks and financial institutions to help students pay for higher education expenses such as tuition fees, accommodation, books, and other related costs. These loans are available for studies in India or abroad and are usually repaid after course completion with a moratorium period.
Benefits of an Education Loan
Access to Quality Education – Enables students to study in top institutions in India or abroad.
Covers Comprehensive Expenses – Tuition fees, hostel, travel (for overseas education), exam fees, and books.
Affordable Repayment – Most loans offer moratorium period (repayment starts after course completion + 6–12 months).
Builds Credit History – Helps students establish financial credibility early.
Tax Benefits – Interest paid on an education loan qualifies for deduction under Section 80E of the Income Tax Act.
Collateral-Free Options – For smaller amounts (usually up to ?4 lakh), collateral may not be required.
Competitive Interest Rates – Especially with government subsidy schemes for economically weaker sections.
Eligibility Criteria
Eligibility varies by lender and scheme, but common requirements are:
Nationality:
Indian citizen (some banks offer to NRIs for studying abroad).
Age:
Generally 16–35 years (varies by bank).
Course & Institution:
Admission to a recognized institution in India or abroad.
Professional, technical, or vocational courses (engineering, medical, management, etc.).
Academic Record:
Good academic performance in previous education.
Co-applicant (Guarantor):
Usually required (parent/guardian).
Repayment Ability:
Based on co-applicant’s income and/or student’s future earning potential.
Documents Required
1. Identity & Address Proof
PAN Card
Aadhaar Card / Passport / Voter ID
Passport (mandatory for overseas education)
2. Academic Documents
Admission letter from the educational institution
Fee structure / Schedule of expenses
Mark sheets and certificates of previous education
3. Income Proof of Co-applicant
Salary slips (last 3 months)
Form 16 / ITR (last 2 years)
Bank statements (last 6–12 months)
4. Collateral Documents (if applicable)
Property documents for secured loans
Valuation reports
5. Other
Passport-size photographs
Completed application form
Guarantor’s identity and signature proof