Education loan is the financial service offered by the bank or the loan providers to the candidates who ursue technical, educational, or other courses in India. These loans cover all levels of education, include from nursery school to higher studies. Education loans offered by various banks in India range in interest from 4.00% p.a. to 16.00% p.a.
What is an Education Loan?
An education loan in India provides a flexible way to fund your higher education. These loans cater to both domestic and international studies, with flexible repayment period of up to 20 years. Education loan covers your tuition fees, hostel and living costs, the purchase of books, exam fees, insurance, and other education releted expenses.
Courses Covered Under Education Loans
- Undergraduate degrees
- Postgraduate degrees
- Undergraduate diplomas
- Postgraduate diplomas
- Vocational training courses
- Skill development courses
- Doctoral programmes
List of Expenses Covered in Education Loans
Here’s what the loan amount will cover:
- Tuition fees
- Hostel fees
- Travel expenses passage money for students studying abroad
- Insurance premium
- Cost of books/equipment/instruments/uniform
- Examination/laboratory/library fees
- Cost of a computer/laptop required for course completion
- Caution deposit, building fund/refundable deposit supported by institution bills/receipts
- Any other expenses required to complete the course such as study tours/thesis/project work
Types of Education Loans
| Category | Loan Type | Detail |
| By Location | Domestic loan | Students studying in India and must be enrolled in a recognized Indian institution |
| Internation Loan | Studying abroad and it covers fees, travel, and living expenses | |
| By Collateral | Secured Loan | Requires assets like property, deposits, or investments as security. |
| Guarantor- Based Loan | Requires a third-party guarantor, often from a bank employee. | |
| By Course | Undergraduate Loan | For bachelor’s degree – three to four years |
| Postgraduate Loan | For master’s or advanced degrees (usually two years) | |
| Career Enhancement Loan | For professionals who wants to pursue short-term courses for training and certification |
List of Documents Required for Education Loans
Here is an indicative list of documents that most lenders ask for:
| KYC Documents | PAN Card, Aadhaar, Passport, Voter’s ID# |
| Address Proof | Utility bill, Telephone bill, or Bank Passbook# |
| Income Proof (Salaried) | Latest 3 Salary Slips, Form 16, and ITR# |
| Income Proof (Self-Employed) | ITR, Audited Financials, and Firm Registration Proof# |
| Additional Documents (Self-Employed) | Qualification Certificates and Establishment Proof# |
| Proprietorship & Company Documents | Partnership Deed, MoA, AoA, and Shareholding Pattern# |
| Academic Records | Grade 12 and Degree Mark Sheets, Scholarship Documents (if applicable)# |
| Admission Proof | College/University Admission Letter and Fee Structure |
| Financial Proof | Rent Agreement or Additional Income Sources (if applicable)# |
| Other Documents | 3CB & 3CD Forms for Applicable Professional# |
List of Banks Offering Education Loans in India
| Name of Bank | Interest Rate (p.a.) | Processing Fees |
| State Bank of India | 7.15% p.a. to 10.15% p.a. | Loans up to Rs.7.5 lakh- Nil |
| Central Bank of India | 7.00% p.a. to 10.00% p.a. | Nil for studies in India1% of loan amount for studies abroad (Max: Rs. 10,000) |
| Punjab National Bank | 4.00% p.a. to 11.85% p.a. | Nil for studies in India1% of loan amount for studies abroad (Max: Rs. 10,000) |
| Canara Bank | 7.60% p.a. to 10.35% p.a. | Minor processing fees or Nil |
| IDFC FIRST Bank | 9.50% p.a. onwards | Up to 1.5% of the loan amount |
| IDBI Bank | 4.00% p.a. to 11.50% p.a. | Nil for studies in India1% of the loan amount (Maximum: Rs.5,000) |
| Bank of Baroda | 7.10% p.a. to 10.70% p.a. | Scholar – 1% of loan amount up to Rs.10,000 |
| Bank of India | 7.10% p.a. to 12.35% p.a. | No processing fee for studies in India |
| ICICI Bank | 9.70% p.a. to 14.00% p.a. | Up to 2% of the loan amount |
| Bank of Maharashtra | 7.10% p.a. to 10.30% p.a. | Nil |
| Axis Bank | 3.50% p.a. to 13.00 p.a. | 2.00% of the loan plus GST |
| HDFC Bank | 10.50% p.a. onwards | Up to loan amount Rs.7.5 lakh- NilAbove Rs. 7.5 lakh- 1% |
| Kotak Mahindra Bank | Maximum up to 16% | Nil |
How to Apply for an Education Loan Online
To apply for an education loan through the official bank website, follow these steps:
Step 1: Access the bank’s official website
Step 2: Locate the education loan product page
Step 3: Complete the application-cum-consent form by entering your personal and contact information
Step 4: Provide your academic and financial details when contacted by the bank
Step 5: Choose between the doorstep service option for a study loan or visit the bank for loan approval process.
How to Apply for an Education Loan Offline
You can apply for an education loan offline by following the steps given below:
Step 1: Visit your chosen bank branch
Step 2: Request a student loan application form
Step 3: Fill out the form with personal, academic, and financial details
Step 4: Confirm loan terms with a bank official
Step 5: Submit the completed application form and documents
Step 6: Receive a formal student loan agreement once approved
Step 7: You need to wait for the bank to process the application and release the loan to your account.
Education Loan Repayment Process
The loan repayment period normally starts 12 months after completion of the course. You will be required to repay your loan using EMIs.
Different Modes of Repayment
- Internet Banking – Pay online through the lender’s website or mobile app
- Cheque – Drop a cheque at any of the branches
- Direct debit – Set up recurring payments for your EMI to be directly debited from your bank account on the payment due date
- Demand Draft – Pay through a DD
Think of the best educational loan in India as an enabler. Education loans offer higher amounts for courses abroad as fees and other expenses.