Design credits: Vishnu Madhav
Getting a college degree these days, can turn out to be pretty expensive if you don’t have the funds in place. Well, an Education Loan can help you fund your educational aspirations. We’re going to shed some light on the nitty-gritty of Education Loans.
So, what’s the eligibility criteria for applying for an Education Loan? Does an Education Loan require collateral? Do you need co-applicants? Are all expenses covered? These are questions that you’re probably asking. Keep reading for the answers.
What does an Education Loan cover?
An Education Loan will cover course fees, exam and library fees, the cost of books, accommodation, travelling expenses abroad, equipment charges like the cost of a laptop, and any other education-related expenses.
- Any Indian national between the age of 16 to 35 years, pursuing any graduate/postgraduate/diploma/technical course.
- A co-applicant is mandatory for applying for an Education Loan for full-time courses.
- The applicant will require confirmed admission in a college/university recognised by the UGC/Govt./AICTE. Sometimes, vocational training courses such as aviation and air-hostess training courses are also taken into account.
Quantum of finance
For studying within India, you can apply for a loan of up to Rs. 10 Lakhs and for studying abroad, you can apply for an amount up to Rs. 20 Lakhs. Under special circumstances, some banks may even consider disbursing higher amounts; but this is solely at the bank’s discretion.
Do not forget that Education Loans in India require some form of collateral security.
- Up to Rs. 4 Lakhs: No collateral is required, but a parent needs to be the co-applicant.
- Between Rs. 4 Lakhs to Rs. 7.5 Lakhs: The collateral should be a third party guarantor along with collateral security from the parents.
- Above Rs. 7.5 Lakhs: The parents need to be co-borrowers and tangible collateral security is required.
The acceptable forms of collateral security are:
- Fixed Deposits
- Life Insurance policies (sum assured should be at least 100% of the loan amount)
- Residential property (house/flat/apartment)
- Non-agricultural land
Documents required for Education Loans
- Admission letter from the concerned college/university
- Detailed break-up of the cost of the course
- Completed loan application and KYC documents as proof of identity and residence
- Academic mark sheets
- PAN Card of the student and parent/co-applicant
- IT Return documents of the co-applicant
- Salary slips and Form 16 of the co-applicant
- Brief statement of the assets and liabilities of the co-applicant
The parent or co-applicant shall be treated as the primary debtor, so it’s important that all his documents are in place.
Generally, Education Loans are disbursed within 15 days and the interest rate varies from 11% to 15%, depending upon the loan tenure, amount, institution, etc. The tenure varies between 5 to 7 years, though it can go up to 15 years for loan above Rs. 7.5 lakhs.
We hope that all this information about Education Loans comes in handy and helps you fuel your dreams of seeking education in India or abroad!