Education Loan Facility for Students in India

Education loans in India provide financial support to students to pursue higher education, both in India and abroad. These loans cover a variety of expenses including tuition fees, accommodation, books, and other educational costs. Here is an overview of how students can access education loans, the types of loans available, and the application process.

1. Domestic Education Loans: For students pursuing higher education within India. Covers costs such as tuition fees, exam fees, library charges, and travel expenses.
2. International Education Loans: For students aiming to study abroad. Covers expenses including travel, tuition, accommodation, and other costs related to foreign education.
3. Skill Development Loans: For short-term, vocational, and skill development courses offered by recognized organizations.

Major Providers of Education Loans

1. Nationalized Banks:
   • State Bank of India (SBI): Offers SBI Student Loan Scheme, SBI Global Ed-Vantage Scheme, and SBI Skill Loan Scheme.
   • Punjab National Bank (PNB): Offers PNB Saraswati, PNB Udaan, and PNB Kaushal.
   • Bank of Baroda (BoB): Offers Baroda Gyan, Baroda Scholar, and Baroda Education Loan for Vocational Education & Training.
2. Private Banks:
   • HDFC Bank: Provides Education Loans for Indian Education and Education Loans for Foreign Education.
   • ICICI Bank: Offers loans for both domestic and international studies.
3. Non-Banking Financial Companies (NBFCs):
   • Credila (HDFC): Specializes in education loans for studies in India and abroad.
   • Avanse: Provides loans for a wide range of courses including undergraduate, postgraduate, and vocational courses.

Features and Benefits

1. Loan Amount: Can range from INR 1 lakh to INR 20 lakhs or more, depending on the course and institution.
2. Interest Rates: Vary across banks and NBFCs, generally ranging from 8% to 15%.
3. Repayment Tenure: Typically ranges from 5 to 15 years, with a moratorium period during the course duration plus 6-12 months post-completion.
4. Collateral: Loans up to INR 7.5 lakhs often do not require collateral. Higher amounts may require collateral in the form of property, fixed deposits, etc.
5. Tax Benefits: Under Section 80E of the Income Tax Act, the interest paid on education loans is eligible for tax deductions.

Application Process

1. Research and Comparison: Compare loan offerings from various banks and NBFCs to find the best terms and interest rates.
2. Eligibility Check: Ensure you meet the eligibility criteria, which typically include admission to a recognized course in India or abroad.
3. Documentation: Prepare necessary documents such as admission proof, fee structure, KYC documents, income proof of parents/guardians, academic records, etc.
4. Application Submission: Submit the loan application either online or at the bank branch along with the required documents.
5. Loan Processing: The bank will review the application, verify documents, and approve the loan if all criteria are met.
6. Disbursement: Upon approval, the loan amount is disbursed directly to the educational institution as per the fee schedule.

Examples of Education Loan Products

1. SBI Student Loan Scheme:
   • Eligibility: Indian nationals securing admission to higher education courses in recognized institutions in India or abroad.
   • Loan Amount: Up to INR 20 lakhs for studies in India and INR 30 lakhs for studies abroad.
   • Interest Rate: Varies with MCLR (Marginal Cost of Funds based Lending Rate) plus a spread.
2. HDFC Credila:
   • Coverage: Tuition fees, living expenses, travel costs, and more.
   • Flexible Repayment: Offers flexible repayment options with a competitive interest rate.
3. Avanse Education Loan:
   • Customized Loans: Tailored loans for various courses including short-term vocational courses.
   • Quick Processing: Fast-track loan approval and disbursal process.