Education Loan Features and Process

Check different Education Loan Segments in India

Features & Benefits of Study Loans

• Loan financing up to Rs.1 crore is available
• Loan repayment tenure is up to 15 years
• Get education loans for studies in India and abroad
• For abroad studies some lenders offer loan disbursals before applying for a Visa
• Door-step service to collect required documents
• Children of the bank's employees enjoy preferential rates at several banks
• Certain banks offer concessional interest rates to female students
• Enjoy a moratorium period of up to 1 year after course completion. During this period, you do not have to make payments on the loan
• Enjoy tax benefits for up to eight years on the interest paid

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

Tax Benefits on Education Loans

The interest you pay on your student loan can be deducted under Section 80E of the Income Tax Act of 1961. This advantage is only available to individual borrowers and is only offered for the purpose of higher education. The deduction is available to all fields of study, both domestically and internationally. It includes both vocational and academic courses.

It's important to remember that the tax deduction only applies to the interest portion of the EMI, not the principle. There is, however, no limit to how many times you can claim this benefit. You'll need a certificate from your bank or financial institution that separates the principal and interest components of your EMIs to qualify for this benefit.

This benefit is accessible for eight years from the day you start repaying your loan or until the interest component is paid off, whichever comes first.

Courses Covered Under Education Loans

• Undergraduate degrees
• Postgraduate degrees
• Undergraduate diplomas
• Postgraduate diplomas
• Vocational training courses
• Skill development courses
• Doctoral programmes
• Student Loan

Eligibility Criteria for Education Loans

• Loans are provided for sanctioned undergraduate programs, postgraduate programs, PhDs, diploma courses with a duration of six months or more, job-oriented courses, and technical/professional courses
• Applicants must be enrolled or secure admissions in recognised institutions, government institutions, professional institutions, and international colleges and universities
• For undergraduate courses, applicants should have completed 10+2 (12th standard), and for postgraduate courses, a degree is required

List of Documents Required for Education Loans

Here is an indicative list of documents that most lenders ask for:

• Admission letter from the educational institution
• Marksheets (previous education - school/college)
• Age proof
• ID proof
• Address proof
• Signature proof
• Salary slips
• Recent bank account statements
• ITR with the income computation
• Audited balance sheet
• Recent bank statements
• Proof of turnover (service tax return/sales receipt)
• Completed application form with signature
• Latest passport-size photographs
• Appropriate Visa for studies abroad
• Know more about documents required for education loan here

What Do the Lenders Consider to Approve the Loan?

• The course and institute you choose
• The amount you need
• Your academic performance
• Repayment capacity of your family
• Family assets
• Annual income

How to Apply for an Education Loan Online

1. Access the bank's official website
2. Locate the education loan product page
3. Complete the application-cum-consent form by entering your personal and contact information
4. Provide your academic and financial details when contacted by the bank
5. Choose between the doorstep service option for a study loan or visit the bank in person to finalize the loan approval process

How to Apply for an Education Loan Offline

1. Visit your chosen bank branch
2. Request a student loan application form
3. Fill out the form with personal, academic, and financial details
4. Confirm loan terms with a bank official
5. Submit the completed application form and documents
6. Receive a formal student loan agreement once approved

How to Calculate Education Loan EMI

An education loan EMI (Equated Monthly Installment) is the fixed amount a student has to pay every month to repay their education loan. The EMI includes both the principal loan amount and the interest charged by the bank or lending institution.

The following formula illustrates how educational loan EMI is calculated:

EMI = [P * R * (1 + R)^n] / [(1 + R)^n - 1]

Where,

• P = Principal amount
• R = Rate of interest
• n = Tenure in months

Education Loan EMI Calculator

The Education Loan EMI calculator is an online calculating tool designed to help borrowers calculate the monthly repayment amount for their educational loans. It generates an amortisation schedule illustrating the EMI breakdown, including monthly interest payments and the portion of the principal repaid.

The tool also outlines the total amount repaid to date and the outstanding balance, offering a comprehensive understanding of the overall cost of the educational loan. This facilitates the calculation of the total interest payable throughout the loan tenure.

How Does the Education Loan Calculator Help You?

For individuals considering or already applying for an educational loan, understanding the monthly EMI commitment is crucial. The Education Loan EMI calculator aids in assessing the monthly financial obligation, allowing borrowers to explore various interest rates and select preferred banks. This information enables effective budget planning.

How to Use the Education Loan EMI Calculator

The tool is user-friendly and free of charge, requiring users to input the following details:

• Amount: The desired educational loan amount
• Tenure: The preferred duration for repaying the loan, representing the EMI period
• Rate of Interest: The applicable interest rate offered by the lending institution

By entering these details, users can obtain the monthly EMI amount, with the flexibility to adjust parameters for a customized monthly budget.

Key Benefits of Using the Education Loan EMI Calculator

• Instantly provides the monthly EMI amount
• Offers a clear overview of monthly EMI commitments
• Facilitates budgeting and savings for financial goals
• Illustrates the amortisation schedule, detailing paid-off EMIs
• Provides insight into the outstanding principal for effective fund management
• Accessible from any location and free of charge

Education Loan Repayment Process

The loan repayment period normally starts 12 months after completion of the course or 6 months after employment, whichever comes first. Applicants are given varied moratorium periods by different lenders when it comes to repaying their loans. 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

The preferred method of repayment varies between lenders. Therefore, it is advisable to check with your lender when taking the loan.

Moratorium Period

In the case of education loans, the beneficiaries will be able to start paying off the loan after the completion of the educational course or after successful employment.

Part-Payment of Education Loans

The beneficiaries of education loans will be allowed to make part payments towards their loans. As an applicant, you can pay back a lump sum amount to make part repayment of the loan.

Pre-Payment of Education Loans

If an applicant is able to manage the funds for the pre-payment of the loan amount, he or she will be able to do the same. However, it should be kept in mind that this might incur a processing fee.