For a whole and prosperous life, one needs to be well educated. However, education is becoming more and more expensive. Even brilliant and capable students find that attending reputable institutions costs a lot of money. As a result, not all parents can afford to send their children to such institutions, even if they truly wish to provide them with the greatest education possible by making long-term investments.
Despite these efforts, financial difficulties can still arise. Therefore, an education loan in India becomes essential in this situation. But what is an education loan? How does it work? How can you apply for an education loan online? If you are also looking for answers to these questions, this blog is for you!
In this blog, we’ll discuss everything you need to know about education loans in India, including how to apply, eligibility criteria, who can use them, some FAQs, and much more.
So, let’s get started!
Why is an Education Loan Becoming Necessary for Higher Education?
Education loans are now a must as the tuition fees for engineering and medical universities have risen to the point that it is no longer feasible to pay the full fee. Education loans have become a necessity, allowing students to enroll in reputable colleges without the financial burden falling entirely on their families.
Types of Education Loans in India
Based on the location, there are two types of education loans:
- Education Loan in India: Individuals can apply for this form of loan if they wish to pursue their education in India. Only applicants who are accepted into Indian educational institutions and who meet all other requirements set forth by the lender will have their loan requests approved.
- Education Loan for Abroad: These loans assist students in realizing their dream of attending an institution abroad to pursue their chosen course of study. Students who want to study abroad can apply for a loan that will pay for their airfare, lodging, and tuition as long as they meet the requirements.
Features and Benefits of Education Loans in India
- Maximum Loan Amount: For NRI students, the maximum loan amount is Rs 30 lakhs, while for others, there’s no limit on the loan amount.
- Comprehensive Coverage: An education loan in India can be used to cover various costs associated with being a student, including living expenses, food, college fees, study materials, laptops, library fees, and more.
- Credit History: Students can build their credit history when they take on loan repayment responsibilities. Students can build a positive CIBIL report by making EMI payments on time.
- Lower Interest Rates: The interest rate for education loans is typically lower than those of other loan types, such as personal loans.
- Tax Benefits: According to section 80E of the Income Tax Act of India, 1961, you are entitled to tax benefits on the interest paid on an education loan.
Eligible Courses for Education Loans
Courses Covered for Education Loans in India:
- PhD courses
- Graduation/PG/Diploma courses from reputed institutions & universities
- Technical/Professional/Management courses
Courses Covered for Education Loans Abroad:
- PhD courses
- Graduation/PG degrees offered by reputed institutions/universities
- Certified degree courses offered by CIMA, London, CPA, USA, and others
How do you apply for an education loan online in India?
There are two primary ways to apply for an education loan online in India:
- Online Application: Complete the application form online with all the required documents attached, followed by online submission. Some banks may also offer virtual assistants to assist with the application process.
- Offline Application: Visit the nearest branch office in person with all the necessary documents and a properly filled-out application.
After submitting your loan application, the bank will start the process by checking your documents, assessing the course of study you want the loan for, and determining what kind of collateral you can offer. The bank will then notify you of their decision.
Required Documents for Education Loans
- Educational certificates
- KYC documents
- Admission letter
- Fee structure
- Income proof and KYC documents of the co-applicant
Additional documents may be required in some cases.
Conclusion
We hope you found this blog on education loans in India useful. Since this is most people’s first loan, getting an education loan might help you establish a strong credit score. If you pay back the education loan on time without making any late payments, getting other future loans will also be simpler for you.
Applying for an educational loan is simple thanks to flexible web and mobile apps offered by many banks. You can apply for a loan of up to any amount and 20–30 lakhs for NRI students online from the comfort of your home. Additionally, you can use an education loan calculator to quickly determine how much of a loan you can afford based on your repayment ability.
Regional College of Management: High-Return Education
If you’re looking for an affordable yet high-return education, consider the Regional College of Management (RCM). With a variety of dynamic courses including BBA+, BCA+, MBA+, PGDM+, MCA+, and MATA programs, RCM offers excellent education and placement opportunities. Investing in education at RCM ensures a bright and prosperous future without the financial strain often associated with higher education.
Top FAQs
Q: What are the fundamental requirements for an education loan abroad?
- Must be a citizen of India
- A parent or guardian must be present
- A letter of acceptance from a reputable overseas university is required
- The borrower’s financial situation must be steady for the loan to be disbursed
Q: Who can apply for an education loan in India?
A: The primary borrower is a student. An applicant’s co-applicant may be a parent or spouse.
Q: To whom is the loan being offered?
A: Loans are available to those who want to study in India or pursue their studies abroad. The amount offered varies depending on whether the study is in India or abroad.
Q: What is an education loan calculator, and how does one use it?
A: The education loan calculator is a smart tool used to compute your monthly EMI payment to the lender. To calculate your EMI and plan financially, use the slider to enter the parameters Principal amount (P), time (N), and rate of interest.
Q: What happens if I don’t pay my student loan in India?
A: If you don’t pay your student loan in India, the lender will send notices to you and your guarantor (if there is one). Ignoring these notices will result in you becoming a defaulter.
Q: How does not paying a student loan affect my credit score?
A: Not paying your student loan will significantly impact your credit score. Your credit score will drop, making it harder for you to obtain loans or credit in the future.
Q: Will my guarantor be affected if I don’t pay my student loan?
A: Yes, if there is a guarantor, they will also receive notices from the lender and may face consequences if the loan remains unpaid.
Q: Can the lender take legal action if I default on my student loan?
A: Yes, the lender can take legal action against you to recover the loan amount if you default.
Q: Are there any long-term consequences of defaulting on a student loan?
A: Long-term consequences include a damaged credit score, difficulty in getting future loans or credit, and potential legal action from the lender.
