What is an education loan and how to apply for one?

Posted by neha sharma on April 29th, 2019

The cost of good quality education is rising globally. To meet the costs of education, especially graduation and post graduation courses, investments and savings may not be enough. In such cases, the deficit can be filled up with an education loan. An education loan is a loan given to meet the costs of education. Typically, an education loan covers the cost of tuition for a given course and a few other expenses such as accommodation expenses, exam charges, library fees, project fees etc.

An education loan is given out to students enrolled in a particular course. These loans are offered at all levels of education i.e school, undergraduate studies, post graduate studies. However, a majority of these loans are for college education at both graduate and under graduate level.

An education loan is given both for education within India and abroad. Each bank has its own minimum and maximum loan limits. These loans are quite flexible and do not distinguish between the different types of courses, i.e full time, part time, vocational etc. The lender also does not restrict the subject of the course i.e an education loan can be availed for courses in all subjects. If you’re wondering how to get education loan for your studies, this guide is for you.

How to get education loan?

  1. The first step is to secure admission in the college of your choice. The first eligibility criteria under this loan is that the student must have secured admission as the proof of admission is one of the documents that the bank checks.
  2. Banks usually give joint education loans that students have to take jointly with their parents. This is a preventive step to ensure the installments are paid. Most education loans come with a moratorium period which means that the installments are not due for a period of time after the student graduates.
  3. Once you’ve met any other eligibility criteria set by the bank, you need to fill an application form. This form can be filled up online or offline in the bank’s branch.
  4. Along with the fully filled up application form, you will need to submit other documents such as KYC documents for both the loan applicants, marksheets, income proofs etc.
  5. After the bank processes these documents, it will either accept or reject the loan application. If the loan application is accepted, the funds will directly be paid to the college the student gets admission into.

Few points to consider:

  1. There is a benefit under Section 80E of the Income Tax Act. Interest paid on an education loan gets a deduction. This interest is not limited by any amount or the course or the country of education. It is available for 8 years from the year of payment.
  2. The bank may charge other fees such as loan processing fees etc.

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neha sharma

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neha sharma
Joined: April 18th, 2019
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