Educational loans in India

A superior quality of education is the one which provides all students with all potentials they need to become more economically productive, develop supportive livelihoods, helpful to peaceful and democratic societies and develop individual quality of wellbeing. It is a building block to lead a dignified life.

With the increase in tuition fees most of the students are far away to gain a quality education. It is highly expensive in some of the premier institutions. Students who are able to get a seat in such big institutions, it becomes difficult for them to study in those institutions due to their poor financial status.

The annual cost of education combined with living is on an average ₹ 350,000. For undergraduate courses like engineering in private colleges it costs between 5-12 lakhs. For medical courses it is approximately 50 lakhs in government with a post-graduation degree and in private colleges it is exceeding 1crore. Post-graduation courses like MBA in India it costs around 10 lakhs. By this it is clear that private colleges charge more fee than government institutions to students. To meet their educational needs some banks offer educational loans to students charging some interest. This interest charge may vary from bank to bank. Education loan is also given to high school students who are studying in private institutions by some of the banks.

Parents who want to provide their children with the quality education invest their money in mutual funds, fixed deposits, unit linked insurance plans, etc., for the long term basis. In addition to these investments, education loan plays a vital role in such a case by filling the gap between the shortfall and required amount.

Many banks like SBI, Axis bank, United bank of India, HDFC bank, Avanse financial services, ICICI bank, Indian overseas bank, PNB, Dena Bank, Vijaya Bank etc offer educational loans to students at reasonable rates.

Interest on loans and the extent they issue is different for different banks. Below are the details of banks offering educational loan.

State Bank of India: SBI offers a maximum of Rs.10 lakhs for studies in India under SBI scholar scheme. Processing fee is not charged for SBI education loans.

Type of educational institution	Loan limit
Without security	With security
List AA	30L	NA
List A	20L	30L
List B	20L	NA
List C	7.5L	30L

Interest rates of SBI student loan scheme

Upto Rs.4 lakhs	3.5% above base rate
>Rs. 4 lakhs and upto Rs. 7.5 lakhs	3.75% above base rate
>Rs. 7.5 lakhs	1.75% above base rate

The fixed base rate is 9.85%. Interest is fixed at 3.50% above the base rate of 9.85%. Concession of 0.50% is provided for girl students and a 1% concession is offered for full tenure of loan, if the interest is serviced promptly during moratorium and course period.

Type of Institution	Interest Rate per annum
List AA	25 bps above base rate (10.10% at present)
List A	25 bps above base rate (10.10% at present)
List B	For unsecured loan up to Rs.20 lakhs, 50 bps above base rate (10.35% at present)
List C	175 bps above base rate (11.60% at present)

Repayment of SBI educational loans tenure is 12 years which starts after the 6 months of course completion.

Maximum Loan Amount	Repayment Period
Up to Rs.4 lakhs	Up to 10 years
Above Rs.4 lakhs to up to Rs.7.5 lakhs	Up to 10 years
Above Rs.7.5 lakhs	Up to 12 years

The security details of loan process are as follows:

Loan Amount	Security
Up to Rs.4 lakh	Parent or guardian as co-borrower
Above Rs.4 lakhs and to Rs.7.50 lakhs	Parent or guardian as co-borrower and collateral security in the form of a third party guarantee
Above Rs.7.50 lakhs	Parent or guardian as co-borrower and tangible collateral security

Bank of Baroda:

Maximum Loan Limit	Rs. 4 lakhs
Eligibility	Applicant must be an Indian national, residing in India. He/she must have secured admission to a recognized school/high school/Junior College (ICSE/CBSE/State Board) for the following courses: Stage I – Nursery to Std. V Stage II – Std. VI to Std. VIII Stage III- Std. IX to Std. XII
Interest Rate	Loans upto Rs.4 lakhs : Base Rate + 2.50% Loans from Rs.4 lakhs to Rs.7.50 lakhs : Base Rate + 2.50% Loans above Rs.7.50 lakhs : Base Rate + 1.75% Baroda Education Loan for Vocational Education & Training : Base Rate + 2.00% Note- Loans to girl students gets an applicable 0.50% concession. Interest must be serviced as and when applied during the moratorium period. If loan amount exceeds Rs.2 lakhs, penal interest at the rate of 2% applies on the overdue amount. Added concession of 1.00% applies to students who are pursuing their studies in premier institutions like IIT, IIM, IIFT, AIIMS, ISB, NIT, XLRI, MDI, IISc, SPJIM etc.
Processing Fee	None. No documentation charges as well.
Security	None. However, if the loan is being taken for the purchase of a computer, then the same will be pledged as security for the loan.
Margin	None
Repayment Tenure	Yearly sub-limit must be repaid in 12 EMIs. First instalment is due 12 months after the disbursal of each year’s loan component.
Expenses Covered	Fees that must be paid to school or college. Fees applicable for Examination, Library, Laboratories, Hostel etc. The purchase of uniforms, books, equipment and instruments. Personal Computers/ Laptops, if the course requires the same for successful completion. Additional payments like Building fund, Caution deposit, Refundable deposit etc. These however, need to be backed up by proper bills or receipts.

Baroda gyan applies to the category of the students who are pursuing graduation, post-graduation and other professional courses in India.

Maximum Loan Limit of baroda gyan	Rs. 10 lakhs
Eligibility	Applicant must be an Indian national, residing in India. Should have secured admission into any of the courses listed under the section ‘Course Eligibility’ below. This Bank of Baroda Education Loan scheme applies to merit students (eligible for a seat under the merit quota) but choose to pursue a course under the management quota. Management quota seats considered under the Bank of Baroda education loan scheme, fees as applicable to these payment seats (authorized by State Government/ Regulatory body approved by the Government) will be taken, subject to the viability of repayment.
Interest Rate	Loans upto Rs.4 lakhs : Base Rate + 2.50% Loans from Rs.4 lakhs to Rs.7.50 lakhs : Base Rate + 2.50% Loans above Rs.7.50 lakhs : Base Rate + 1.75% Baroda Education Loan for Vocational Education & Training : Base Rate + 2.00% Note- Loans to girl students gets an applicable 0.50% concession. Simple interest will be charged through the moratorium period with monthly rests. If loan amount exceeds Rs.2 lakhs, penal interest at the rate of 2% applies on the overdue amount. Added concession of 1.00% applies to students who are pursuing their studies in premier institutions like IIT, IIM, IIFT, AIIMS, ISB, NIT, XLRI, MDI, IISc, SPJIM etc.
Processing Fee	None.
Security	Loan amount upto Rs.4 lakhs : None Loan amount from Rs.4 lakhs to Rs.7.5 lakhs: Third party guarantee and assignment of future salaries towards loan repayment. Loan amount above Rs.7.5 lakhs: Tangible collateral as security that is equivalent to 100% of the loan amount. Plus, assignment of future salaries towards loan repayment.
Margin	Loans upto Rs.4 lakhs : None Loans above Rs.4 lakhs : 5.00% Note- Margin is applicable on pro-rata basis on yearly basis as and when disbursements are availed.
Repayment Tenure	Loan amount upto Rs.7.50 lakhs : Repayment in max 120 installments Loan amount above Rs.7.50 lakhs : Repayment in max 180 installments
Moratorium Period	The repayment holiday applies from, Course Period + 1 year or 6 months after getting the job (whichever comes first).
Expenses Covered	Fees that must be paid to school or college. Fees applicable for Examination, Library, Laboratories, Hostel etc. The purchase of uniforms, books, equipment and instruments. Personal Computers/ Laptops, if the course requires the same for successful completion. Additional payments like Building fund, Caution deposit, Refundable deposit etc. These however, need to be backed up by proper bills or receipts. Additional expenses that are deemed important for course completion, including and not limited to projects, study tours, thesis etc.
Course Eligibility	All Graduation, Post-Graduation and Doctorate courses. All courses conducted by IIT, IIM, IISc, XLRI, NIFT etc. All professional courses, conducted by recognized institutions. Courses such as C.A, ICWA, CFA, CS, etc. Computer certificate courses from reputed institutes with alignments to recognized Universities. Degree/Diploma from colleges/universities/National Institutes/private institutions/evening courses that are approved by a recognized Government body such as UGC/AICTE/ AIBMS/ ICMR etc. Degree/Diploma in Aeronautical, pilot training etc. (approved by Director General of Civil Aviation/shipping). Educational courses offered in India by prominent foreign Universities.
Perks	Free Debit Card.

The current Bank of Baroda education loan base rate is 10.00%. the interest rate are as follows:

Loans upto Rs.4 lakhs : Base Rate + 2.50%.
Loans from Rs.4 lakhs to Rs.7.50 lakhs : Base Rate + 2.50%.
Loans above Rs.7.50 lakhs : Base Rate + 1.75%.
Baroda Education Loan for Vocational Education & Training : Base Rate + 2.00%.

Loans to girl students gets an applicable 0.50% concession. For Vocational Education & Training, the concession will be 1.00%. Simple interest will be charged through the moratorium period with monthly rests. If loan amount exceeds Rs.2 lakhs, penal interest at the rate of 2% applies on the overdue amount. Added concession of 1.00% applies to students who are pursuing their studies in premier institutions like IIT, IIM, IIFT, AIIMS, ISB, NIT, XLRI, MDI, IISc, SPJIM etc.

3.Axis Bank: This bank offers loans to students to got admitted into medicine, engineering and management. Loan will cover the tuition fees, hostel charges, cost of study materials and other educational expenses. Maximum amount of loan offered is Rs.10 Lakhs. Interest rates applicable are as below

Loan Type	Loan Amount	Interest Rates
Education Loan	Up to Rs.4 lakhs	Base Rate + 7%
	Loans from Rs.4 lakh up to Rs.7.5 lakhs	Base Rate + 8%
	Loans greater than Rs.7.5 lakhs	Base Rate + 6%
Education Loan for Girl Student	Up to Rs.4 lakhs	Base Rate + 6.50%
	Loans from Rs.4 lakhs to Rs.7.5 lakhs	Base Rate + 7.50%
	Loans greater than 7.5 lakhs	Base Rate

The base rate is currently fixed at 9.95%. There are no loan processing charges and prepayment charges. Rs.500 plus taxes per cheque bounce and a penal interest of 24% per annum on the overdue amount is charged for the late payment.

Here are the details of other banks which provide best educational loans to students:

Punjab National bank student loan: eligibility of this loan is to be an Indian national and must have completed 10+2 or equivalent. For education in India you can avail loans up to 10 lakh.

Loan Amount – Interest Rate
Up to 4 lakhs – 10.25% + 3%
4 lakhs – 7.5 lakhs – 14.25%
Above 7.5 lakhs – 12.25%

Security details of this bank loan process:

Up to 4 lakh – Parent/Guardian made joint borrower
4.00-7.5 lakh – Apart from parent/guardian you need collateral security in the form of suitable third party guarantee
7.5 lakhs and above – Apart from parent/guardian you need collateral security in the form of suitable third party guarantee as well as an assessment of the future income of the student. For loans above 7.5 provided there is collateral security required.

IDBI bank student loan: this bank offer loan to students who pursue non-vocational courses, vocational courses, management quota and under Financial Inclusion Program. No processing fee is charged.

Loan qualifying as Priority Sector Lending (PSL)	11.25% (BR+1.00%)
Loan amount not qualifying as Priority Sector Lending (PSL)	12.25% (BR+2.00%)
Vocational Courses	11.25% (BR+1.00%)
Education Loans for students studying in Premier Education Institutes	10.25% (BR+0.00%)
Education Loan for other students who secured admission under Management Quota.	13.75% (BR+3.50%)
Education Loan under Financial Inclusion program (FIP)	11.75% (BR+1.50%)

Canara bank educational loan: for studying in India bank offers a loan of 10 lakhs. Loans up to 4 lakh there is no collateral security while up to 7.5 lakh you will require third party guarantee. For loans above 7.5 lakhs a security equivalent to the loan is needed. Base rate is 10.20%.

Loan Amount – Interest Rate
Up to 4 lakhs – BR+1.5%
4 lakhs – 7.5 lakhs -BR+2%
Above 7.5 lakhs -BR+1.5%
Non priority category – BR+1.5%
Vocational education and training – BR+1.5%

Bank of India student loan: maximum amount of loan issued by this bank is 10 lakhs. You must be Indian and must have secured selection for entrance exam through merit based selection to get this loan.

Loan Amount – Interest Rate
Up to 7.5 lakhs – 13.20%
Above 7.5 lakhs -12.70%

Vijaya bank student loan: maximum loan offered is 10 lakhs. Eligible courses include regular technical and professional Degree/Diploma courses conducted by colleges/universities approved by UGC/ AICTE/IMC/Govt./AIBMS/ICMR. Etc.

IBA	Up to 4 lakh	Base Rate + 1.80 = 12.05%
IBA	4 lakh and above	Base Rate + 2.25 = 12.50%
Management Quota (Non IBA)	Irrespective of loan	Base Rate + 2.55 = 12.80%
Education Loan to Indian School of Business student	Irrespective of loan	11.75% ( Fixed)
Education Loan to the students of Premier Central Institutions such as IIMs, IITs etc	Irrespective of loan	11.75% ( Fixed)

Things to be kept in mind while applying for the loan:

Credentials like loan documents should be supplied to the related bank in which the loan is applied. In addition to the necessary loan documents, an income certificate issued by Income Certifying Authority mentioned by the State Government is required. Married applicants can mention their spouse as co-applicant. Submit HSC and SSLC certificates in addition to the degree mark sheet. Insurance covering the life of the borrower with the policy assigned in favour of SBI is mandatory while applying for education loan.

Documents to be submitted:

Letter of admission
Duly filled and signed loan application form
2 recent passport size photographs
Statement of cost of study
PAN Card, AADHAR card of student and parent/guardian
Proof of identity and proof of residence
IT returns or IT assessment order of previous two years of the co-borrower
Statement of assets and liabilities of parent/guardian
Proof of income of parent/guardian

Options are many in these days even though getting a student loan is not so easy.

Educational loans in India

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