Education Loan
An education loan is a financial product offered by banks and lending institutions to help students fund their higher studies in India or abroad. Repayment generally begins after the course is completed, often with a grace period of around six months. In India, education loan interest rates usually range from 3.50% to 16.00% per annum, and many banks provide subsidized rates or government-backed schemes to reduce the overall burden on students.
Education loans can cover a wide range of academic levels—from nursery and school education to higher studies. Many lenders also offer loan options designed specifically for working professionals pursuing full-time or part-time courses.
What is an Education Loan?
An education loan is a financial assistance facility offered by banks and lending institutions to help students pursue higher studies in India or abroad. These loans come with flexible repayment terms—often extending up to 20 years—and typically begin after a grace period following course completion.
Borrowers can also claim tax benefits under Section 80E, which allows deductions on the interest paid. Applications can be made online or offline, and usually require documents such as admission letters, academic records, and identity proofs.
Students can use anEducation Loan EMI Calculator to estimate monthly payments and plan better. Repayments can be made through multiple methods, including online banking, auto-debit, cheques, and demand drafts.
Eligibility Criteria for Education Loans
To qualify for an education loan, applicants must meet the following basic requirements:
Eligible Courses: Loans are offered for approved undergraduate and postgraduate programs, PhDs, technical and professional courses, diploma programs of six months or longer, and other job-oriented courses.
Recognised Institutions: Students must have secured admission to a recognised university, government institution, professional college, or an accredited international institute.
Academic Qualification: For undergraduate studies, completion of 10+2 is required, while a graduate degree is necessary for postgraduate courses.
Documents Required for an Education Loan
While requirements may vary by lender, the commonly asked documents include:
Admission letter from the educational institution
Previous academic records (school/college mark sheets)
Proof of age, identity, and address
Signature verification proof
Salary slips and recent bank statements
Income Tax Returns with income details
Audited financial statements (for self-employed applicants)
Proof of business turnover, if applicable
Completed loan application form
Recent passport-size photographs
Valid student visa for overseas studies
Types of Education Loans
| Category | Loan Type | Detail |
|---|---|---|
| By Location | Domestic loan | Students studying in India and must be enrolled in a recognized Indian institution |
| Internation Loan | Studying abroad and it covers fees, travel, and living expenses | |
| By Collateral | Secured Loan | Requires assets like property, deposits, or investments as security. |
| Guarantor- Based Loan | Requires a third-party guarantor, often from a bank employee. | |
| By Course | Undergraduate Loan | For bachelor’s degree – three to four years |
| Postgraduate Loan | For master’s or advanced degrees (usually two years) | |
| Career Enhancement Loan | For professionals who wants to pursue short-term courses for training and certification |
List of Banks Offering Education Loans in India
Here is the list of interest rates offered by different banks in India:
| Name of Bank | Interest Rate (p.a.) | Processing Fees |
|---|---|---|
| State Bank of India Education Loan | 7.15% p.a. to 10.15% p.a. | Loans up to Rs.7.5 lakh- Nil |
| Central Bank of India Education Loan | 7.00% p.a. to 10.00% p.a. | Nil for studies in India1% of loan amount for studies abroad (Max: Rs. 10,000) |
| Punjab National Bank Education loan | 7.00% p.a. to 11.10% p.a. | Nil for studies in India1% of loan amount for studies abroad (Max: Rs. 10,000) |
| Canara Bank Education Loan | 8.25% p.a. to 11.10% p.a. | Minor processing fees or Nil |
| IDFC FIRST Bank Education Loan | 9.50% p.a. onwards | Up to 1.5% of the loan amount |
| IDBI Bank Education Loan | 7.65% p.a. to 10.60% p.a. | Nil for studies in India1% of the loan amount (Maximum: Rs.5,000) for studies abroadFor other management quota students: 1% of loan amount + service tax, minimum Rs.1000 + tax. |
| Bank of Baroda Education Loan | 7.10% p.a. to 13.50% p.a. | Baroda Vidhya – NilBaroda Gyan – NilBaroda Scholar – 1% of loan amount up to Rs.10,000 |
| Bank of India Education Loan | 7.10% p.a. to 11.45% p.a. | No processing fee for studies in India |
| ICICI Bank Education Loan | 9.00% p.a. to 14.00% p.a. | Up to 2% of the loan amount |
| Bank of Maharashtra Education Loan | 7.10% p.a. onwards | Nil |
| Axis Bank Education Loan | 3.50% p.a. to 13.00 p.a. | 2.00% of the loan plus GST |
| HDFC Bank Education Loan | 10.50% p.a. onwards | Up to loan amount Rs.7.5 lakh- NilAbove Rs. 7.5 lakh- 1% |
| Kotak Mahindra Bank Education Loan | Maximum up to 16% | Nil |
| Federal Bank Education Loan | 11.25% p.a. to 15% p.a. | Contact the bank |
Interest rates on education loans can be either fixed or floating, depending on the bank or financial institution. Floating rates are typically linked to the Repo Rate, with an additional spread added to determine the final Effective Interest Rate (EIR) offered to the borrower.
Features & Benefits of Education Loans
Loan amounts available up to ₹1 crore
Flexible repayment tenure of up to 15 years
Loans offered for studies in India and abroad
Some lenders provide pre-visa disbursal for overseas education
Convenient doorstep document collection services
Children of bank employees often receive preferential rates
Many lenders offer special interest rate concessions for female students
Moratorium period of up to 1 year after course completion
Tax benefits under Section 80E for up to 8 years on interest paid
Expenses Covered Under Education Loans
Education loans typically cover a wide range of academic and related expenses, including:
Tuition and hostel fees
Travel expenses for students studying abroad
Insurance premium for study-related policies
Cost of books, uniforms, instruments, and equipment
Examination, laboratory, and library fees
Laptop or computer required for the course
Caution deposit, building fund, and other refundable charges (with receipts)
Additional expenses such as study tours, project work, and thesis-related costs
Tax Benefits on Education Loans (Section 80E)
Under Section 80E of the Income Tax Act, borrowers can enjoy several tax advantages on education loan repayment:
Applicable for loans taken for yourself, your spouse, or your children
Full interest paid can be deducted from taxable income
Deduction is available for up to 8 years or until interest is fully paid
Only interest, not the principal, qualifies for tax deduction
Helps reduce taxable income and eases financial burden
Courses Covered Under Education Loans
Most education loans support a wide range of academic programs, including:
Undergraduate degrees
Postgraduate degrees
Undergraduate and postgraduate diplomas
Vocational and technical training courses
Skill development programs
Doctoral and research-based programmes
What Do Lenders Evaluate Before Approving an Education Loan?
When reviewing an education loan application, lenders typically assess:
The course and institution selected
The total loan amount required
The student’s academic record
The family’s repayment capacity
Available family assets
Annual income and financial stability
How to Apply for an Education Loan Online
Follow these simple steps to apply through a bank’s official website:
Step 1: Visit the bank’s official website.
Step 2: Navigate to the Education Loan section.
Step 3: Fill out the online application and consent form with your personal details.
Step 4: Share your academic and financial information when contacted by the bank representative.
Step 5: Choose doorstep document collection or visit the branch to complete verification and final approval.
How to Apply for an Education Loan Offline
You can apply for an education loan at a bank branch by following these steps:
Step 1: Visit your preferred bank branch.
Step 2: Request the education loan application form.
Step 3: Fill in your personal, academic, and financial details.
Step 4: Discuss loan terms and eligibility with the bank representative.
Step 5: Submit the completed form along with all required documents.
Step 6: Once approved, the bank will issue a formal loan agreement.
Step 7: Wait for the bank to process and disburse the loan amount.
Important Factors to Consider Before Applying
To avoid financial stress, review these key points before taking an education loan:
Check all additional charges, including processing fees and late payment penalties.
If you plan to repay early, ask about prepayment or foreclosure charges.
Read the entire loan agreement carefully before signing.
Always verify the total repayment amount, including interest and extra fees.
Education Loan EMI Calculator
An Education Loan EMI Calculator is an online tool that helps borrowers estimate their monthly repayment amount. It also generates an amortisation schedule showing how each EMI is divided between interest and principal, along with the total amount paid and the remaining loan balance. This gives a clear picture of the overall cost of the education loan throughout the tenure.
How the Education Loan EMI Calculator Helps
Understanding your EMI is essential before taking an education loan. The EMI calculator allows you to:
Know your exact monthly repayment commitment
Compare different interest rates and loan offers from various banks
Estimate total interest payable during the loan term
Plan your finances more efficiently by choosing a suitable tenure
How to Use the Education Loan EMI Calculator
The EMI calculator is simple to use and completely free. Just enter:
Loan Amount: The total education loan you want to borrow
Loan Tenure: The duration over which you plan to repay the loan
Interest Rate: The rate offered by the bank or lender
Once you fill in these details, the tool instantly displays your monthly EMI. You can adjust the values anytime to find an EMI that fits your budget.
Key Benefits of Using an Education Loan EMI Calculator
Quickly shows the exact monthly EMI
Gives a clear view of your repayment obligations
Helps in planning your budget and savings
Displays the full amortisation schedule for better understanding
Shows the remaining principal to track outstanding dues
Free to use and accessible from anywhere
Education Loan Repayment Process
Repayment of an education loan typically begins 12 months after course completion or 6 months after securing a job, whichever occurs earlier. Lenders may offer different moratorium periods, after which repayment starts through fixed EMIs.
Modes of Repayment
Borrowers can choose from several repayment methods, including:
Internet Banking: Pay online via the bank’s website or mobile app
Cheque: Submit a cheque at the branch
Direct Debit/Auto-Debit: Set up automatic monthly EMI deductions from your bank account
Demand Draft: Make payments using a DD
Since repayment options may differ across lenders, it’s best to confirm available modes during the loan application process.
Moratorium Period
Education loans typically offer a moratorium period, allowing students to begin repayment only after completing their course or securing employment. This provides financial flexibility during the study period.
Part-Payment of Education Loans
Borrowers can make part-payments at any time by repaying a lump-sum amount toward the outstanding balance. This helps reduce the total interest burden and shortens the loan tenure.
Pre-Payment of Education Loans
Full pre-payment of the education loan is also allowed if the borrower can arrange funds earlier. However, some lenders may charge a processing or foreclosure fee, so it’s advisable to check the terms beforehand.
If financial limitations are holding you back from achieving your academic or professional goals, an education loan can help bridge the gap. Many lenders offer collateral-free student loans, so you don’t need to provide any security. Plus, repayments typically begin only after course completion, giving you the flexibility to focus on your studies first.
FAQs
Will I get the same loan amount for studying in India and abroad?
No. Education loans generally offer higher amounts for overseas courses because tuition and living expenses abroad are typically higher than in India.
Do banks offer education loans without interest?
No. All education loans come with an interest rate; however, some schemes may offer subsidized interest for eligible students.
Is there an age limit or maximum amount for an education loan?
RBI does not mandate an upper age limit, but individual banks may set their own criteria. Loan amounts vary based on the lender and course.
Are loans for overseas studies disbursed in foreign currency?
Yes. For international courses, lenders usually disburse the loan directly to the institution in the respective country’s currency.
Can the moratorium period be extended if I take a break from my course?
An extension depends on the lender. In most cases, the moratorium lasts until you find a job or up to one year after course completion. Speak with your bank for special cases like a sabbatical.
Are NRIs eligible for education loans in India?
Yes, if the applicant is an Indian citizen with a valid passport. A resident Indian co-applicant and a Power of Attorney (POA) are also required.
What happens if I discontinue the course but get a job within the grace period?
Loan repayment begins immediately once you gain employment, even if the course is discontinued.
Can I transfer my education loan to another bank?
Yes. Education loan balance transfers are allowed, but your existing bank may charge a refinancing fee. Compare costs before switching.
Is student loan waiver available in India?
Yes, under specific circumstances such as government schemes, financial hardship, disability, or special institutional policies. Eligibility varies by lender and program.
How can I apply for a loan waiver?
Submit a written application explaining your financial hardship (e.g., unemployment or medical issues). The lender will review your request and provide terms if you qualify. If approved, you must sign the agreement and follow the repayment or settlement terms.