Education Loan Schemes
|PNB||7.30% onwards||Up to 15 Lakhs||1% of loan amount|
|SBI||7.97% p.a. - 10.05% p.a.||Above Rs. 20 Lakh||Rs.10,000 + tax|
|Axis||13.70% to 15.20%||Up to 7.5 Lakh||Nil to Rs.15,000 + tax|
|Bank of Baroda||8.25% to 10%*||Up to 4 Lakh and above||1% of loan amount up to Rs.10,000|
|HDFC||For preferential rates contact HDFC||Max Apr||Up to 1.5% of loan amount + tax|
|Tata Capital||10.99% onwards||Up to 30 Lakh||Up to 2.75% of loan amount + tax|
|Union Bank of India||6.90% onwards||Need-based finance||Nil for Indian students 0.50% of loan amount + GST for NRI students|
|Bank of India||9.10% onwards||For courses in India: Up to Rs.10 lakh For courses abroad: Up to Rs.20 lakh||Nil for courses in India Rs.5,000 + other fees for study abroad|
|Kotak Mahindra Bank||Up to 16%||For courses in India: Up to Rs.10 lakh For courses abroad: Up to Rs.20 lakh||Contact the bank|
|ICICI Bank||Contact the bank||For courses in India: Up to Rs.50 lakh For courses abroad: Up to Rs.1 crore||Contact the bank|
|Federal Bank||10.05% onwards||For courses in India: Up to Rs.10 lakh For courses abroad: Up to Rs.20 lakh||Contact the bank|
Education Loan Eligibility
- Indian citizens
- Non-Indian Residents (NRIs)
- Overseas Citizens of India (OCI)
- Persons of Indian Origin (PIOs)
- Students born to Indian parents abroad and wish to study in India
- Undergraduate programs
- Postgraduate programs
- Doctoral courses and PhDs
- Certificate courses with 6 months or longer duration
- Job-oriented courses
- Technical/diploma/professional courses
- Recognized institutions and government colleges
- Private institutes aided by government
- Professional institutions
- International colleges and universities
- Collateral-free loans up to Rs.7.5 lakh from leading lenders
- Collateral-free loans up to Rs.40 lakh for select courses/institutions from select lenders
Tax Benefits on Education Loan
You will get tax deduction on the interest paid on your education loan under Section 80E of the Income Tax Act, 1961. This benefit is only offered to individual borrowers and for the purpose of higher education. The deduction covers all fields of study in India and overseas. It also includes vocational as well as regular courses.
Please note that the tax deduction is only applicable on the interest portion of the EMI and not the principal. However, there is no maximum limit to claim this benefit. You will require a certificate from your bank or financial institution segregating the principle and interest portions of your EMIs to claim this benefit.
You can claim this benefit for 8 years from the year you started repayment or until the interest portion of your loan has been repaid, whichever occurs first.
List of Documents Required for Education Loan
Here is an indicative list of documents that most lenders ask:
- 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 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
Frequently Asked Questions
Is the RBI moratorium on loans due to the Covid-19 pandemic applicable for education loans too?
Yes, the Reserve Bank of India’s moratorium on retail loans, due to people undergoing financial challenges due to the Covid-19 pandemic, is applicable to education loans as well. The moratorium on Equated Monthly Instalments (EMIs) could be availed from March 2020 to August 2020.
Will I get the same amount of money on my education loan for the same level course in India and abroad?
No, usually education loans for courses in India do not offer the same amount as for comparable level courses abroad. Education loans offer higher amounts for courses abroad as fees and other expenses may be higher there than for courses in India (which also depends on the educational institution).
Is it possible to get an education loan without offering a collateral?
Almost all education loans from banks and other lenders require a collateral which can be fixed deposits, property, shares, bonds, etc. However, you can still avail an education loan without having to give any collateral. This can be achieved through the Credit Guarantee Fund for Education Loan (CGFEL) Schemes which covers a collateral-free loan of up to Rs.7.5 lakh. This is only for education loans dispersed under the Model Education Loan Scheme of Indian Banks’ Association (IBA). To avail this, you have to apply for an education loan under this scheme through a scheduled commercial bank. You don’t need to provide security or collateral for amounts of up to Rs.7.5 lakh but anything above that will require a collateral.
Can I take an education loan against mine or my parents’ fixed deposit?
You can always avail a loan against a fixed deposit, as per the terms and conditions of the lender. However, there are certain banks, such as ICICI, which provide specifically education loan against fixed deposit.
For courses abroad, is the loan offered in the currency of that particular country?
For courses abroad, education loans are typically paid directly to the educational institution in the local currency of that country.
Will the moratorium on education loan get extended if I choose to take a sabbatical from my course?
The moratorium period on education loans differ from lender to lender. However, it is usually until the borrower gets employed or for up to 1 year of the course being completed, whichever is earlier. If you choose to take a sabbatical and want an extension of your moratorium, it would depend on the bank whether to grant it or not, so it is best to have a discussion about this with the lender.