It is time for the higher secondary students to plan for their professional degrees. The results are out for the higher secondary students and if you are a student passing out from the secondary school, mind full of tension about the course to choose, lot of suggestions from the relatives and friends. If you are hailed from a wealthy family then financial requirement won’t be major issue in your case. But, if your financial status decides your future of education, then you must be worried even though you have scored very decent in the exam results. If you are loosing your life time ambition just because of the current situation of your family finance, then it should be the life time mistake you have done.
Education loan comes to your help for funding your spending for the education. In India, govt. has informed all the banks to offer education loans to all the students. However there are few restrictions on the course, college, etc. that prevents banks to reject the loan applications. But, in most of the cases students will fall in to the category of eligible courses.
If you have any doubts related to the education loans, please post it in the comments section. I will reply to all your queries and resolve your doubts. Thank you for reading my blog. Stay tuned to get more updates!!
How to get education Loans?
If you are in India, you can apply for education loans in all the nationalized and private banks. As per the govt. circular to all the banks in India, every bank must approve the education loans application from the students. If you are a student who have completed the higher secondary education, you can get the education loan from any of the nearest bank branch in your city.
It is always good idea to start inquiring about the education loan to the banks. Each bank may have different eligibility criteria, it is better to be early than the late. If you have savings bank account with any of the bank, start your inquiry with the same bank. Your job could be easier because they are already known to you.
The following are the steps to apply for the education loan:
- Find the details of the procedure to apply for the education loan
- Fill up the education loan application form to the bank
- Get the bona fide certificate from the college which you are joining with the receipt of joining fees and fees structure of the institution
- Submit the mark sheet of the higher secondary education
- Submit the address proof
- Other documents requested by the banks
Who can get education loans?
There are certain restrictions to approve the education loans. When banks are offering the loans, they have to consider the repayment capability of the applicant. The student’s family may not be in the good financial status, but his course must be competent in the country to get him good job to repay his loan. Otherwise banks would hesitate to approve the loans. Let’s look into the few points which is important for you to get the education loans:
- You must be get into the approved education institutions in the country. The loans can not be applied for the un-approved institutions.
- Job prospect for the chosen course. If you are studying the course which has very less probability to get the job and you don’t have any other assets, then very likely you will fail in repaying the loan.
- You have check the list of courses in the education loan document. Most of the courses would be covered in the list.
- You must be an Indian citizen
- If you are in the category of SC/ST, then aggregate mark percentage should be 50% else 60% required.
The above points are only the guideline for you to get an idea about the eligibility enforced by most of the leading banks in India.
What is your education loan eligibility?
- If you are studying in India, maximum eligibility is Rs. 10,00,000 (10 lacs)
- If you are studying in abroad, maximum eligibility is Rs. 20,00,000 (20 lacs)
If you need more loans, it depends on other eligibility criteria like marks, college, family income, etc.
Security for education loans
If you are applying for education loans below Rs. 4,00,000, there is no security with the loan. If you need loan amount more than Rs. 4 lacs, then you have to provide the loan guarantee.
- If the loan amount between Rs. 4 lacs to Rs. 7.5 lacs, student’s parents or relatives has to provide the individual guarantee.
- If the loan amount is more than Rs. 7.5 lacs, student has to provide security in the form of assets in his name or parents name.
But, in the most of the cases the total expenses of the courses would fall into 4 lacs. Note that the loans can not be taken for the donation given to the colleges. The loan can be only used for the college fees and hostel fees. The following are the expenses allowed to claim in the education loan:
- College semester fees
- Exam fees, books and lab fees
- Student’s education expenses (dress, research related materials)
- Computer
- Expenses incurred for completing the project work
How to repay the education loans?
There is no need for the students to repay the loans at the time of studying. After completing the course, within one year or after getting the job within six months he has to start the loan repayment. Normally five years to given to repay the entire loan amount. The Equated Monthly Installement (EMI) is differ for the each bank. If your family’s total income is less than 4.5 lacs per annum, you need not pay the interest on the education loans at the time of doing the course. That expenses will be paid by the govt. Please read our previous article about interest free education loans.
Under Section 80E, interest paid on the education loans are fully exempt from the Income tax. The loan can be taken for himself or the relative. Relative means the in relation to an individual, means the spouse and children of that individual the student for whom the individual is the legal guardian. There is no condition that the course should be in India. The total claim for the interest payment is unlimited.
Interest Rates for the Education Loans
I have summarized the list of banks with interest rates. I have listed only the leading nationalized banks in India.
Summary
Update 1 (26-June-2012):
Here is the good news for those who are interested in doing the vocational or skill development courses like polytechnic, mechanical or professional certification for the specialized skills required for the job. These areas have not been covered by the existing loan scheme. In the existing loans, banks approve only the formal degrees from the recognized institutions. The change in the guidelines for education loans by Indian Banks Association (IBA) has made it clear that banks can offer loans for the vocational courses. It is not very clear that when banks will start implement this scheme for the students. If you have approached the banks and got any valuable information, please share it here.
Update 2 (30-June-2012):
In the recent survey conducted by the Indian Banks Association (IBA) with over 150 educational institutes across the countries, banks are not following the standard guidelines issued by IBA for issuing the loans. There are high number rejection on the education loans, sadly most affected part is the rural areas. Even for the loans less than Rs. 4 lacs, banks tend to ask for the collateral. Also they charge the compound interest rate on the loans which is not acceptable. I have learn from the comments in our post about interest free educational loans, many of the students have complained on these issues. We hope that our govt. or any body would take this issue seriously and find a remedy. Educational loans are very important for the economically weak students.
I have come up with the maximum details to help the students to search for their education loans. If you have any friends who are looking for the education loans, please share this details which will be more useful for them. If you are student, the progress report of your studies needs to be submitted to the bank every six months. So, you have to be careful on clearing all the subjects. Banks has the rights to stop your education loan at any point of time if your performance is not good in college.
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June 17, 2012 at 8:43 pm
In the article , it is mentioned : “But, the exemption is applicable for the student”. But, this is wrong . The parent of student can claim excemption under sec 80E.
June 17, 2012 at 8:56 pm
Hello Manohar,
Thank you for pointing out the mistake. Earlier to previous year 2006-07 the above deduction is available for loan taken and repaid by the assessee himself for his studies only. In 2007, the rule has changed.
Thank you for reading my blog.
Thanks,
Krishna
June 17, 2012 at 8:58 pm
I have updated the blog with correct info.
Thanks,
Krishna
June 17, 2012 at 10:34 pm
can you please clarify: if to become eligible for int-free loan, is taxable income up to 4.5 lakh is taken into ? or gross total income is taken into consideration?
June 17, 2012 at 11:15 pm
Hello Manohar,
Thank you for replying back.
The total income of the family is below Rs. 4.5 lacs. Not the taxable income. In the govt. website they have clearly mentioned this paragraph:
“The benefits under the Scheme would be applicable to those students belonging to economically weaker sections, with an annual income upper limit of Rs. 4.5 lakh per year.”
source: http://www.pib.nic.in/newsite/erelease.aspx?relid=52177 (press release from the govt.)
Please let me know if you have any other doubts.
Thanks,
Krishna
June 28, 2012 at 1:14 am
Hi,
I want loan for MBA course from NIT Trichy,
will the bank provide me the loan?
also want to share that my parents do not want me to go for any more study so they will not sign any of the document or any where also they will not assist me finentialy but i am salected for the above course in NIT Trichy and i want to avail the opportunity,In this case please advise if the loan will be sanctioned or they require parent signature to sanction the loan?
Thanks,
Regards,
Sandeep.
09716937334
June 28, 2012 at 6:29 am
Hello Sandeep,
If the college is good, then some banks may not insist on taking the parents sign. Since NIT, Trichy (I have studied in Trichy
)is very good college, there won’t be much problem in getting the loan. I would suggest your to talk to the banks.
Thanks,
Krishna
June 28, 2012 at 6:40 am
What course you did in nit t
June 28, 2012 at 6:57 am
I said I have studied in Trichy. Not in NIT
June 28, 2012 at 9:07 pm
oH, ok SIR,
June 25, 2012 at 9:43 pm
thanks for giving info. regarding Ed. loans ;
Is this interest free criteria accepted by every bank??
June 26, 2012 at 6:29 am
Hello Akash,
It is available with the nationalized banks.
Thanks,
Krishna
June 26, 2012 at 10:42 pm
sir i get 55%in madhyamik exam and want to study more but for financial problem i cant get admission on polytechnic college so can i get the loan. for admission. pls tell me sir…..
June 26, 2012 at 11:12 pm
Hello Rajive,
Just few days back, RBI has told the banks to offer education loan for the courses like polytechnic, etc. I am not sure when this will be active. I would encourage you to talk to some of the banks in your town. They can provide the ideas. Also you read this article about the recent announcement:http://www.livemint.com/2012/06/11222108/IBA-approves-vocational-educat.html
Thanks,
Krishna
June 28, 2012 at 7:17 am
If you want to know the ranking of universities across the world, this site would be useful:
http://www.webometrics.info/
June 29, 2012 at 1:49 am
sir i am bsc graduate this year 2012..i am willing to do MBA in B-School…can i get loan for that exactly 4 lacks without monthly interest…because my parents cant pay that interest monthly..please guide me
June 29, 2012 at 6:10 am
Hello Bharat,
Please talk to the nearest nationalized bank. I am not sure whether that scheme is still available.
Thanks,
Krishna
July 2, 2012 at 2:01 am
Dear Krishna!
I have completed my PGDM Agri-Food Business Mgmt, got campus placement, working. I took Bank of Maharashtra education loan for this course. When should I start repaying principle amount? my father has been paying interest since 2010. What benefits we can claim to avoid the Income Tax?
Principle amount= Rs. 4,00,000
Kindly guide,
I will be grateful to you.
Dhananjay Kale
July 2, 2012 at 6:39 am
Hello Dhananjay,
Since you got the job, you can start repaying the loans immediately. For the tax benefits, the amount which you are paying as the interest can be claimed fully tax exemption.
Thanks,
Krishna
July 2, 2012 at 10:24 pm
Dear Krishna!
Thanks for previous comment. One more doubt, if I pay Rs. 50,000 in FY 2012-13. Then for 50,000 I will get tax exemption, is it? Please, quote an example to clear this one.
Thank You and Best Regards,
Dhananjay Kale
July 3, 2012 at 5:29 pm
Hello Dhananjay Kale,
If you repay Rs. 50000, you ask the banker to give the repayment certificate. In that they would have clearly mentioned that what is proportion of Principal and Interest. Only interest part you can claim.
For example, If you are paying the monthly EMI for the education loans, depends on the loan tenure the principal and interest will vary. Say if the total EMI is Rs. 7000 per month, this comprise of Rs. 3000 as the principal and Rs. 4000 as the interest. Every month principal will increase and interest will decrease.
This details should be provided by your bank at the end of financial year. Use the document to submit the details.
Thanks,
Krishna
Thanks,
Krishna
July 4, 2012 at 2:12 am
Dear Krishna!
Thank you for fruitful guidance.
Regards,
Dhananjay Kale
July 4, 2012 at 2:13 am
Dear Krishna!
Thank you for guidance.
Regards,
Dhananjay Kale
July 4, 2012 at 8:24 am
Hello Dhananjay,
Thank you for reading my blog.
If you have any doubts, please post it here.
Thanks,
Krishna
July 11, 2012 at 10:00 am
hiii
i have taken 2lakhs of loan from andhrabank for 2007-2011
how much i have to pay for an installment
July 11, 2012 at 11:57 pm
Hello shiva,
Please call to your bank for the details.
Thanks,
Krishna
September 4, 2012 at 11:16 am
Am a central govt pensioner having pension/other income less than Rs.4.5 lakhs and am residing at Chennai. My son got admitted in engg college at kerala. So please intimate where I can get interest free education loan?
September 5, 2012 at 3:52 pm
Respected Sir,
i have taken an educational loan of Rs.3,22,000 from Union Bank Of India in 2009 for my MBA studies, i have completed my MBA in july 2011.
I got married as well in same year (2009) and came to delhi, my father paid interest for few months, and uptil now we have paid around 40,000. But the loan amount instead of decreasing has risen from 322000 to somewhere around 40,000. Can you please provide me some information on the fact that
is education loan has now become interest free? Can i awail this benefit?
i am not working anywhere and that would be a great help to me and also please tell what should be the ideal amount that i should pay every month? and from when ideally should i have started paying it? please help?
September 26, 2012 at 2:13 pm
Hi,
I am engg graduate, I took education loan in IOB in the yr 2008. but from 2009, govt made zero interest for students. Now problem is, few of my friend who took loan in 2008 in some other banks, got zero interest from 2009. But my bank officers saying its not applicable for me. can you please clarify me.? I will be so glad for your kind help.
November 15, 2012 at 8:32 am
Hello Krishna
First of all, thanks a lot for the blog! My doubt is, it was said the total income of the family is below 4.5Lakhs. I have a brother working for an MNC. Should I consider his income also while checking my eligibility or my father’s income alone will do? If I sum up the income of my father and brother, it will cross 4.5Lakhs, else my father’s income alone will be under 4.5L. Please clarify. And also whom should I appeal to if the bank is not processing the waiver?
Thanks
Naresh
March 10, 2013 at 10:45 am
I m a student appeared for 2nd year enggineering computer science degree course and i have to undergo 4 more semmester. for the earlier 4 semmester i have already paid the fees and books by borrowing from relatives but now they are not in position to lend. I also want to repay them as i have promised when i get my job. Please guide me that for remaining 2 years i need atleast Rs 250000/- for the fees and books.If i want avail it by loan guide me for the same. My mail id is tejassalvi09@gmail.com
March 11, 2013 at 6:06 am
Please contact the bank. Not sure still the education loan scheme is available.