What is an education loan? How to get it?

In today's time, it is the dream of every student to get a good education, but due to the rising education cost, this dream remains unfulfilled for many students. In such a situation, education loan emerges as an effective option, which provides the necessary financial assistance to the students for their higher education. In this article, we will learn about education loan in detail, understand its benefits, eligibility, process and other important aspects.

What is an education loan?

An education loan is a type of loan provided by a bank or financial institution, which provides financial assistance to students for their higher education. This loan is available to students studying within the country and abroad. Through this loan, students can meet tuition fees, books, hostel expenses, travel and other educational expenses.

Types of Education Loan

Education loan can be mainly divided into two parts:

1. Domestic Education Loan: It is given to students who wish to pursue higher education in India.
2. International Education Loan: It is for students who wish to study abroad.

Eligibility to get an education loan

The following eligibility criteria must be met to get an education loan:

1. The applicant must be an Indian citizen.
2. The student must have got admission in a recognized university or institute.
3. The applicant must have good educational qualification.
4. Parents or guardians are included as co-applicants.
5. Co-applicants with good credit score are preferred.

How to get an education loan?

The process of getting an education loan is simple but there are some important steps that need to be kept in mind:

1. Compare different banks and NBFCs (Non-Banking Financial Companies) and choose the most suitable loan plan.
2. Visit the bank’s official website or branch and fill the loan application form.
3. Submit the required documents like identity proof, admission letter, fee structure, income certificate of co-applicant, etc. to the bank.
4. The bank will check your eligibility and complete the verification process.
5. Once the loan is approved, the bank will pay the fees directly to the institution.

Documents required for education loan

The following documents are required for education loan:

• Identity proof (Aadhaar card, PAN card, passport, etc.)
• Admission letter
• Educational qualification certificate
• Fee structure details
• Income certificate of co-applicant (salary slip, ITR, bank statement)
• Residence proof (ration card, electricity bill, etc.)

Education loan repayment process

The loan repayment process usually starts after the completion of the course period. The bank provides a moratorium period to the students, which usually ranges from 6 months to 1 year after the completion of the course. For repayment, the student has to pay EMI (Equated Monthly Installment), the duration of which is determined by the bank.

Interest rate on education loan

The interest rate on education loan may vary according to the bank and financial institutions. Generally, the interest rate ranges between 6% to 12%. Under government schemes, interest rate rebate is also given to girl students and economically weaker sections in some special cases.

Benefits of Education Loan

• It provides an opportunity to get higher education without financial problem.
• No EMI has to be paid during studies.
• Tax exemption is available on interest under Section 80E of the Income Tax Act.
• Most loan schemes offer repayment periods of up to 5-15 years.

Education loan schemes provided by the government

The Government of India runs various schemes for students, the main ones being:

• Vidya Lakshmi Portal: Here loan options of different banks are available at one place.
• Central Sector Interest Subsidy Scheme (CSIS): In this, interest rebate is given to economically weaker students.
• Pradhan Mantri Vidya Yojana: Under this scheme, students get loan at low interest rate.

Conclusion

Education loan is an important tool for students who are not able to continue their education due to financial constraints. By choosing the right plan and the right bank, students can make their future bright. If you want to pursue higher education and need financial assistance, then education loan can prove to be a great option.