Introduction

Is financial constraint holding you back from achieving your educational dreams? Are you hesitating to pursue your higher education in your dream college or university due to shortage of financial fund? You can now achieve your dream of completing the desired degree by taking advantage of education loans in India. Like all developing countries, India has also created a definite niche in the world economy by providing education loans to the aspiring students. Many colleges, universities and other educational institutions have tied up with private and nationalized banks to help the students achieve their dreams.
A comprehensive educational loan scheme was framed with the consultation of Government of India with reserve bank of India and Indian bankers association. By this scheme, one can avail a loan of up to 7.5 lakhs in India and up to 15 lakhs for abroad studies. These figures are not stable in nature for banks. State bank of India is availing an upper limit of 20 lakhs. In recent days, Indian bank has upgraded its maximum limit to 15 lakhs for education in India and 25 lakhs for abroad studies.

In India, if a student is under 18 years of age, an education loan is granted to the parents. Loans are also granted through third-party guarantee, who can be a relative, friend or neighbor. Students, above 18 years of age get loans to meet their professional or academic education costs. Compared to other types of loans, education loans in India come with lower interest rates. Sometimes, the loans are supplemented by student grants, which in general cases do not have to be repaid. Most nationalized and private lending institutions in India need authorization from the respective college or university. These education loans generally include the costs of tuition fee, hostel expense, and books & stationery costs.

Benefits of educational loan :
One can be benefited in many ways taking an educational loan.
The following are some benefits of taking education loans:
· Financial support is being offered for the most expensive professional courses (BE/ BTech, MBBS, MBA, MS etc.) that require more initial payment to get started with. This also includes challenging online MBA degree programs.
· Repayment of the loan is easier with flexible time duration after the course is complete and the students being well placed in some company.
· Loans are given for education India & abroad. Loans for education that are taken in abroad are also sometimes secure medical supports and safety.
· Loans are made available with more covers upto 20 lakhs from various banks.
· Expense coverage includes tuition fee, b o o k f e e , h o s t e l charges, t r a v e l expenses,and many m o r e based on the type of loan one opts for.
·Students can take after graduation with a security or under parents/ guardians security, thus reducing the burden of the parents.
· Students who want go for higher studies are more benefited by the service offered on loans.

Eligibility

The banks generally offer loans for management studies, engineering and medical degrees. The banks do not provide loans for students wanting to pursue a general Bachelor’s or Master’s degree in arts or commerce or for such courses where the prospect of lucrative employment is less.
The eligibility criteria of the bank to obtain an educational loan from any bank of India:-
· The student who is seeking for educational loan should be Indian national
· The student should have secured admission to professional/ technical c o u r s e s t h r o u g h entrance test/ s e l e c t i o n process
· T h e student should have secured admission to f o r e i g n u n i v e r s i t y / institution.

D o c u m e n t s required

You need to keep the following documents in place before applying for an educational loan:
· Mark sheets of the last qualifying examination for school and graduate studies in India.
· Proof of admission to the course.
· Scheduling of expenses to the course.
· Copies of letter confirming the scholarship.
· Copies of foreign exchange permit, if applicable.
· Two passport size photographs.
· Bank statement for the last six months of the borrower.
· Income tax assessment order not more than two years.
· Brief statements of assets and liabilities of the borrower.
· If you are not an existing bank customer you would need to establish your identity and give proof of residence.

Margin

If the course cost is up to 4 lakhs, nil for both studies in India and abroad. If the course cost is above 4 lakhs, 5% for inland studies and 15% for studies abroad.

Security

Banks have the following security/collateral security requirements for granting loans to students. However, the requirements differ from bank to bank.
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Loan up to INR 4 lakhs: No collateral security.
Loan above INR 4 lakhs and up to INR 7.5 lakhs: Security in the form of Satisfactory third party guarantee.
Loan above INR 7.5 lakhs: (a) Collateral security of suitable(b) Co-obligation of parents /
guardians/third Party along with assignment of future Income of the student for payment of
Installments.
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Rate of interest

The rate of interest is 10.75 % up to INR 4 lakhs. For a loan above INR 4 lakhs, the interest rate is 11.75 %. However, the rate of interest is subject to changes as per the specifications of RBI or the concerned bank.

Repayment of Loan

Loans are repayable in 5 to 7 years. Repayment of both principal and interest will start after one year after completion of the course or six months after g e t t i n g employment, whichever is earlier. Interest will be charged on simple interest basis during the period of study / moratorium period. At the commencement of repayment, the accrued interest is added to the principal amount and Equated Monthly Installments (EMIs) fixed on total outstanding amount. After commencement of repayment, the benefit of simple interest would be  discontinued.

Processing fee

Most of the Indian banks do not charge any processing fee or upfront charges. The State Bank of India accepts a deposit of INR 5000 for education loan for studies abroad, which is adjusted in the margin money.

Capability Certificate

If you are going abroad to study, some of the foreign universities require you to submit a certificate from your bankers about the sponsor’s solvency/financial capability with a view to ensure that your sponsors are capable of meeting the expenses till completion of studies. Accordingly branches can also issue the capability certificate. For this financial and
other supporting documents may be obtained from you, if required.

Which Banks in India Offer Education Loans?

Most nationalized banks, private banks, foreign banks and private lending institutions  provide students loans. Some of the loans from the most popular banks are as follows:
· Axis Bank Study Loan
· Allahabad Bank Loan
· Bank of India Loan
· Bank of Maharashtra Loan
· Bank of Baroda Loan
· Bank of Rajasthan Loan
· Canara Bank Student Loans
· Federal Bank Vidya Loan
· IDBI Bank Education Loans
· HDFC Education Loan
· UCO Bank Education Loan
· ICICI Bank Education Loan
· Punjab National Bank Loan
· Syndicate Bank Loans
· Indian Overseas Bank Loan
· Oriental Bank of Commerce
· State Bank of India Loan
· United Bank of India Loans

Conclusion

Finally, you need to hit on the right bank with the right educational loan scheme to suit your needs. Parameters to weigh the alternatives are many; as in, whether the bank provides loan for the course you are opting for and if yes, then up to what extent, the margin and security requirements, the rate of interest, proximity of bank to your residence, et al. The discretion is yours after a thorough analysis.