Education Loan Process-Stepwise Guide of Education Loan in India

If you are looking for the education loan in India and want to know the education loan process in India then this article will help you finding the steps to get education loan in India and will familiarize you with the education loan process. Higher education in the top notch educational institutes is everyone’s dream but the expenses and fees structure of these higher education institutes is also very high. Either you are opting premier Indian or Foreign higher education institutes, cost incurred is very high, some may be able to get into these institutes with their own resources and for some families it’s a day dream to reach and fulfill due to financial constraints.

There are various public and private banks in India who offer education or student loan to the meritorious scholars without any collateral and some of them offers the loan based on the collateral. The education loan process of these public and private banks may differ, few of them offers 100 percent financing of all educational expenses including tuition fees, examination fees, 
living expenses, travel expenses, and any other costs 
related to the course. Some banks offer pre-admission loans for a student with the ‘proof of funds’ which can help with securing a confirmation of admission at their chosen University or higher education institute on or before the admission.

By making college un-affordable and student loans unbearable, we risk deterring our best and brightest from pursuing higher education and securing a good-paying job.

…by Mark Pokan

Before reaching out to the banks, here are some of the points to consider before applying and taking student loan or education loan in India, also get familiar with their Education Loan Process.

Step-by-Step Guide of Education Loan in India

1. Important points to consider before taking Education Loan in India

1. 1. Do they take multiple co-borrowers.
   2. Check the interest rates, should avoid the higher interest rate offers.
   3. Check the loan structuring and various hidden charges.
   4. Check the educational loan’s part payment options.
   5. Check the educational loan’s pre-payment options and pre-payment charges.
   6. Check the collateral need and form of collateral such as real estate properties, life insurance policies, fixed deposits, NSC, KVP, NSS, etc.
   7. Check the flexibility on/of collateral security.
   8. Check the documents required.
   9. Check the margin money if required from the bank and the margin money free loan limit.
   10. Time taken to sanction the educational loan or early approval of the loan, it should be pre-Visa if opting for the foreign education loan.
   11. Check for the service charges and other banking charges.
   12. Check your course such as Graduation, Post-Graduation and Professional Degree/Diploma courses conducted by colleges/universities approved by UGC/AICTE/IMC/Govt. bodies ||Technical/professional courses like management, medicine, law, engineering, aviation ||Degree/diploma courses offered by independent institutions like IIT, IIM etc. ||Courses offered in India by recognized foreign universities ||Vocational training, executive programs and other courses etc. are covered by the banks or not.
   13. Check the loan amount and coverage of the loan such as tuition fees, boarding and hostel charges, examination fees, laboratory fees, library fees, books and uniform expenses, caution deposit and building fund fees, and other expenses.
   14. Insurance cover and its premium of the student loan or education loan in India for the co-borrower and student.
   15. Once loan is approved, then check the mode of disbursal of amount.
   16. Check for some extra future expenses if needed during the course duration, their approval process and time of disbursement.
   17. Check the income-based repayment program or refinance the loan program and student loan process of the bank. This is the most important point to consider once your course is completed and payment of your loan begins.
   18. Repayment tenure.
   19. Tax benefits under section 80(E) on education loan in India repayment.
   20. Check for any subsidy on education loan in India if available from bank, government etc.
   21. Check if bank offers any concession on interest rate on the education loan in India.

2. Candidate or Student Eligibility for the Education loan

1. 1. Student applying for the Education Loan must be an Indian citizen, and age should not be less than 18 years.
   2. Admission confirmation documents by the institute is needed before applying for the loan.
   3. Co-borrower should be an earning person in India with Indian citizenship, who could be a parent, sibling, legal guardian, or a relative.
   4. Co-borrower (in certain banks co-borrower becomes the primary debtor) must have an Indian bank account with cheque writing facilities.

Courses Eligible for Education Loan In India

All the financial institutions that offer education loan or student loan first see the reputation of Institute/University from where student will be seeking for the admission to accomplice the course. They also verify whether the course and institution has the accreditation by the concerned authority. They also see the reputation of the Institute and cross check the stats of job opportunities offers after course completion so that they can get the returns on time.

Students can avail of loans all the courses such as Under Graduate programs, Diploma courses, Post Graduate programs, PG diplomas and Doctorate programs.

Few diploma in specialized streams & training are also eligible for the education loan but all banks do not finance these courses and depends on the bank to bank for such eligibility, but you can find out and research the process and offers extended by banks for such courses.

Specialized courses in Computer certifications such as Data science, IoT, Machine Learning, Artificial Intelligence etc. offered by top notched institutions are eligible for student education loans where job chances are higher.

One can also get education loan for Engineering diplomas, ITI certifications, Nursing/Teacher Training certificate courses and B.Ed/M.Ed, courses and diploma related to Agriculture field, Veterinary diploma or any other job oriented diploma or certificate course.

Institutes/Universities Eligible for Education Loan

All the banks don’t offer education loan in India to all the courses offered by any Institute or University, they’re very selective in offering loans.

Financial Institutions see the repute of the course and institute both and also see the stats of jobs offered post course completion.

They always keep data of reputable and pre-approved universities as well as pre-approved courses. If the course is in India then the course and institutions should be recognized by UGC, Government department if needed, AICTE, AIBMS, IMCR, etc. and if the courses to be done in foreign countries then it should come under the criteria prescribed by the bank offering student loan.

Documents Required for Education Loan In India

1. Proof of identity anyone such as Aadhaar Card, Valid Passport, Pan Card, Voter Card, Driving License etc. (You can check it from the bank where you’re applying for the loan).
2. Proof if residence anyone such as Aadhaar Card, Valid Passport, Pan Card, Voter Card, Driving License, Tax Paid Receipt, Bank Account Statement / Passbook, Letter from any recognized public authority, Telephone bill / Electricity bill / Water Bill not more than 3 months old, Ration Card (except Maharashtra), Letter from employer, Copy of agreement to sale / sale deed, Allotment letter issued by any government department etc. (You can check it from the bank where you’re applying for the loan).
3. Signature proof as given by/in Banker’s signature verification/authentication, Passport Copy, PAN Card, Driving license with photograph and signature Individual, Clearance of processing fees cheque –concerned officer has to verify signature on application form with processing fees cheque. Photocopy of the processing fee cheque to be maintained in the file, Notarized affidavit. (You can check it from the bank where you’re applying for the loan).
4. Private and Public Limited Companies, Partnership Firms/LLP, Trust/Foundations, Proprietorship firms are also accepted as the co-borrowers by the banks, you can check from the banks for the required documents of such co-borrowers.

List of Banks and other Institutions offering Student Loan or Education Loan

1. Auxilo Finserve Pvt. Ltd. who was formerly known as Stellenyak General Finance Pvt. Ltd.
2. SBI Education Loan
3. Kotak Mahindra Bank Ltd.
4. Union Bank of India
5. Vidya Laxmi (This portal is developed under the guidance of Department of Financial Services, (Ministry of Finance), Department of Higher Education (Ministry of Human Resource Development) and Indian Banks Association (IBA). The portal has been developed and being maintained by NSDL e-Governance Infrastructure Limited. The portal also provides linkages to National Scholarship Portal.)
6. TataCapital
7. Avanse Financial Services
8. ICICI Bank
9. HDFC Credila – for easy education loan process and HDFC Bank
10. You can check UGC (University Grants Commission) site for the associated banks offering education loan.
11. Axis Bank
12. Scheduled bank BCCB

Education Loan Interest Rates offered by Banks

The education loan interest rate differs from bank to bank, which is based on the particulars of the applicant, type of course, reputation of University/Institute as well as the loan amount. The final rate of interest fixed by the banks is the total of the base rate and the loan mark up. The base rates range from 8% to 10% and the final rates of interest range from 8.30% to 12.25% per annum.

Education Loan Process Defined

1. Once you found yourself eligible for the education loan in India based on the above criteria and possessing all the required documents, you need to approach the bank. You should follow the points to consider before applying for the education loan given above.
2. Once you contacted the bank, there might be a round of personal discussion where you will be asked questions such as academic choices, your academic performance, courses and institution selected for which you’re applying for the loan. Bank could arrange a counselor for all this and will try to collaborate with you to create a customized loan solution.
3. Once all above done, you will be asked to fill the required form for the education loan. All the required documents will be scrutinized and verified by the bank. You will be required to give details about your institution such as admission dates, course-specific information, admission related documents etc.
4. If you have chosen for the foreign courses then you need to submit course qualifying certificate/letter, Institute/University website which is showing your result, academic calendar of the course, fee structure along with all the other expenses, Visa of the country, Passport etc.
5. Once all the required forms, documents are submitted then Loan structuring process begins where your’s and co-borrower’s documents are scrutinized/verified.
6. Once all the above process is completed successfully then your loan is disbursed by the bank to your account or educational institution or the vendor as and when there is requirement.

Note: All the above steps are taken for the reference purpose only, subject to differ from the bank to bank. These points can be taken to get the general idea about the education loan process of the banks.

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Note: There are various private and public banks who offer education loans to the deserving students at lower rate of interests. Please do thorough study before accepting the education loan from any banks. Remember all the points given above for the education loan process and you can also take the advice from the experts, inquire about the same from your colleagues, seniors etc. who has already taken Student loan or Education Loan.

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