Education loans are investments made to cover students' higher education expenditures by banks or financial institutions. Availing this loan scheme, financial assistance is provided to the nation's deserving candidates with outstanding educational credentials to study at leading educational institutions in India and overseas. With stable terms and conditions, most Indian banks give such loans to eligible candidates at a low interest rate. In addition, the paperwork procedure is rendered limited to allow students to get the amount of the loan without any hassle.
Eligibility required for education loans
As these loans are given to the deserving students and those who are unable to cover the costs of their higher education, the eligibility of the educational loan is the students' educational success and accomplishments. In other terms, the candidates' eligibility is measured on the grounds of their educational outcomes, as applied to in the mark sheets of the initial studies. The eligibility conditions for the basic education loan that the candidates need to meet in order to get approval for the loan are mentioned here:
- He or she must be a resident of India
- In India or abroad, he or she must have verified admission in approved educational institutions.
- He or she must have a minimum age of 18 years up to a limit of 35 years during the loan application.
- Students taking full-time programmes must have a parent/guardian or spouse/parent-in-law co-applicant in case of married applicants.
Documents required for education loans
Education loan documentation does not require any physical documents, as stated earlier. The procedure is quick and can be carried out electronically without asking the banks for physical visits. The method may, however, vary based on the conditions set by different banks or lending organizations. In addition, since the banks are very stringent in their words, failure to apply the necessary documents will lead to refusal of the loan:
- Duly filled application form
- 2 passport size photographs
- Aadhaar/PAN Card of the student and his or her parents or guardians.
- Age proof: Aadhaar Card, Voter ID, Passport, Driving License
- Identity proof: Voter ID, Aadhaar Card, Driving License, Passport
- Residence proof: Bank statement of last 6 months of the student, Copy of Ration card and utility bills, rental agreement
- Income proof: Form 16 of the parent, guardian or co-borrower, salary slips of the last 3 months, bank statement or updated passbook of the last 6 months of the borrower, recent ITR.
Education Loan Interest Rates
The cheapest loans are offered by the Union Bank of India, starting at 6.8 percent, driven closely by the Central Bank of India. On education loans of Rs 20 lakh with a repayment period of seven years, Central Bank of India offers an interest rate of 6.85%. Education loan rates of India's largest lender State Bank of India are a bit higher at 6.9%. Banks are classified on the basis of interest rate in ascending order, i.e. banks with the lowest interest rate on education loans (up to Rs 20 lakh) are put at the top and the highest at the end. The table considers the lowest rate offered by banks on loans up to Rs 20 lakh.
|Sr No.||Banks||ROI in % p.a.|
|1||Union Bank of India||6.80|
|2||Central Bank of India||6.85|
|3||Bank of India||6.85|
|4||Bank of Baroda||6.85|
|5||Punjab National Bank||6.90|
|9||Bank of Maharashtra||7.05|