Education Loan

For what type of courses can educational loans be taken?

Educational loans can be taken to pursue a wide variety of courses, for example: School/graduation courses, like High School, B.Sc., B.Com, B.A., etc. Post-graduate/specialized courses, like M.Sc., M.A., M.Com, etc. Professional courses, like M.B.A., M.C.A., B.E., M.E., B.Tech, M.B.B.S., etc. Other courses, like computer courses, fashion designing, commercial pilot training, etc. Keep in mind, however, that, usually, the courses financed should be for durations of more than a year, i.e., 12 months.

What are the costs covered under educational loans?

Educational loans usually cover the costs of tuition fees, hostel fees, mess fee and examination fees. Some banks may also finance the cost of books, equipments and other instruments required by the student for that course. For studies abroad, banks may provide one-way air fare. But this needs to be checked with your individual bank.

What security does one needs to provide for the loan?

The security depends on the loan amount. It is quite possible that banks may not require security for a loan of up to Rs 4, 00,000, but would require it for amounts greater than that. These limits are usually in slabs that vary with banks. The usual securities that the banks generally take are National Savings Certificates (NSCs), bonds, gold, vehicle, house or property, etc. In addition to these, some banks might also require the applicant to have a life insurance policy equivalent to, or greater than, the loan amount.

What are the documents required for an educational loan?

The general documentation required by the banks for disbursing education loans is usually very simple. The most important among them is proof from the college/institute that the student has a confirmed admission there, an agreement with the students or the parents/guardians, and proof of residence. Proof of age is also important, considering that quite a few banks have a clause that they would not finance a student above a certain age limit. Also some documents are required to prove that the parents/guardians have a regular source of income, namely, salary statements, IT returns, etc. and lastly a resume of the student, clearly showing his past academic performances.

How is the disbursement made?

Disbursement of the educational loan is made directly to the institute/college to which the student has applied for admission. In the case of mess and hostel charges, the relevant amounts are given to the concerned authorities. In the case of air fare, which is also available for studies overseas, the amount is given directly to the airlines. Some banks do give the students themselves a certain amount on a monthly or quarterly basis for purchasing books, equipments and other related material associated with the course. This, again, depends on the discretion of the bank.

Can a minor avail an educational loan?

No, a minor cannot avail of an educational loan. But his parents/guardians who satisfy the eligibility criteria can do so. Banks assess the individual's repaying capacity at the time of disbursing the loan, and, hence, minors are ineligible for educational loans. To know whether you can qualify for an education Loan, call us on 080 67974000 and ask our experts!

How does one repay the education loan?

Is a prepayment of education loan possible? What are the charges?

Is there any Grace Period in repayment of education loans?

How can one get Tax benefits on education loans?

When are education loans NOT eligible for tax deduction?