Education Loan

Education loans are offered to students for funding their higher education in India and abroad.

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Introduction

Education loans are offered to students for funding their higher education in India and abroad. Multiple financial institutions like Public sector banks, private banks, and NBFCs offer an education loan to students. An amount between 1 lac to 1.5 cr can be offered as an education loan in India with interest rates starting from 7.5%. Education loan is offered on the basis of the student's profile and which kind of course and university they are going to study at.

Why Choose an Education Loan from WeMakeScholars?

WeMakeScholars (WMS) is an organization supported by the IT Ministry, Govt of India under the Digital India Campaign. Our motive is to offer unbiased education loan support to students who are looking for higher education in India and Abroad. All the services of WeMakeScholars are FREE of cost. We are associated with 14+ banks (public/pvt) in India and help you get the best abroad education loan matching your profile. Interested students can request a callback from the team. 

Advantages of applying for an education loan through WeMakeScholars are listed below:

  1. Better Interest rates: Banks offer lower interest rates if the loan application is via WeMakeScholars, as we are their largest partner. The interest rates through WeMakeScholars are 0.5% to 2% lower than the bank’s average. 
  2. Fastest processing time: We maintain an average sanction timeline of 21 working days for Govt. banks and 7 working days for Private banks and NBFCs, after submission of all documents from your end. It is 50% less than the time the bank takes directly.
  3. End-to-end support: Not just with your loan sanction, the WeMakeScholars team also helps you with disbursement and repayment, even when you are in a 12 hrs different timezone.
  4. Cashback offered: You get a cashback of up to ₹3000 after you take your loan disbursement.
Features and Benefits of Education Loan
  1. Up to INR 75 lacs* without collateral
  2. Up to INR 1.5 cr* with collateral
  3. Interest rate starts at 7.5% (depends on the RBI repo rate)
  4. Interest rate concession of 0.5% for female students, offered by Govt. banks.
  5. Moratorium period is offered for all education loans - start repaying 6 months to 1yr after studies
  6. Repayment tenure up to 15 yrs.
  7. Loan offered without admission letter or i20
  8. Pre-visa disbursement possible
  9. Avail income tax under section 80E
  10. Avail concession in TCS on foreign remittance with an education loan

*Please note that all the above-mentioned parameters slightly vary depending on the student's profile, university and course. Once you speak with the Financial Officer at WeMakeScholars, you will get to know the exact option that matches your profile.

Tax Benefits on Education Loan
  1. Under section 80E of the income tax act 1961, the complete interest amount of an education loan, can be claimed as a tax free expense which means up to your effective interest rate will be 30% lesser than quoted.
  2. Under section 80C of the income tax act 1961, an individual can claim an interest portion up to 1.5 lacs from the total taxable income.
  3. TCS on foreign remittance: When you send money abroad, you need to pay TCS on foreign remittance. TCS is 5% if you are sending money from your own account and it is 0.5% only if money is coming through an education loan, so there is a saving of 4.5% on foreign remittances.
Types of Education Loans in India

1. Secured or Collateral Education loan:

Going for a collateral loan requires you to pledge your collateral (an asset) against your education loan. The collateral accepted by lenders are of two types:

  • Immovable property: House, flat, or non-agricultural land.
  • Liquid security: Fixed deposits, Insurance policies (term insurance),  or and Government bonds.

 2. Unsecured or Non-collateral Education Loan:

Non-collateral education loans do not require mortgaging any collateral for the education loan.

Difference between Secured and Unsecured Loans that is Collateral vs Non-Collateral Education Loan

Parameter

Secured or Collateralized Education Loan

Unsecured or Non-collateral Education Loan

Collateral requirement

Required minimum 50% of the loan amount

Not required

Loan Amount

  • Up to 1 cr for India
  • Up to 1.5 cr for foreign studies
  • Up to 50 lacs for India
  • Up to 75 lacs for foreign studies

Processing fee

Zero to max 10,000 rupees

0.75% to 1.5% of Loan amount

Rate of interest

8% to 10.5%

10.5% to 12.5%

Moratorium period

  • Course duration + 6 months
  • No payments required in moratorium
  • Course duration + 12 months
  • Partial interest or full simple interest may be asked during the moratorium.

Key parameters for loan eligibility

  • Collateral legal and valuation
  • Student’s profile
  • Parent’s income
  • Student’s profile
How to Apply for an Education Loan Online?

Let’s go through the application Process for an education loan.

Offline:

If you want to apply for an education loan offline, then you can visit the nearest bank branch.

Online:

It is possible to start your education loan process online for all Govt. banks, private banks and NBFCs.

Steps are as below:

Step 1: Fill the Education Loan Common Application form

Step 2: You will receive a call from your financial officer, to check your eligibility. Provide all the required information.

Step 3: Compare and choose your lender bank from all the lender options as per your eligibility and loan policies.

Step 4: Submit your documents in the bank or upload your documents on WeMakeScholars secure document portal, as per the documents checklist shared by your financial officer

Step 5: After document submission, your file will be logged in. You will receive a loan decision within 2-6 days  for Private banks and within 15-20 days for Govt. banks.

Step 6: After the sanction, you can sign the loan agreement and collect your sanction letter.

Top Banks and NBFC Providing Education Loans in India

Education loans are offered by Public banks, private banks and NBFCs in India. Top banks and NBFCs are mentioned below:

  • State Bank of India
  • Bank of Baroda
  • Canara Bank
  • HDFC Credila
  • Axis Bank
  • Karur Vysya Bank
  • Avanse
Comparing Education Loans from Different Banks & NBFC
    Banks Interest rate Processing fees Loan Amount

State Bank of India

Starts from 7.95%

    Rs.10,000 + GST

Without collateral: 7.5 lacs

(Higher amounts possible for top universities in India

With collateral: Up to 1.5 cr

Bank of Baroda

Starts from 8.45%

Rs.10,000 + GST or 1% of the loan amount whichever is lower

Without collateral: 7.5 lacs

(Higher amounts possible for top universities in India

With collateral: Up to 1.5 cr

Canara Bank

Starts from 8.80%

Rs. 10,000 + GST

 Without collateral: 7.5 lacs

(Higher amounts possible for top universities in India)

With collateral: Up to 80 lacs

HDFC Credila

Starts from 11%

1 - 1.5% of loan amount + GST

Without collateral: 50 lacs

With collateral: Up to 1 cr

Axis Bank

Starts from 10.70%

1% of Loan amount + GST

Without collateral: 40 lacs

With collateral: Up to 1 cr

Karur Vysya Bank

Starts from 10.50%

Rs. 10,000 + GST

Without collateral: 7.5 lacs

(Higher amounts possible for top universities in India)

With collateral: Up to 1.25 cr

Avanse

Starts from 11%

1 - 1.5% of loan amount + GST

Without collateral: 60 lacs

With collateral: Up to 1 cr

 

*Note: These interest rates are effective as of Nov 2022. The interest rates may change with change in RBI repo rate and bank policies.

Documents Needed to Apply for an Education Loan

Section 1: Application form 

Bank Application form with 2 passport-size photographs (online copy generated by WeMakeScholars is acceptable)

Section 2: Basic documents for Applicant (student) and co-applicant and/or Guarantor

  1. Proof of identity –PAN Card (and Passport of the student if going abroad)
  2. Proof of Residence – Voter ID Card/  Passport/ Electricity Bill/ Telephone Bill/ Ration card/ Bank account statement/ Aadhar. (2 different proofs if current and permanent residence is different)
  3. Bank account statement for the last 6 months (Personal/ Salary). For co-applicant, it should show the salary credits if salaried or 1 yr business transactions if self-employed.
  4. Personal Asset & Liability Statement (assessed by the branch professional)
  5. All the documents should be self-attested.

Section 3: Applicant academic documents

  1. Education marksheets and certificates- 10th, 12th, Degree
  2. Proof of admission for the course (should be evidencing total duration of the course)
  3. Fee structure
  4. Entrance exam score card

Section 4: Co-applicant Income documents

If Salaried

  1. Latest Salary slips (for last 3 months)
  2. Form 16 of the last 2 yrs.
  3. Employers ID card
  4. ITR of last 2 yrs

If Self-employed

  1. ITR of last 3 yrs
  2. Last 3 yrs Balance sheet and Profit & Loss account (only if self-employed)
  3. Proof of Business address

Section 5: Other Documents

  1. Letter stating that left over expenses, apart from loan amount will be borne by the co-applicant (Format to be provided by WeMakeScholars Financial officer)
  2. Notarised joint affidavit with the student and co-applicant in Bank’s standard format (Format to be provided by WeMakeScholars Financial officer)

Section 6: Additional docs (if applicable)

  1. Receipts of advance payments made if any.
  2. All loan account statements (1 year) if any pending loans.
  3. Letter explaining the gap if the students had a failure/break in studies on Rs. 100 stamp paper. (Format to be provided by WeMakeScholars Financial officer)

Section 7: Collateral documents (Optional)

It is only applicable for collateral loans. List of documents is different for each state. Ask your WeMakeScholars Financial officer for the state-specific collateral documents list.

When you process your education loan with WeMakeScholars, your financial officer will provide you with a detailed documents checklist, after analyzing your education loan profile.

Apply to the Best study abroad Education Loans

Speak with Financial officer

Due to high number of loan requests from your region, we are not accepting any new applications at the moment. We believe in offering quality service to our customers.

Sorry for the inconvenience caused.


Education Loan Eligibility

Applicant:

  • The applicant must be an Indian citizen residing in India or NRI.
  • Overseas Citizens of India (OCI) and Persons of Indian Origin (PIOs) are eligible for loans to study in India but not for overseas education.

Co-applicant:

  • The co-applicant must also be an Indian citizen residing in India or NRI.
  • Overseas Citizens of India (OCI) and Persons of Indian Origin (PIOs) are eligible for loans to study in India but not for overseas education.
  • Applicants must have any of their parents/ parent-in-law/ siblings/ spouse as their co-applicants while applying for an education loan.

University and course:

  • The applicant should have an admission letter from a recognized university abroad or in India.
  • The applicant must have opted for a full-time or part-time UG/PG program.
  • Exceptional academic record is always beneficial for the process.

Courses:

  • Graduation courses : BA, B.Com, B.Sc., etc.
  • Post Graduation courses : Masters & Phd.
  • Professional courses like: Engineering, Medical, Agriculture, Veterinary, Law, Dental, Management, Architecture, Computer etc.
  • Management courses include Hotel Mgt., Hospitality Mgt., Event Mgt., Mass Communication etc offered by reputed institutions having assured employment prospects
  • Computer certificate courses of reputed institutes accredited to Dept. of Electronics or institutes affiliated to an approved university.
  • Courses like ICWA, CA, CFA etc.
  • Courses conducted by IIM, IIT, IISc, XLRI. NIFT etc.
  • Regular Degree / Diploma courses like Aeronautical, Pilot training, Shipping etc., approved by Director General of Civil Aviation/shipping or equivalent foreign body
  • Evening courses of approved institutes.
  • Other courses leading to diploma / degree etc. conducted by colleges / universities approved by UGC / Govt./ AICTE / AIBMS / ICMR etc.
  • Teachers Training Course / Nursing Course / BEd will be eligible for education loan provided the training institutions are approved either by the Central Government or by State Government and such courses should lead to Degree or Diploma Courses and not to Certificate Course.
  • For foreign studies, Regular Graduate Degree/Post-Graduate Degree/Diploma/Certificate/ Doctorate courses in any discipline offered by foreignInstitutes/Universities in USA, UK, Canada, Australia, Singapore, Japan, Hong Kong, New Zealand and Europe [Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Norway, Poland, Portugal, Russia, Spain, Sweden, Switzerland, United Kingdom] will be primarily considered for the loan. Other countries are acceptable on a case-by-case basis.

However, the specific education loan eligibility depends on your bank and the education loan scheme, under which you are taking the education loan. There is always a possibility of deviation from the usual process, but this advantage only lies with the students, who process their education loan with WeMakeScholars, Request a callback or fill the common application form to avail all the benefits.

Track your Education Loan Application Status

When you choose WeMakeScholars as your education loan partner all updates regarding your education loan process will be shared with you within no time, via email, SMS and whatsapp text, along with that with WeMakeScholars you get:

  • Round the clock availability -  We are available 9 AM to 9 PM, for your convenience, you can call your financial officer to know the status of your education loan.
  • Loan profile credentials - You can access your loan profile using your loan profile credentials and track the status of your education loan application  
  • Digital empowerment - In the era of digitalization, WeMakeScholars empower you to apply, process and track your education loan all from your home.
  • Direct connectivity to lenders - You are provided the contact information of executives handling your file, using which you can directly reach out to the lenders team, if required.
Service Charges & Fees for Education Loans

WeMakeScholars is a government funded non-profit organization, supported by the Ministry of Electronics & Information Technology under the Digital India Campaign. We do not ask any service charge or fees from students to process their education loan. All our premium services are totally free of cost.

Here is a list of processing fee and other charges of Banks and NBFCs:

Type of Lender

Loan Processing fees

Other Charges

Govt. Banks

Rs.10,000 + GST

Collateral Legal and Valuation charges between Rs. 7500 to Rs. 10,000. Only applicable for secured loans.

Private banks

1% of the loan amount + GST

Collateral Legal and Valuation charges between Rs. 7500 to Rs. 10,000. Only applicable for secured loans.

NBFCs

0.75% to 1.5% of the loan amount + GST

Collateral Legal and Valuation charges between Rs. 7500 to Rs. 10,000. Only applicable for secured loans.

 

How to Calculate EMI for Education Loans?

Knowing the Education loan EMI helps students and parents in planning their repayment. Education loan EMI calculation is not as simple as home loan or personal loans, because in Education loan EMI payment starts after moratorium period that means for course duration plus 6 to 12 months, you won’t have to pay EMI.

WeMakeScholars is the only EMI calculator on the internet which is designed specifically for Education loans. It takes into consideration semester-wise disbursement, partial payments made during study period, any extensions of moratorium offered.

You can use the education loan EMI Calculator by WeMakeScholars to have a precise EMI amount and Loan amortization schedule for you.

List of Expenses Covered in Education Loan
  • Tuition fees- The tuition fee that is mentioned in your offer letter or admit card
  • Living expenses- These may comprise accommodation cost, food, and travel expenses
  • Health insurance- Many lenders include health insurance in the expenses
  • Travel tickets- Two-way flight ticket once per year
  • Books & Stationery cost - Books & stationery expenses incurred during the entire course of study
  • Laptop & Computer cost -  If required for the course, students can utilize the money from their education loan to purchase a laptop or computer.
  • Cautionary deposit- The amount up to 10% of the loan amount can be utilized from the education loan as cautionary deposit.
  • Two-wheeler- Loan amount can include up to 50,000 towards purchase of two-wheeler.
  • Miscellaneous expenses- Any other expenses incurred towards field visits or projects.
Education Loan Subsidy Schemes

Central Scheme for Interest Subsidy  (CSIS)

The scheme was announced by the MHRD, now the Ministry of Education, to grant interest subsidies on education loans to students belonging to the EWS section of society. 

Eligibility criteria for CSIS 

  • Annual family income of the student should not exceed Rs 4.5 lacs per annum.
  • Students should have mandatory proof of belonging from the EWS section of society.
  • Students must secure admission in approved courses of study in India only

Benefit: Under the scheme, in the moratorium period, eligible students need not to pay any interest for their education loan taken to study in India.

Padho Pardesh Scheme

The interest subsidy scheme was launched by the Ministry Of Minority Affairs, GOI to benefit meritorious study abroad aspirants belonging to economically weaker sections of notified minority communities.

Eligibility criteria for Padho Pardesh Scheme

  • Students should pursue courses at Masters, M.Phil and Ph.D levels.
  • Students should have availed loan from a scheduled bank under the Education Loan Scheme of the Indian Banks Association.
  • The total family income of the student should not exceed Rs 6 lacs per annum.
  • Income certificate issued by government approved authorities is mandatory.

Benefit: Moratorium period interest will be borne by the government up to a max of 20 lacs loan amount.

Dr. Ambedkar Interest Subsidy Scheme for OBC and EWS Students

The interest subsidy scheme was launched by the Ministry of Social Justice and Empowerment, for students belonging to OBC and EBC sections of the society, on the interest payable for the education loan within the moratorium period. This scheme is for eligible abroad study aspirants.

Eligibility criteria for Dr. Ambedkar Interest subsidy scheme for OBC and EBS students

  • Annual family income of the student should not exceed Rs 8 lacs per annum for OBC category and EBC category
  • Students should have secured admission in the approved courses at Masters, M.Phil or Ph.D levels abroad
  • Student should have taken loan from scheduled bank as per the Indian Banking Association guidelines
  • For students belonging to the OBC category, caste certificate is mandatory.

Benefit: Moratorium period interest will be waived off.

Credit Score & Report for Education Loan

Credit score or CIBIL score is the measure of the financial credibility of any individual. A person with a good CIBIL score has greater chances to get an education loan faster. But what is a good CIBIL score? 

Don’t worry, the below-mentioned table will tell you if your CIBIL score is up to the mark or not.

Banks

Min CIBIL score

State Bank of India

591

Other Govt. banks

685

Pvt. banks/NBFCs

685

 

Get in touch with your financial officer at WeMakeScholars, to find a way to process your education loan in spite of a lower CIBIL score.

Top 5 Education Loan Non-banking Financial Companies Institutions in India

HDFC Credila:

  • Up to 100% finance of I20 value
  • Option of 100% non-collateral education loan
  • Loan sanction before admission for I20
  • Doorstep service

Avanse:

  • 100% education finance
  • There is no limit for the maximum loan amount
  • Sanction within 1 day after logging the file
  • Prefers meritorious students
  • Can disburse in 1 installment
  • Doorstep service

Incred:

  • Accepts multi city co-signers
  • Can cover all the expenses of a student
  • All charges are included in InCred's origination fees
  • Can provide pre-visa disbursal if the situation demands
  • Doorstep service

Auxilo:

  • 1% processing fees
  • 100% finance
  • Pre-admission loan
  • Pre-Visa loan disbursement
  • Fast track loan
  • Competitive interest rates

Credence:

  • Offers a loan tenure of 15 years
  • 100% digital process
  • Approval in 6 hours
  • 48 hours to transfer fund
  • Can provide up to 50 lacs of unsecured loan

Other NBFCs offering education loans are Aditya Birla Capital, Tata Capital, Bajaj Finserv

Education Loan against FD, Govt. Bond, LIC Policy, House, Flat, Non-Agricultural Land

Immovable Property:

   Type

Value considered for the loan

Documents required

   House, Flat, Land

75% to 100% of the property realizable value

All property papers including title deed, sale deed, link document, property tax copy are required.

 

Liquid Security:

   Type

Value considered for the loan

Documents required

   Fixed Deposit

Upto 100% of the principal value

FD online or physical receipt

   LIC or other insurance policies

Upto 90% of the principal value

Surrender value certificate and insurance receipt

   Bonds

Upto 100% of the face value

Bond certificate

   Mutual funds or shares

Upto 50% of the current value- Max loan limit 20 lacs

Shareholding certificate or purchase proof

 

Education Loan Repayment

Banks understand that students cannot start repaying immediately after getting an education loan. Hence, they offer a moratorium period of course duration plus 6 months up to  1 year. Students need not to pay any interest during the moratorium period. However, for public banks it is not required for students to pay simple interest in the moratorium period but, private banks may ask for interest payments during this period.

After the Moratorium period ends, students will have to pay the previously calculated EMI to repay their education loan within the stipulated repayment period.

For instance if you take an education loan of say Rs 40 lacs for your higher education at 9% rate of interest, for a duration of say suppose 15 years, then your EMI repayment table will look like:

[Table] (to be added)

EMI will be auto-debited from your account after your moratorium period that is course duration plus grace period is over. You may also use Internet banking or Cheque to pay your EMI. So make sure there is sufficient balance in your account and plan your repayment wisely.

Education Loan Customer Care Numbers

We are a dynamic team of expert individuals, who are determined to fulfill your dream of abroad education, and that is why, we are always available to resolve all your doubts and queries at any stage of your education loan sanctioning process. You can reach out to us by:

  • By calling your assigned financial officer during office hours or by calling our support team at +919393344424.
  • Alternatively, you can drop an email to the customer support team of WeMakeScholars at hello@wemakescholars.com.

Feel free to reach out to us at any stage of your loan process, we will try our level best to resolve your concern as soon as possible.

How to Close an Education Loan?

To close your education loan you need to follow the below given steps:

  • Check your outstanding loan amount through internet banking in your loan account
  • Issue a cheque to your bank of the due amount.
  • Once you receive confirmation from banks, stating “no dues pending”
  • Fill out the education loan closure form via online or offline mode

Tip????: While issuing a cheque of the outstanding amount, keep a little extra amount, in case the manager closes your loan the next day, there shouldn’t be additional outstanding amount.

Multiple financial institutions like Public sector banks, private banks, and NBFCs offer an education loan to students. An amount between 1 lac to 1.5 cr can be offered as an education loan in India with interest rates starting from 7.5%. Education loan is offered on the basis of the student's profile and which kind of course and university they are going to study at.

Education Loan FAQ's

  • How does Education Loan work?

    Education loan is the financial aid offered by public banks, private banks and NBFCs in India to students who lack proper funds for their higher education in India or even abroad, as per their eligibility and requirement. The lenders charge interest on the offered education loan and have certain repayment policies according to which a student will have to repay the loan amount within the repayment duration.

  • What is the best way to repay an education loan?

    All the ways through which the education loan is repaid as early as possible is the best way to repay an education loan. Generally, students have to pay EMIs to repay the loan within the stipulated repayment duration which is generally 10 to 15 years, but there are certain methods to repay the loan even before the repayment period. Those are: Pre-payment or Part payment, Reducing the repayment period, Consider transferring education loan

  • Can I get an interest-free education loan?

    You will surely get an education loan at the cheapest rate of interest, than from anywhere else, if you process your education loan with WeMakeScholars, but banks do not offer interest-free education loans. However, you can apply for fully-funded scholarships through our website to arrange funds for your higher education.

  • What happens if an education loan is not paid?

    If an education loan is not paid by the borrower, banks will recover their lended money by selling off the collateral pledged by the borrower if it is a collateralized education loan. In case of non-collateralized education loan, the banks after sending multiple notices to the applicant and guarantor regarding the same, will declare the lended loan as default. After which the credit score of the applicant will take a serious hit, and the borrower may not be able to take loans further.

  • Can we cancel the education loan after approval?

    Yes, an education loan can be canceled even after approval, but for that a student will have to write a request to the banks, stating the reason for the same, if the lender bank finds the reason satisfactory, it will cancel the loan. But the processing fees incurred while the loan sanctioning process will not be refunded.

  • How much education loan can we get without collateral?

    You can get upto Rs 75 lacs without pledging any collateral with the banks, but in order to get such a high amount, your financial co-applicant must be earning well and you should satisfy the other eligibility criteria of the lender banks. A higher amount may also be offered depending on the student's loan profile, speak to your financial officer to know about the possible lender options.

  • Who is eligible for an education loan?

    All the students who satisfy the eligibility criteria of the lender bank can get an education loan. The criterias are different for different banks and their loan schemes. However, the basic eligibility criteria include, academic scores, applied course, applied college or university, preferred country, financial co-applicant’s income, etc. You can check your education loan eligibility by filling out the eligibility check form.

  • Who can be a guarantor for an education loan in India?

    A guarantor is a person who owns the property that is being pledged to take an education loan. Usually the primary co-applicant, mostly parents owning the collateral, are considered as a guarantor, but if the co-applicant is not pledging any property as collateral then the candidate's immediate family. For e.g., uncle, aunt, friends of the candidate can be the guarantor for a collateralized education loan in India.

  • What is the current interest rate on education loans?

    The current rate of interest for an education loan with collateral is between 9-11%, while for an education loan without collateral it is 11-13%. Usually, it is suggested to take collateralized education loans from public banks as they charge cheaper interest rates comparatively. However, you are sure to get an interest rate discount of 0.5-2% compared to the market rate, if you process your education loan with WeMakeScholars.

  • Can a student get an education loan without parents?

    Yes, a student can get an education loan without parents, they can have their siblings or if married, their parents-in-law or spouse as their co-applicants. A student can get an education loan without a financial co-applicant but having any one of the above-mentioned relatives as a primary co-applicant is mandatory to get an education loan.