Education Loan in Gujarat

If you are a student in Gujarat and are thinking about getting a loan to pay for your education in Gujarat or elsewhere in India or abroad, this information will be helpful to you. On average, students in Ahmedabad, Surat, and Vadodara need around INR 15 lakhs to finance their education within India, and around INR 45 lakhs to study abroad. Education loan interest rates in Gujarat can range from 8.5% to 13%, depending on the type of loan and the lender. More information is available below.

For studies in India: 

For Foreign studies:

Interest rates of education loans in Gujarat differ from bank to bank and according to whether the loan is to be used for local education or overseas education. Interest rates are generally competitive and there are often additional discounts depending on the bank, the student’s gender, and the choice of the repayment plan. The following section compares interest rates offered by different banks in Gujarat as well as concessions that may be provided for students and their families to compare different banks while choosing the credit organization that will finance their education.

For studies in India

For Foreign studies

Expenses covered:

In India, students often take out education loans to cover the costs of tuition, exams, and other expenses related to their studies, such as:

• Hostel fees
• Books
• Equipment. 
• Some loans may also include money for living expenses like housing and food. The lender may have specific rules about how the loan must be used.

Moratorium Period:

The moratorium period is a set amount of time during which the borrower is not required to make any payments on their loan. The length of this period can vary depending on the lender and the terms of the loan, but is usually between 6 and 12 months after the borrower has finished their course of study. During the moratorium period, the borrower does not have to make any loan payments.

Loan Margin:

The loan margin is the percentage of the total loan amount that the borrower must pay out of their own funds. For instance, if the loan margin is 5%, the borrower would need to pay 5% of the total loan amount, while the lender would cover the remaining 95%. Lenders may use the loan margin as a way to reduce their risk if the borrower is unable to make the loan repayments. 

Collateral Margin:

A collateral margin is a percentage of a loan that is secured by an asset that the borrower puts up as collateral in case they are unable to repay the loan. If the borrower defaults on the loan, the lender can take possession of the collateral to cover their losses. Lenders may require a collateral margin as a way to reduce their risk.

To get an education loan in the state of Gujarat one has to go through a proper procedure of applying for the loan and submitting some necessary documents. Regardless of whether the loan is secured or unsecured, applicants are required to present certain documents that help to establish identity, educational background, income level, and the pledged property. This makes sure that the borrower is qualified for the loan and also helps to make the procedures for lending money easier. This section explains the necessary documents for both secured and unsecured loans in Gujarat to prepare borrowers to prepare themselves for the requirements within their loan application.

Documents required for Unsecured Loan in Gujarat

Application form:

To apply for a loan, a borrower must provide two photos, a signed form, and financial information from their officer. These items are necessary for their application to be considered.

Student Documents:

• The applicant must provide identification documents such as an Aadhar card, PAN card, and passport.
• A letter of admission from a university is required.
• Utility bills, including an electricity bill and house tax bill, must be submitted.
• Academic documents including transcripts from 10th and 12th grade, as well as any degrees or diplomas, are needed.     
• Scores from exams like IELTS, TOEFL, GRE, and GMAT must be provided.
• If there are any gaps in the applicant's education, a gap certificate must be submitted.
• If applicable, a letter verifying work experience should be included. 

Co-applicant Documents:

• In addition to identification documents, financial documents are also necessary for the application process.
• For salaried individuals, this includes the last 3 months of salary slips, 6 months of bank statements, a company ID, the last 2 years of Form 16, and the last 2 years of ITR.
• For self-employed individuals, the required financial documents include the last 3 years of ITRs, 6 months of bank statements, a balance sheet, a profit, and loss account for the last 3 years, and proof of the business's address.

Other Documents: 

• A letter stating that the co-applicant will be responsible for any remaining costs not covered by the loan must be submitted (a specific format for this letter will be provided by the assigned financial officer).    
• A manifested standard bank statement with both student's and the co-applicant's information must be provided.  
• If a loan is being requested to cover expenses such as travel or the purchase of a laptop, an invoice for these items must be included.
• Receipts for any transactions made in advance should be submitted.
• If applicable, loan statements from the previous year must be provided.
• A letter on Rs. 100 stamp paper explaining any gaps in employment or income may be required.   
• If relevant, a letter explaining the lack of a co-applicant's income tax return must be included.

Documents required for Secured Loan in Gujarat

In addition to the normal documents required for an unsecured loan, a co-applicant may need to provide a basic income certificate if they do not have income tax returns. For a secured loan, the borrower must also provide additional papers as proof of the collateral being pledged.

Additional Documents for Secured Loans for Gujarat

• Title deed for the property being used as collateral
• The registered sale agreement, gift deed, or will
• Original receipt for the agreement listed above
• Allotment letter from a government authority such as GIDC (Gujarat Industrial Development) 
• 30 years of documents showing the transfer of ownership of the property or an earlier chain of sale deeds establishing ownership, including an extract of the controlled document (EC)
• The latest property tax bill and latest electricity bill with the same address as the property
• Copy of a municipality-approved building plan or plot layout for the property.  

Acceptable collaterals in Gujarat for education loans

1. In the state of Gujarat, houses, flats, and land may be accepted as collateral for student loans. If you are using an immovable property as collateral for a student loan application in Gujarat, you will need to present all of the required collateral documents. This may include proof of ownership, a property appraisal, and any other documents that are necessary to verify the value and condition of the property.
2. Private banks may accept commercial properties as collateral, but the collateral margin for these types of assets is generally lower than it is for residential properties. This means that the value of the commercial property must be higher in proportion to the loan amount in order to serve as acceptable collateral.  
3. In the state of Gujarat, it is legally allowed to use agricultural lands as collateral when applying for an educational loan. To do so, the applicant must provide an affidavit that attests to the fact that all of their income is derived from agriculture at the time the mortgage is created.
4. Fixed deposits (FDs), insurance policies, and government bonds may be accepted as collateral, depending on their type. For instance, the principal value of an FD is typically considered, while the surrender value is taken into account for insurance policies and the face value is used for government bonds. It is worth noting that the collateral margin for these types of assets is generally higher than for other types of property.

In the state of Gujarat, a common reason for loan rejection is a low CIBIL score for the co-applicant. In order to be approved for a loan, most banks require a CIBIL score of above 685 with no major negative issues such as defaulted loans or cheque bounces. If the loan is unsecured, the CIBIL scores of both parents will be checked, but if a property is being used as collateral, only the CIBIL score of one parent (either the father or mother) will be evaluated. 

It is important to maintain a good CIBIL record in order to have a wider range of options and a lower interest rate on loans. Another factor that can affect loan eligibility in Gujarat is the income declared in tax returns (ITR). If an individual's ITR shows a lower income, it may decrease their loan amount eligibility. To avoid this, it is advisable to accurately report income in ITRs if a loan will be sought in the near future. Additionally, unregistered properties, referred to as "file" properties, cannot be accepted as collateral for secured loans.

• Under the education loan scheme implemented by the Government of Gujarat, and under this scheme education loans will not be given, only interest subsidies will be provided for the duration of the course and an additional one year after completion (moratorium period). Beyond this period, the remaining loan interest payments will not be eligible for subsidies under this scheme. This initiative aims to provide financial assistance to students pursuing higher education and to ease the burden of student loan debt.
• Eligibility criteria that applicants must meet in order to receive interest subsidies. These criteria include: passing the 12th standard with 60% or more percentiles, family income of ₹6.00 lakh or less, admission in recognized universities of India/foreign after passing the 12th standard exam from Gujarat state or Central higher secondary education board, and taking an education loan from a scheduled bank after being admitted to a particular course.
• The subsidy is available only for up to 10 lacs. If an educational loan is for more than 10 lacs, then interest should be given on only 10 lacs and the rest of the amount should be paid by the applicant.

Guidance from an Expert: If you are looking for a secured education loan, A relationship manager will be assigned to your case from WeMakeScholars to help you through the process by explaining to you and also expediting the process. 

Rate of Interest Negotiation: Interest rates for an Unsecured loan is usually higher than secured loans, but WeMakeScholars will help you in negotiating a rate of interest up to 2% less than that quoted by the lender.

Government Funding: WeMakeScholars is a government-funded organization by the Ministry of IT under the Digital India Campaign.

Experience in Complex Cases: WeMakeScholars come across multiple complex cases where there are multiple parties involved and need to be worked on a priority basis to get the loan sanctioned on time. WeMakeScholars can proudly say that we have processed education loans for many complicated cases in time.

No Service Charge: WeMakeScholars provides all its services free of cost, and will continue to assist the students further till the loan is completely repaid.

Transparency: WeMakeScholars will keep you updated on the progress of your application and also makes sure that you understand the process completely.

Cashback Provided: WeMakeScholars offers a cashback incentive for students who use the platform to apply for a study loan. The cashback will be applied to the first disbursement of the loan, with a maximum reward of INR 3000.

Once the moratorium period is over, you will need to start making monthly payments on an education loan without collateral. The repayment term for this loan is 10 years.

As an example, if a student obtains a loan of INR 35 lakh at an interest rate of 11.25% over a 10-year period, they will have to follow a payment plan in which they make monthly payments to pay back the loan.

There are various education loan subsidy schemes for students from Gujarat especially for the students belonging to the economically weaker and socially backward categories. These are aimed at reducing the cost of acquiring education by providing subsidies on interest charged on student loans. This section will briefly discuss the subsidies and their specific requirements and the possibilities of receiving them. The above-mentioned endeavors are meant to make certain that only deserving students are provided education without being hindered by the issue of finances.

Dr. Ambedkar Interest Subsidy Scheme for OBC and EBC Students:

The Ministry of Social Justice and Empowerment introduced this program in order to reduce the amount of interest that students from the OBC and EBC sections of society need to pay during the moratorium period for their education loans. This program aims to provide financial relief to these students during this time.

Eligibility Criteria for the Dr. Ambedkar Interest Subsidy Scheme for OBC and EBC Students:

• The student must have been accepted into a master's, M.Phil, or Ph.D. program at a foreign institution.
• The student's family income must be less than INR 8 lakh per year for both the EBC (Economically Backward Class) and OBC (Other Backward Class) categories.
• OBC category students must have a valid caste certificate.
• Only loans from scheduled banks that meet the guidelines of the Indian Banking Association will be accepted.

Benefit: During the temporary suspension of payments period of the loan, the interest payments that would normally be due will be waived. This means that you will not have to pay any interest during this time.

Padho Pardesh Scheme

The Ministry of Minority Affairs introduced this program to assist individuals from EWS (Economically Weaker Section) communities who wish to study abroad. This program provides financial support and resources to help these students achieve their educational goals.

Eligibility Criteria for the Padho Pardesh Scheme

• Loans must be obtained from scheduled banks that adhere to the guidelines of the Indian Banking Association.
• Students must have been accepted into a master's, Ph.D., or M.Phil program.
• A government-approved certificate of income is required.
• The student's family income must be less than INR 6 lakh per year.

Note: The Padho Pardesh scheme, which was a program run by the government of India, was terminated on March 31, 2022. However, students who were eligible for and registered in the program before April 1, 2022, will still be able to receive benefits from it.

Central Scheme for Interest Subsidy (CSIS)

The Ministry of Human Resource Development (which is now known as the Ministry of Education) established the program to offer waivers on the interest payments for student loans taken by individuals from the EWS (Economically Weaker Section) of society. This program was designed to provide financial assistance and support to these students as they pursue their education.

CSIS Eligibility Requirements

To be eligible for this program, students must provide evidence of their membership in the EWS (Economically Weaker Section) of society. They must also be accepted into an approved study program within India, and their family's annual income must not exceed 4.5 lakh rupees. If they meet these requirements, students who took out loans to study in India during the temporary suspension of payments period are exempt from paying interest on their loans under this program.

Benefit: The Central Scheme for Interest Subsidy (CSIS) is a program that offers financial support to students who meet the eligibility requirements and take out loans to finance their education in India during the temporary suspension of the payments period. Under this program, these students are eligible to have the interest on their loans waived.

There are several well-respected educational institutes located in Ahmedabad, Surat and Vadodara that offer a wide variety of courses, including engineering, medical, and degree programs. These institutes are highly regarded and are considered to be some of the top universities in Gujarat.

• Gujarat University
• The Maharaja Sayajirao University of Baroda
• Nirma University
• Sardar Vallabhbhai National Institute of Technology, SVNIT.
• Pandit Deendayal Energy University- PDEU (Formerly PDPU)
• Marwadi University
• Indian Institute Of Technology–Gandhinagar (IIT–Gandhinagar)
• Dharmsinh Desai University
• Navrachana University