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Education Loan
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Table of content
- What Is An Education Loan?
- Types of Education Loans
- Types Of Collateral Accepted For An Education Loan in India
- What is the Best Bank for Education Loans in India?
- Features and Benefits of a Study Loan in India
- Tax Benefits on Student Loans
- Expenses Covered in an Education Loan
- Eligible Courses for an Education Loan
- Education Loan Eligibility Criteria
- Documents Required for Education Loan Application
- How to Apply for an Education Loan Online?
- How Much Time Does it Take to Get an Education Loan?
- Important Education Loan Details: Fees & Charges
- Education Loan Repayment
- How to Calculate EMI for Education Loans?
- CIBIL Score for An Education Loan
- Education Loan Subsidy Schemes
- Tips To Manage Your Education Loan
- Education Loan Customer Care Numbers
- FAQ's
- Need Help? Ask Here!
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What Is An Education Loan?
Education loans are the loans offered to students to finance their higher education in India and abroad. Financial institutions like Public sector banks, Private banks, and NBFCs offer education loans in India. The banks evaluate several factors, including the country(overseas, domestic), the course (undergraduate, postgraduate), the student's profile, and the co-applicant's income and creditworthiness, to provide student loans. These factors decide the loan terms, such as the Loan amount, interest rate, Moratorium period, and the education loan Repayment period.
Study loans in India offer various benefits, including higher loan amounts, lower interest rates, long repayment tenure, and an income tax rebate on education loans etc. To know more about each of these aspects, keep on reading and comment if you have any further queries.
Types of Education Loans
Education Loans are primarily divided into 2 types based on the collateral involvement of the loan:
Secured Education loan:
Secured or Collateralized Education Loan is an education loan where you have to pledge collateral (an asset or security) such as a house or land to receive the loan amount.
Immovable property: House, flat, or non-agricultural land.
Liquid security: Fixed deposits, Insurance policies (term insurance), or Government bonds.
Education Loan without Collateral
An Unsecured education loan, or an education loan without collateral, is where the student can take an education loan without having to offer any security or collateral. These loans are given based on the income and creditworthiness of the applicant and the co-applicant.
Comparison of Secured vs Unsecured Student Loans
Here is the comparison table containing the important education loan details of both secured and unsecured student loans. It helps you compare education loan interest rates, loan amount, collateral requirement, processing fee, moratorium period, and eligibility criteria of secured and unsecured student loans:
|
Parameter |
Secured Education Loan | Unsecured Education Loan |
| Collateral requirement | Required minimum of 50% of the loan amount | Not required |
| Loan Amount |
(Depends on the collateral evaluation) |
|
| Processing fee | Zero to max 10,000 rupees + GST | 1% to 2% of the Loan amount |
| Rate of interest | 8.15% to 10.5% | 10.5% to 12.5% |
| Moratorium period |
|
|
| Key parameters for loan eligibility |
|
|
- Government banks are the best option to go for in case you are trying for a secured education loan, and they offer very good student loan interest rates and flexible repayment conditions. They also offer education loans without collateral of up to ₹7.5 Lakhs under the CGFSEL Scheme.
- Private banks and NBFCs are the best when it comes to an education loan without collateral, as they offer a higher loan amount than government banks, considering that there is no collateral involved.
Types Of Collateral Accepted For An Education Loan in India
What is Collateral in Student Loans?
Collateral is any form of asset/ property that you pledge to the bank to get your loan. A collateral acts as a security to the bank in case you are unable to repay your loan for any reason.
Immovable Property:
An immovable property is something that cannot be moved or shifted from its original place and whose quality, quantity, or shape would change on moving. A few examples of immovable property would be Houses, Flats, and Land.
|
Type |
Value considered for the loan |
Documents required |
|
House, Flat, Land |
75% to 100% of the property's realizable value |
All property papers including title deed, sale deed, link document, and property tax copy are required. |
Liquid Security:
Liquid Security or assets are a type of property that can easily be converted into cash while still retaining its market value. A few examples of liquid assets would be government bonds, FD, LIC policies, etc.
|
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 |
What is the Best Bank for Education Loans in India?
Financial institutions like Public banks, Private banks, and NBFCs offer student loans in India. These banks offer student loans with varying terms to cater to the diverse needs and requirements of students.
The best bank for education loans in India is not the same for every student, as each individual has a unique situation. You should assess various factors, such as the education loan interest rates, loan amounts, collateral requirements, and the education loan repayment terms, before choosing the best bank for education loans. The following table helps you compare education loan interest rates, processing fees, and loan amounts of prominent banks and NBFCs offering study loans in India.
Note: These interest rates are effective as of Jan 2025. The student loan interest rates may change with changes in the RBI repo rate and bank policies.
(Keep in mind that these are the applicable education loan interest rates on going through your education loan with WeMakeScholars, which can vary on a case-by-case basis)
| Banks | Interest rate | Processing fees | Loan Amount |
| State Bank of India (SBI) | Starts from 8.15% | Rs.10,000 + GST |
|
| Bank of Baroda (BOB) | Starts from 9.15% | Rs 10,000 + GST or 1% of the loan amount, whichever is lower |
|
| Canara Bank | Starts from 8.60% | Rs. 10,000 + GST |
|
| ICICI Bank | Starts from 10.85% | 1 - 2% of the loan amount |
|
| Credila | Starts from 9.75% | 1 - 1.5% of the loan amount + GST |
|
| IDFC Bank | Starts from 10.75% | 1 - 1.5% of the loan amount + GST |
|
| Axis Bank | Starts from 11% | 1% PF Loan amount + GST |
|
| Karur Vysya Bank | Starts from 9.99% | Rs. 10,000 + GST |
|
| Avanse | Starts from 10% | 1 - 1.5% of the loan amount + GST |
|
| Incred | Starts from 11% | 1 - 1.5% of the loan amount + GST |
|
| Auxilo | Starts from 11% | 1 - 1.5% of the loan amount + GST |
|
Top NBFCs Offering Study Loan in India
NBFCs refer to the Non-Banking Financial Companies offering credit services in India. They are known for offering higher loan amounts and flexible repayment terms for an education without collateral. The following are the top 4 NBFCs offering a study loan in India:
- Up to 100% finance of i20 value
- Option of a 100% collateral-free student loan
- Sanction before admission for i20
- Doorstep service
- 100% education finance
- There is no limit to the maximum amount
- Sanction within 1 day after logging the file
- Prefers meritorious students
- Can be disbursed in 1 instalment
- Doorstep service
- 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
- 1% processing fees
- 100% Finance
- Pre-admission student loan
- Pre-Visa study loan disbursement
- Fast-track student loan
- Competitive student loan interest rates
Other NBFCs offering a study loan in India are Aditya Birla Capital, Tata Capital, and Bajaj Finserv.
Features and Benefits of a Study Loan in India
The funds provided by the student loans help students cover their educational expenses, including the tuition fees, living expenses, cost of books and supplies, etc. Student loans fund both studies in India as well as abroad. The following are several benefits of student loans:
- A loan amount of up to ₹3 crores can be offered with student loan interest rates starting from 8.15% (latest ROI).
- Banks offer an education loan repayment period of up to 15 years.
- Many lenders offer a doorstep service for an education loan in India and collect the required documents at your doorstep. This means you don't need to visit the branch to submit the documents required for education loans.
- The general education loan process includes searching for a lender, applying for an education loan, getting the loan sanctioned, disbursing the amount, and the education loan repayment period.
- The education loan repayment starts after the moratorium period in all banks. A moratorium period of around 6 months to 1 year is offered by banks on taking an education loan.
- Moratorium period = Course duration + 6 months/ 1 year (grace period)
- Other features and benefits offered by student loans include very low-interest rates, an education loan without collateral and an I-20, pre-visa disbursement, TCS on foreign remittance, and income tax rebate on education loans under section 80E.
Know more: Top 9 Advantages of Education Loan You Need to Know
Tax Benefits on Student Loans
Student loans offer certain tax benefits, such as an income tax rebate on education loans and TCS on foreign remittance, to the borrowers of the loan:
-
Income Tax rebate on education loans:
Under section 80E of the Income Tax Act 1961, borrowers can claim tax deduction of the interest paid on education loans for a maximum of 8 years. -
TCS on foreign remittance:
When you send money abroad, you need to pay TCS on foreign remittance. TCS is 5% of the money when you are transferring money from your account. However, the TCS on the funds transferred through an education loan is 0%. This means there is no TCS on foreign remittances through an education loan in India.
Expenses Covered in an Education Loan
Here is the list of Expenses Covered in an Education Loan :
- Tuition fees- The tuition fee is covered in all education loans, as it is the primary expense that students have to pay. The tuition fee is mentioned in your offer letter or admit card provided by your university. It is disbursed directly into the university's bank account.
- Living expenses- This includes the accommodation costs, food, and travel expenses that you would need while studying abroad. The student must carefully calculate their living costs and request the living expenses accordingly. The disbursement of living expenses is different in each financial institution.
- Health insurance- Many lenders include health insurance in the expenses as part of an education loan, but it has become an optional expense ever since the COVID-19 pandemic.
- Travel tickets- A two-way flight ticket once per year is provided for students. Banks don't automatically give you money for aeroplane tickets. If you can't afford to pay for your travel, you need to ask the bank to include the cost of air tickets in the list of expenses they cover for you. Most banks are willing to help with the cost of air tickets.
Pro tip: Getting a degree comes with costs like buying books, a laptop, course materials, project work, and study trips. These expenses are not part of the tuition fees and require extra money. Some banks include them when deciding how much loan you can get. If your study costs aren't covered by the loan, you can ask your bank to add them to the list.
- Books & Stationery cost - Books & stationery expenses incurred during the entire course of study.
- Laptop & Computer cost - If required for the course, students can use the money from their study loan to purchase a laptop or computer.
- Cautionary deposit- The amount of up to 10% of the amount can be used as a cautionary deposit.
- Miscellaneous expenses- Any other expenses incurred towards field visits or projects.
Note: Before applying for an education loan, it is crucial to consider various important points to avoid complications after approval. Once the loan is sanctioned, no changes can be made to the application, so accuracy is key.
- First, applicants should calculate the correct costs of accommodation and other expenses and make sure that the costs are accurate to avoid any future issues.
- Additionally, carefully reviewing the list of expenses covered by the chosen financial institution is important.
- If necessary, applicants should request adjustments to align with their specific requirements.
- Another important consideration is the availability of part-time job options in the country of relocation; if uncertain, it's advisable to factor in living expenses accordingly.
Eligible Courses for an Education Loan
Here is the List of Course Eligible for an Education Loan:
Graduation courses:
- BA
- B.Com
- B.Sc., etc
Post Graduation courses:
- Masters
- Ph.D.
Professional courses:
- Engineering
- Medical
- Agriculture
- Veterinary
- Law
- Dental
- Management
- Architecture
- Computer, etc.
Management courses:
- Hotel Mgt
- Hospitality Mgt
- Event Mgt
- Mass Communication, etc.
- Computer certificate courses of reputed institutes accredited to Dept. of Electronics or institutes affiliated with 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 the Director General of Civil Aviation/shipping or equivalent foreign body)
- Evening courses of approved institutes.
- Other courses leading to diplomas/degrees etc. conducted by colleges/universities approved by UGC / Govt./ AICTE / AIBMS / ICMR etc.
Courses like:
- Teachers Training Course
- Nursing Course
- BEd
For abroad studies:
- regular Graduate Degree
- Post-Graduate Degree
- Diploma/Certificate
- Doctorate courses in any discipline offered by abroad Institutes
Note: Universities in the 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 an education loan in India. Other countries are acceptable on a case-by-case basis.
Education Loan Eligibility Criteria
In the sections below you can check the applicant and co-applicant education loan eligibility, CIBIL requirements with the acceptable universities and courses:
Applicant:
- The applicant must be an Indian citizen residing in India or an NRI.
- Overseas Citizens of India (OCI) and Persons of Indian Origin (PIOs) are eligible for student 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 an NRI.
- Overseas Citizens of India (OCI) and Persons of Indian Origin (PIOs) are eligible for education 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 a student loan
University and course:
- The applicant should have an admission letter from a recognized School abroad or in India.
- The applicant must have opted for a full-time or part-time UG/PG program.
- An exceptional academic record is always beneficial for the process.
What Will Improve My Education Loan Eligibility?
- Banks carefully assess students' education loan eligibility to make sure they qualify. They consider factors like a strong academic record, admission to a reputable university, the financial stability of parents or guardians, potential for future employment, and income generation also play a role in making a student eligible.
Note: However, the specific education loan eligibility depends on your bank and the scheme under which you are taking the education loan. There is always a possibility of deviation from the usual process.
Documents Required for Education Loan Application
Section 1: Study Loan 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
- Proof of identity –PAN Card (and Passport of the student if going abroad)
- 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 are different)
- Bank account statement for the last 6 months (Personal/ Salary). For co-applicants, it should show the salary credits if salaried or 1-year business transactions if self-employed.
- Personal Asset & Liability Statement (assessed by the branch professional)
- All the documents should be self-attested.
Section 3: Applicant's Academic Documents required for Education Loan
- Education mark sheets and certificates- 10th, 12th, Degree
- Proof of admission for the course (should be evidencing the total duration of the course)
- Fee structure
- Entrance exam scorecard
Section 4: Co-applicant's Income Documents required for Education Loan
These documents are very important for the loan process, especially for an education loan without collateral. These documents vary based on whether the co-applicant is salaried or self-employed.
- For Salaried
- Latest Salary Slips (for the last 3 months)
- Form 16 of the last 2 years.
- Employee ID card
- ITR of last 2 years
- For Self-employed
- ITR of last 3 years
- Last 3 years Balance sheet and Profit & Loss account (only if self-employed)
- Proof of Business address
Section 5: Other Documents required for Education Loan Application
- Letter stating that leftover expenses, apart from the loan amount, will be borne by the co-applicant (Format to be provided by WeMakeScholars Financial officer)
- Notarised joint affidavit with the student and co-applicant in the Bank’s standard format (Format to be provided by WeMakeScholars Financial officer)
Section 6: Additional Docs (If Applicable)
- Receipts of advance payments made, if any.
- All loan account statements (1 year) if any pending loans.
- 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 collateralised study loans. The list of documents required for education loans from each state is different.
When you process your student loan with WeMakeScholars, your financial officer will provide you with a detailed checklist of documents required for education loans after analyzing your profile.
How to Apply for an Education Loan Online?
Let’s go through the application process for an education loan.
Online:
- It is possible to start your study loan process online for all Govt banks, private banks, and NBFCs.
The steps are as follows:
- Step 1: Fill out the WMS Student Loan Common Application form or request a callback
- Step 2: You will receive a call from your financial officer to check your education loan eligibility. Provide all the required information.
- Step 3: The financial officer will compare education loan interest rates and other important terms to choose a lender as per your education loan eligibility and policies.
- Step 4: Submit your documents in the bank or upload your documents on the 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 decision within 2-6 days for Private banks like Axis, and ICICI and within 15-20 days for Govt. banks.
- Step 6: After the sanction, you can sign the education loan agreement and collect your sanction letter.
Offline:
- If you want to apply for an education loan offline, you can visit the nearest bank branch and speak to the bank manager.
How Much Time Does it Take to Get an Education Loan?
How much time it takes to get education loans varies from student to student, depending on several factors, such as the loan type, the lender, documentation, and the status of the student loan application.
- The processing time of collateral education loans from public banks can go over 45 days to 2 months. The legal and verification process for the collateral in the loan increases the time it takes to get an education loan.
- However, when applying through WeMakeScholars, the time taken for the secured education loan application to be sanctioned is just 15 to 20 working days. Private banks and NBFCs, on the other hand, can process student loans much faster.
- The processing time for an education loan without collateral from these lenders is between 7 to 10 working days. As these lenders specialize in unsecured education loans that do not require collateral in the loan, the time it takes to get an education loan from them is very less.
Note: The above-mentioned processing time is applicable after all the documents required for the education loan are submitted.
Important Education Loan Details: Fees & Charges
Here are the Important Education Loan Details, such as Processing Fees and Other Charges of Banks and NBFCs:
- Government Banks: Rs 10,000 + GST
- Private Banks: 1% to 2% of the loan amount + GST
- NBFCs: 1% to 2% of the loan amount + GST
Government Banks include the State Bank of India (SBI), Bank of Baroda (BOB), Canara Bank, Union Bank of India (UBI), Punjab National Bank (PNB), etc.
Whereas Private banks and NBFCs include institutions like Axis Bank, ICICI Bank, IDFC Bank, Credila, Incred, Avanse, and Auxilo.
- The Collateral Legal and Valuation charges are between Rs. 7500 to Rs. 10,000. Only applicable to secured 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 for any service charges or fees from students to process their loans. All our services are free of cost.
Education Loan Repayment
Education loan repayment is a structured process of repaying the loan that the borrower has taken. Not planning for the education loan repayment period can be an issue for most students. It causes a major financial burden on students during the education loan repayment period. Thus, students need to plan their education loan repayment right from the beginning of the loan process. Let's look at how your education loan repayment schedule can look, along with the interest portion, principal portion, and EMIs, through the following example.
Education Loan Repayment Table
For instance, if you take a student loan of Rs 40 lacs to pursue higher education at a 9% rate of interest, for a tenure of 15 years, then your EMI repayment schedule will look like this:
|
Repayment Cycle |
EMI |
Interest portion |
Principal portion |
Loan Outstanding |
|
Start of loan EMI |
45135 |
33375 |
11760 |
4438240 |
|
End of year 1 |
45135 |
32368 |
12767 |
4302912 |
|
End of Year 2 |
45135 |
31170 |
13965 |
4142027 |
|
End of Year 3 |
45135 |
29860 |
15275 |
3966050 |
|
End of Year 4 |
45135 |
28427 |
16708 |
3773564 |
|
End of Year 5 |
45135 |
26860 |
18275 |
3563022 |
|
End of Year 6 |
45135 |
25145 |
19989 |
3332730 |
|
End of Year 7 |
45135 |
23270 |
21865 |
3080835 |
|
End of Year 8 |
45135 |
21219 |
23916 |
2805311 |
|
End of Year 9 |
45135 |
18976 |
26159 |
2503940 |
|
End of Year 10 |
45135 |
16522 |
28613 |
2174299 |
|
End of Year 11 |
45135 |
13838 |
31297 |
1813735 |
|
End of Year 12 |
45135 |
10902 |
34233 |
1419347 |
|
End of Year 13 |
45135 |
7691 |
37444 |
987964 |
|
End of Year 14 |
45135 |
4178 |
40957 |
516113 |
|
End of Year 15 |
45135 |
336 |
44799 |
0 |
How to Calculate EMI for Education Loans?
Types of Education Loan Interest Rates
Let's understand simple interest and compound interest before learning how to calculate education loan EMI:
- Simple interest: It is the education loan interest rate calculated on the original principal loan amount taken by the applicant
- Formula: (P × T × R) ⁄ 100
- Compound interest: Student loan interest rates are calculated on the principal loan amount taken by the applicant in addition to the interest accumulated over time.
- Formula: P(1+R⁄100)^T − P
Where,
- P= Principal amount
- R= Rate of Interest
- T= Time
Note: 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 outstanding loan within the repayment period.
Example:
Let’s assume that you have taken a loan of Rs. 15 lakhs for a course period of 24 months. The education loan interest rate is 10.50% per annum, and the moratorium period is 12 months. You will not be paying during the study + moratorium period. With a loan tenure of 12 years.
Here is how you can calculate the EMI:
- Calculate the EMI using the following formula:
- EMI = [P x R x (1+R)N]/[(1+R)N-1]
Where,
- P = Principal amount (loan amount)
- R = Rate of interest (monthly)
- N = Tenure (in months)
- Monthly interest rate = Annual interest rate / 12
Monthly interest rate = 10.5 / 100/ 12 = 0.00875%
EMI = [15,00,000 x 0.00875% x (1+0.00875%)36]/[(1+0.00875%)144-1]
EMI = Rs. 18,362
You can also use our EMI calculator to calculate the EMI for your education loan
CIBIL Score for An Education Loan
A credit score or CIBIL score is a measure of the financial credibility of an individual. A person with a good CIBIL score has a greater chance of getting a student loan faster.
What is a good CIBIL score?
- 300-599: If your credit score is in the range of 300-590, it is not possible to get an education loan from any other bank except SBI. It would be better to improve your credit score before applying for an education loan.
- 600-749: For credit scores between 600-749, you might qualify for a student loan. However, be aware that the lender could charge a higher interest rate or offer a shorter education loan repayment period.
- 750 and above: A credit score of 750 and above is highly favourable and can lead to instant loan approval with favourable student loan interest rates and other terms beneficial to the applicant.
Minimum CIBIL scores accepted by the Government Banks, Pvt. Banks and NBFCs
- State Bank of India (SBI): 591
- Other Govt. Banks: 685
- Pvt. banks/NBFCs: 685
Request a callback from your financial officer at WeMakeScholars to find a way to process your Student loan despite a lower CIBIL score.
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 study loans to students belonging to the EWS section of society.
Education Loan Eligibility Criteria for CSIS
- The 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 pay any interest for their student loans 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.
Note: The Padho Pardesh scheme has been discontinued from 2022-2023
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 the OBC and EBC sections of the society, on the interest payable within the moratorium period. This scheme is for eligible study abroad aspirants.
Note: Dr. Ambedkar Interest Subsidy Scheme for OBC and EWS Students scheme has been discontinued from 2022-2023
Tips To Manage Your Education Loan
Follow the following tips to effectively manage your education loan
Choose the Right Education Loan Repayment Plan:
- Lenders provide various repayment options. Thoroughly assess all the education loan details of different lenders before choosing one.
- Compare education loan interest rates and other terms of different lenders and pick the one that aligns with your budget.
- Consider the length of your moratorium period.
- Also, think about your expected income from your first job.
- Without proper planning, you may end up with a higher EMI that could strain your finances.
Opt for a Shorter Loan Tenure:
- An effective strategy for handling student loans is opting for a shorter repayment tenure.
- While shorter tenures may mean higher monthly payments, they also result in significant interest savings over the loan's duration.
- Be mindful not to choose unaffordable EMIs, but rather select the shortest tenure you can manage.
- Use an education loan EMI calculator to understand the monthly payments within your means.
Set Up Automatic Payments:
- It's crucial to avoid missing loan payments as it can affect your CIBIL significantly.
- Late payments can impact your credit score and lead to additional fees.
- Prevent this by setting up automatic debits from your savings account.
- Regular, on-time payments contribute to maintaining a healthy credit report, which proves beneficial for future loan applications.
Pay Off Interest During the Moratorium:
- Initiate payments toward the interest on your education loan during the moratorium period, even though the full repayments begin after this phase.
- The moratorium typically lasts for 6 months or 1 year after completing your course.
- Starting early payments on the interest accrued while studying can result in substantial savings overall.
- Consider securing a part-time job during college to contribute to paying off this interest, potentially turning a hobby into a source of income.
Make Extra Payments towards Your Student Loan:
- If you come into extra cash, whether through a work bonus or a gift, consider making larger payments toward your student loan.
- This approach helps alleviate the overall repayment burden and may even lead to early loan closure.
- However, check with your lender for any pre-payment penalties before proceeding.
Tips for Education Loan Repayment Period:
- Check your outstanding loan amount through Internet banking in your student loan account
- Issue a cheque to your bank for the due amount.
- Fill out the study loan closure form via online or offline mode
- While issuing a cheque for the outstanding amount, keep a little extra amount, in case the manager closes your loan the next day, there shouldn’t be an additional outstanding amount.
- Utilize government schemes and income tax rebate on education loans to manage your finances during the education loan repayment period.
Education Loan Customer Care Numbers
We are a dynamic team of expert individuals who are determined to fulfil 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 student 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 student loan process. We will try our level best to resolve your concern as soon as possible.
FAQs:
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How does Education Loan work?
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What is the best way to repay an education loan?
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Can I get an interest-free education loan?
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What happens if an education loan is not paid?
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Can we cancel the education loan after approval?
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How much education loan can we get without collateral?
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Who is eligible for an education loan?
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Who can be a guarantor for an education loan in India?
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What is the current education loan interest rate?
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Can a student get an education loan without parents?
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Which bank is good for an education loan?
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How much education loan can I get?
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What is the margin for an education loan?
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How to get an education loan in India?
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What is the moratorium period for education loans?
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Does an education loan cover living expenses?
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What is an education loan in India?
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How to get an education loan for abroad studies?
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How to fill education loan application form?
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Are education loans tax-free?
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What are the requirements for an education loan?
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Who is a co-applicant in the education loan?
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Who is eligible for an education loan?
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How much time it takes to get an education loan?
NEWS
The desire among Gujarat's students to study abroad is surging, evident in a notable 33.8% increase in education loan disbursements during the second quarter of fiscal year 2023-24. As per the State-Level Banker's Committee (SLBC) Gujarat, banks allocated Rs 511 crore for education loans this quarter, compared to Rs 383 crore in the corresponding period of FY 2022-23.
Bank officials attribute this rise to the growing ambition among students to pursue undergraduate and postgraduate courses overseas. The aspiration isn't merely about attaining a foreign degree; it extends to seeking employment and settling abroad.
According to banking sources, a considerable 6,384 students applied for loans in the second quarter alone, underscoring the increasing trend. Foreign education consultants highlight the relaxed bank norms and heightened awareness as key factors propelling this growth.
Bhavin Thaker, founder of a consultancy firm, notes a shift towards undergraduate courses abroad, previously dominated by postgraduate pursuits. Banks, in tandem, are actively promoting their education loan products, leveraging incentives like nominal interest rates and no mortgage requirements, especially for admissions to prestigious universities.
Furthermore, students are diversifying their academic interests, exploring fields beyond traditional engineering and management to encompass psychology, humanities, mass communications, and public policy. This evolving landscape reflects a broader international educational outlook among Gujarat's youth.
Last Updated - 25/01/2024
Tata Capital Ltd, a leading financial services firm under the Tata Group, has introduced Education Loans for higher education in India, the USA, Canada, the UK, Australia, New Zealand, Germany, Singapore, and Dubai (UAE). Available for Undergraduate, Postgraduate, or Masters programs in STEM, Management, and Vocational courses, these loans offer up to Rs 75 lakhs without collateral and up to Rs 200 lakhs with collateral or total educational expenses coverage. Pre-admission sanction letters expedite application processes. Competitive interest rates and flexible repayment plans ease financial burdens during studies.
Vivek Chopra, Tata Capital's Chief Operating Officer, emphasizes a commitment to trust and transparency, offering comprehensive support covering tuition, travel, and medical expenses. The focus remains on facilitating access to higher education, transcending socioeconomic barriers, and empowering students to pursue academic goals.
Last Updated On - 25/01/2024
Education loans surged by 20.6% to ₹1,10,715 crore in the current fiscal year until October, marking a record high compared to ₹96,853 crore in the previous year. Reserve Bank of India (RBI) data highlights this as the steepest growth in five years, contrasting with a 12.3% rise in FY23 and a 3.1% decline in FY22.
Several factors are fueling this surge. The revival of offline courses both domestically and internationally, coupled with a low base, has spurred fresh demand for education loans. Foreign education loans, averaging ₹40-60 lakhs, constituted 65% of disbursed loans over the past year.
Furthermore, recent RBI measures tightening credit elsewhere haven't affected education loans, potentially bolstering credit flow to this sector in the upcoming months. Notably, loans for education in the US are notably high, supported by a record issuance of student visas, further boosting bank portfolios.
The ease of loan application and disbursal processes is also contributing to this growth, with some NBFCs, like HDFC Credila, offering collateral-free loans up to ₹50 lakhs with digitized procedures, including Video KYC, ensuring quick disbursals within a week.
Rating agency data underscores NBFCs' significant role, with education loans witnessing a remarkable 100% growth in Assets Under Management in FY23 compared to the preceding year.
Last Updated - 25/01/2024
Haryana and Punjab lead in applications for higher education loans in both public and private sector banks over the past five years, as per data presented in Parliament. In 2018-19, Haryana had 4,716 applications, while Punjab had 4,297. The following year saw a rise of 23.4% in Haryana and 29.7% in Punjab. However, the Covid-19 impact in 2020-21 led to a decrease of 6.7% in Haryana and 18% in Punjab. Yet, in 2021-22, there was a significant surge in applications in both states: a 47.1% increase in Haryana and 60% in Punjab.
In 2022-23, Haryana had 11,133 applications, a rise of 39.4%, while Punjab had 10,414, a rise of 42.3%. Maharashtra led the nation with 78,694 applications, followed by Kerala and Tamil Nadu.
According to Minister of State for Finance Bhagwat Karad, scheduled commercial banks adhere to the Indian Bank Association’s Model Education Loan Scheme, offering collateral-free loans up to Rs 7.50 lakh for higher education. Public sector banks, with an 83% share in educational loans in 2022-23, also provide collateral-free loans exceeding Rs.7.50 lakh for premier institutes based on their policies.
Last Updated- 29/01/2024
Indian banks have put forth a proposal to the Reserve Bank of India (RBI) suggesting a reclassification of students' first unpaid education loans as 'standard' if they apply for a second loan. This move aims to extend repayment periods and offer students more flexibility in gaining work experience before pursuing higher education.
Currently, when borrowers partially repay an education loan, it's labeled as 'restructured,' leading to higher interest rates for subsequent loans. Typically, loan repayments start after a one-year moratorium period, with options for restructuring if borrowers wish to defer payments for further studies, albeit at the cost of affecting their credit rating.
The proposed change would maintain the standard classification for the initial loan, easing financial burdens on students early in their careers. It's seen as a win-win for both banks and students, curbing overdue loans and ensuring a steady flow of funds for education.
This initiative coincides with a projected 40% surge in education loans by non-banking financial companies (NBFCs), driven by increased overseas education pursuits. Notably, public sector banks offer education loans at lower interest rates with no prepayment penalties, encouraging borrowers to consider early repayment to minimize overall loan costs.
Last Updated- 29/01/2024
Our Education Loan team will help you with any questions
WeMakeScholars- supported by IT Ministry, Govt. of India.
Adarsh Kumar Verma
Rishi Krishna Das
Rismiya Shyju
Scholarship Expert
Hi Rishi Krishna Das,
You can contact our Support team at 988 988 1070 or 988 988 2090 for Education Loan assistance you need. They’ll be happy to assist you with any queries you have!
Krishna das choudhury
Rismiya Shyju
Scholarship Expert
Hi Krishna Das Choudhury,
You can contact our Support team at 988 988 1070 or 988 988 2090 for any assistance you need. They’ll be happy to assist you with any queries you have!
Varun Singh Jasrotia
Rismiya Shyju
Scholarship Expert
Hi Varun Singh Jasrotia,
It might be a temporary glitch with the Vidyalakshmi app. Please try applying again using a different browser or clear your current browser’s cache and then retry. If the problem persists, feel free to reach out again. Good luck!
Deepthi Dayanand
Rismiya Shyju
Scholarship Expert
Hi Deepthi,
Apologies for the inconvenience caused. Your assigned financial officer will be reaching out to you as soon as possible. Thank you for your patience and understanding.