How to Apply for Education Loan in India- Complete Process

Introduction

Financing can be a significant concern for many students when embarking on the journey of higher education. Understanding how to apply for an education loan is crucial in making this dream a reality. In India, the process of securing an education loan has become more streamlined and accessible, allowing students to pursue their academic aspirations without financial constraints. 

This guide will walk you through the steps involved in applying for a student education loan online in India, providing insights into the process, requirements, and essential information to help you navigate this important financial decision. Let's delve into how to get education loan.

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Why Education Loan is Essential for Higher Studies

Education costs have been steadily increasing, making it challenging for many students to afford higher studies without financial assistance. According to HDFC Bank, pursuing a dream education course in India can now be supported by education loans of up to Rs. 10 lakh. This rise in tuition fees necessitates the need for education loans to bridge the gap between aspirations and financial constraints.

Access to renowned educational institutions and quality education is a key factor in shaping a successful career. Education loans enable students to pursue higher education in India or abroad, covering expenses like tuition, fees, books, and living costs. By providing financial support, education loans open doors to prestigious institutions and ensure that students can focus on their studies without the burden of financial constraints.

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How to Apply for Student Loan in India

Securing an education loan in India can be a streamlined process if approached systematically. Here’s a step-by-step guide on how to take student loan:

Identify the Bank or Financial Institution Offering Student Loans

• Research and choose a reputable bank or financial institution that provides education loan options.
• Consider significant banks like the State Bank of India, ICICI Bank, and Bank of Baroda, known for their education loan schemes. It's also worth exploring options offered by Non-Banking Financial Companies (NBFCs) specialising in education loans. For instance, Propelld offers competitive rates and flexible repayment options, potentially complementing the offerings of traditional banks.

Check the Bank's Specific Eligibility Criteria

• Understand the unique eligibility requirements set by the chosen bank or lender.
• Factors such as academic performance, course of study, institution, and financial background may influence eligibility.

Compile the Necessary Documents for the Application

• Gather essential documents like proof of identity, address, admission letter, and co-borrower's income details.
• Documents may include mark sheets, admission letters, salary slips, and bank statements.

Fill out the Online Application Form Accurately

• Utilize the convenience of online application forms provided by most banks and financial institutions.
• Ensure all sections are completed accurately and attach the required documents as specified.

Submit the Completed Application Form

• Submit the filled-out application form along with the necessary documents either online or at the bank branch.
• The bank will initiate the review process to assess your eligibility for the education loan.

Await the Bank's Assessment and Loan Approval

• Following submission, the bank will evaluate your application details to determine loan terms.
• Upon approval, the loan amount will be disbursed, as per the agreed terms, directly to the educational institution or your bank account.

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Documents Required for Education Loan Procedure

Applying for an education loan in India involves submitting a comprehensive set of documents to the lender. These documents serve as proof of the applicant's identity, financial status, academic qualifications, and admission to the desired educational institution. Ensuring that all the required documents are in order is crucial for a smooth loan application process. 

Let's explore the key documents needed for the education loan process in India.

Duly Filled Application Form

The first step in applying for an education loan in India is to submit a duly filled application form. This form typically includes personal details, academic records, and financial information. Ensuring that all fields are accurately filled and signed is crucial to avoid any issues during the loan processing stage.

Bank Statements

Bank statements are required to verify the applicant's and co-applicant's financial stability. These statements should include the last 6 months of transactions, which helps lenders assess the applicant's ability to repay the loan.

Passport-Sized Photos

Passport-sized photos are necessary for identification purposes. These photos are used to verify the applicant's identity and ensure that the loan is disbursed to the correct individual.

Photo Id

A valid photo ID, such as a PAN card, passport, or voter ID, is required to prove the applicant's identity. This document is essential for the loan application process.

Residence Proof

Residence proof, such as a utility bill or lease agreement, is necessary to verify the applicant's address. This document helps lenders track the applicant's location and ensure that the loan is disbursed correctly.

Academic Documents

Academic documents, including mark sheets, certificates, and admission letters, are crucial for the loan application process. These documents demonstrate the applicant's academic performance and eligibility for the loan.

Proof of Admission

Proof of admission, such as an offer letter or admission letter from the institution, is necessary to confirm the applicant's admission status. This document ensures that the loan is disbursed correctly and for the intended purpose.

Additional Documents

Depending on the lender and the specific loan requirements, additional documents may be requested. These can include proof of income, business documents, or collateral documents. It is essential to review the loan terms and conditions carefully to ensure that all necessary documents are submitted.

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Education Loan Process: Eligibility Criteria

Understanding the eligibility criteria for an education loan is crucial before embarking on the application process. Different financial institutions have specific requirements that applicants must meet to qualify for a student loan. Here are the essential eligibility criteria: 

Indian Citizenship

To be eligible for an education loan, applicants must hold Indian citizenship. This criterion is a fundamental requirement across various banks and financial institutions offering student loans.

Academic Performance

Applicants are typically required to achieve a minimum of 50% marks in their Higher Secondary Certificate (HSC) and graduation. Academic performance plays a significant role in determining eligibility for education loans.

Course Selection

Eligibility often depends on gaining admission to career-focused courses such as medicine, engineering, management, etc., at either the graduate or postgraduate levels. Course selection is a critical factor in determining eligibility for an education loan.

Income Proof of Co-Applicant

It is mandatory for the co-applicant, who can be parents, siblings, or a guarantor, to provide proof of regular income. This requirement ensures that there is financial backing to support the loan repayment.

Admission Status

Securing admission in India or abroad based on entrance exams or a merit-based selection process after completing HSC (10+2) is a common eligibility criterion. Proof of admission to a recognized institution is essential for the loan application process.

By meeting these eligibility criteria, applicants can enhance their chances of successfully applying for an education loan online in India.

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Features and Benefits of Education Loans

The key features and benefits of education loans in India include:

Comprehensive Coverage of Education-Related Expenses

• Education loans cover a wide range of expenses, including tuition fees, living costs, study materials, travel, laptops, library fees, and more.
• This comprehensive coverage ensures that students have access to the necessary financial resources to pursue their educational goals without financial constraints.

Building a Positive Credit History

• Repaying an education loan responsibly helps students establish a strong credit history.
• A good credit profile can be beneficial for future financial endeavors, such as obtaining favorable terms for loans or other financial transactions.

Tax Benefits on Interest Repayment

• Under Section 80E of the Income Tax Act, 1961, borrowers or their co-applicants can claim a tax exemption on the interest paid towards the education loan.
• This tax benefit helps reduce the overall financial burden on the borrower.

Moratorium Period

• Education loans often offer a moratorium period, where borrowers are not required to make repayments during their study period.
• This repayment holiday provides students with financial flexibility and allows them to focus on their education without immediate repayment obligations.

Promoting Financial Independence

• Education loans enable students to fund their own education, reducing dependence on family resources.
• This fosters financial independence and responsible financial management skills among students.

By leveraging these features and benefits, students can access the necessary financial support to pursue their educational aspirations and build a strong foundation for their future.

Financing your education shouldn't be a hurdle on your path to success. With the knowledge you gained from this guide, you're well-equipped on ‘how to take education loan’.. By understanding the eligibility criteria, required documents, and the features and benefits of education loans, you can make an informed decision about financing your academic aspirations.

Also, consider exploring NBFCs like Propelld for a potentially faster and more flexible financing option.

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Streamline Your Education Journey with Propelld

Don't let financial constraints clip your wings! Propelld, the leading NBFC specializing in education financing across India, is here to help you soar.  They have empowered over 2 lakh students to achieve their academic dreams, and they are here for you too.

Propelld offers a hassle-free, 100% digital process that's 10X faster than traditional banks. Say goodbye to cumbersome paperwork and lengthy approvals. With Propelld, you can experience:

1. No Collateral Requirements
2. Faster Approval Times (Yes, even quicker than you think!)
3. Minimal Documentation
4. Complete Online Process (No more waiting in queues!)

Visit  Propelld now to begin your journey with Propelld.

FAQs on the Education Loan Process in India

What are the interest rates for education loans in India?

Interest rates for education loans can vary depending on the lender, loan amount, course of study, and the applicant's credit profile. It's advisable to compare rates offered by different lenders before finalizing a loan.

What is the process of education loan to study abroad?

Yes, education loans are available to cover educational expenses for studies pursued abroad. However, specific eligibility criteria and documents required may differ for international education loans.

Can I get ₹10,000 as an education loan?

While education loans typically cover larger amounts, some banks and financial institutions may offer smaller loans, including amounts as low as ₹10,000. However, this depends on the specific lender's policies. Microfinance institutions and specific educational schemes may also provide smaller education loans.

Am I eligible to get ₹50,000 on 0% interest?

Some banks and financial institutions may offer interest-free or low-interest education loans, but these are typically rare and often subject to specific conditions. Zero-interest loans might be available through certain scholarships, government schemes, or during promotional periods​​. However, it's crucial to read the terms and conditions carefully before applying for such loans.

What is the moratorium period for education loans?

The moratorium period is a feature of education loans where borrowers are not required to make repayments during their study period and for a specified period after course completion​​. This period provides financial flexibility to students before they begin repayment.

What is the role of a co-applicant in an education loan?

A co-applicant, often a parent, sibling, or guarantor, provides financial backing to support the loan repayment. The income proof of the co-applicant is generally required to ensure the loan's financial backing. 

What's the maximum loan amount I can get? 

The maximum loan amount varies depending on whether you're studying in India or abroad. Generally, loans for domestic studies range from Rs. 10 lahks to Rs. 15 lakhs, while loans for international studies can go from Rs. 20 lakhs to Rs. 30 lakhs. Some lenders may offer higher amounts with collateral.

What is employment verification for a co-signer? 

Employment verification is when the lender confirms the job information provided by your co-signer, usually a parent, guardian, or spouse. This helps ensure the accuracy of the information and may impact your loan approval.

Can I save on taxes with an education loan? 

Yes! Under Section 80E of the Income Tax Act, you can claim tax deductions on the interest paid towards your education loan. This benefit is separate from the Rs. 1.5 lakh deduction allowed under Section 80C. You can claim this deduction from the time you start paying interest on the loan, up to a maximum of 8 years or until the entire interest is paid off, whichever comes first.