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.
Things To Do Before Applying For A Student Loan in India
Here are some crucial steps to take before initiating your loan application:
1. Check Your Eligibility
Each lender has specific eligibility requirements based on academic performance, institution reputation, and course type. Confirm that you meet these criteria before proceeding with the loan application.
2. Organize Essential Documents
Having the necessary documents ready can speed up the loan approval process.
3. Compare Lenders
Different banks and financial institutions offer varying interest rates, repayment terms, and additional charges. Research and compare multiple lenders to find the best deal that suits your financial situation.
4. Understand the Repayment Structure
Go through the loan repayment terms carefully, including the tenure, EMI amount, and any moratorium period provided. Some lenders offer flexible repayment options or grace periods after graduation, which can be beneficial.
5. Estimate Your Future Earnings
Assess your potential salary in the field you plan to enter after completing your studies. This will help ensure that your repayment obligations are manageable and prevent financial strain in the future.
6. Look for Alternative Funding Sources
Before depending entirely on an education loan, explore scholarships, grants, and part-time job opportunities that can help reduce the amount you need to borrow. This can significantly ease your financial burden.
7. Borrow Only What’s Necessary
While it may be tempting to secure a higher loan amount, it’s wise to calculate your actual educational expenses and borrow only the required sum. This will help you avoid excessive debt and minimize interest costs.
8. Check Collateral Requirements
For higher loan amounts, lenders might require collateral such as property, fixed deposits, or other assets. Be aware of these requirements and evaluate whether you can fulfill them.
9. Review Processing Fees & Additional Costs
Some lenders charge processing fees, administrative costs, or other service-related expenses. Factor in these additional costs before finalizing your loan application, as they can influence the total loan expense.
By preparing in advance and carefully evaluating these aspects, you can streamline the loan application process and secure a student loan that aligns with your financial capabilities and academic aspirations.
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:
1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.
What are the Requirements for Education Loan?
Lets see the eligibility criteria and documents requirements for education loan process:
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.
1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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.
Eligibility Criteria for Education Loan
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:
1. 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.
2. 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.
3. 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.
4. 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.
5. 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:
1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
How Education Loan can Help in Higher Studies?
Education costs have been steadily increasing, making it challenging for many students to afford higher studies without financial assistance.
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.
Here are some of the reasons why education loan is a saviour for those with higher education dreams:
1. Covers Complete Educational Expenses
Loans cover tuition, hostel fees, exam charges, and even travel costs for studying abroad, ensuring uninterrupted education.
2. Reduces Financial Burden on Families
Instead of relying on family savings, students can finance their education independently, keeping household finances stable.
3. Flexible Repayment with a Grace Period
Most loans offer a moratorium period, allowing students to begin repayment only after completing their course and securing a job.
4. Affordable Interest Rates and Tax Benefits
Education loans usually have lower interest rates than personal loans, and borrowers can claim tax deductions under Section 80E of the Income Tax Act.
5. No Collateral for Certain Loan Amounts
Many lenders provide unsecured loans up to a specific limit, making funds accessible without pledging assets.
6. Builds a Strong Credit History
Timely repayment improves credit scores, benefiting students when applying for future loans.
7. Enables Admission to Top Institutions
Students can enroll in reputed universities in India and abroad without financial constraints, improving career prospects.
With structured repayment plans and financial flexibility, education loans make quality higher education accessible, allowing students to focus on their academic and career goals stress-free.
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.
Why Propelld?
Propelld makes funding your education abroad simple and fast with flexible loan options. It helps you cover tuition, living expenses, and other costs, ensuring you can focus on your studies without financial stress.
The following are the primary benefits of Propelld.