Apply for a Student Loan in India for UG Program

Introduction

The landscape of higher education in India is undergoing a dynamic shift. With the proliferation of online learning platforms, geographically dispersed students can access a wider range of accredited undergraduate programs. However, pursuing a degree can be financially demanding. This is where online degree loans for undergraduate students emerge as a powerful tool, unlocking doors to academic aspirations.

This guide takes you to the intricacies of education loans, empowering you to navigate the application process with clarity and confidence. We'll explore the loan offerings extended by Indian banks and financial institutions specifically designed for undergraduate studies. 

Additionally, we'll shed light on crucial aspects like repayment terms, interest rates, and course eligibility, ensuring you make an informed decision.

So, let’s get started! 

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Types of Education Loan

Education loans are designed to suit both domestic and international higher education needs. Let’s see how many types of education loans are available;

1. Undergraduate Education Loans: These loans are designed to help students finance the cost of their bachelor's degree (higher education after secondary education). This covers tuition fees, living expenses, and other educational costs.
   
   
2. Postgraduate Education Loans: Meant for students pursuing master's degrees, doctoral programs, or other advanced degrees after completing their undergraduate studies. These loans can cover expenses associated with postgraduate studies.
   
   
3. Career Growth Education Loans: Target professionals seeking to enhance their skills or qualifications through specific courses, training, or certifications. These loans help finance the cost of such programs that can lead to career advancement.
   
   
4. Education Loans for Parents: Enable parents to financially support their children's educational pursuits. These loans can be used to cover the child's tuition fees and other educational expenses.

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Top Education Loan Offers 2024:

Here's the table with the information on Top student loans for undergraduate students in 2024:

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Important Note:

• Interest rates are valid as of May 2024 and are subject to change based on individual bank policies.
• Some banks might offer fixed or floating interest rate packages.
• Floating rates are typically based on the Repo Rate, with an additional spread determining the final Effective Interest Rate (EIR).

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Key Features of Student Loans for Undergraduate Students

Financing your education through student loans for undergraduate students online loan options can be a strategic approach. However, to ensure a well-informed decision, a thorough understanding of key aspects is crucial. This document outlines the critical considerations regarding repayment terms, interest rates, and course eligibility for online education loans in India.

1. Repayment Terms

Online education loans typically feature a grace period following graduation. This grace period of up to 20 years is designed to provide you with a window of time to secure employment and stabilize your finances before commencing loan repayments. The subsequent repayment period typically extends for several years, allowing for manageable Equated Monthly Installments (EMIs). It is essential to meticulously examine the specific repayment time frame and EMI structure offered by each lender. 

2. Interest Rates

Comparative analysis is paramount when considering interest rates on education loans. These rates can vary significantly between lenders, with a lower interest rate directly translating to a reduced overall borrowing cost. Therefore, it is imperative to meticulously compare the interest rates offered by various banks and financial institutions. Notably, some lenders may even extend preferential rates to students with exceptional academic achievements. Generally, banks offer education loans at an interest rate of 8.10% per annum. 

3. Course Eligibility

The eligibility criteria for online education loans can be program-specific. It is vital to ensure that your chosen undergraduate program qualifies for the loan you are considering. While some lenders may place restrictions on specific fields of study, others might offer loans for a broader range of undergraduate programs. To avoid any discrepancies, it is advisable to directly confirm with the lender whether your desired course is eligible for the loan you are interested in.

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List of Expenses Covered in Education Loan

Taking that step toward higher education is exciting! But amidst the thrill, financial considerations often come into play. Understanding what expenses these student loans for undergraduate students typically cover is crucial for informed decision-making. Let's investigate the nitty-gritty of education loan coverage.

Here's a breakdown of the common expenses typically covered by education loans:

1. Tuition Fees: These include the university or college fees associated with your chosen program.
   
   
2. Living Expenses: These loans can help cover your living costs like accommodation (rent or hostel fees), food, transportation, and other daily necessities while you pursue your studies.
   
   
3. Exam and Study-Related Costs: These loans might cover exam fees, library subscriptions, lab fees, and other essential study materials required for your program.
   
   
4. Travel Expenses (in some cases): Some loans might even cover travel expenses, particularly for students pursuing studies abroad.
   
   
5. Health Insurance: Some education loans might extend coverage to health insurance premiums, ensuring you have access to medical care during your studies.
   
   

Features of Online Education Loans for College Students 

Investing in your education is a stepping stone to a brighter tomorrow. However, the cost of higher studies can feel like a formidable obstacle. Here's where student loans for undergraduate students in India step in as a powerful tool! 

1. Flexible Financing: Study loans offer financial support for a wide range of educational pursuits. They can cover expenses for undergraduate and postgraduate degrees, professional courses, and even certificate programs, depending on the lender and your specific program.
2. Course Agnostic (to an extent): While some lenders might have restrictions on specific fields of study (like medicine or engineering requiring higher eligibility), many loans cater to a broad spectrum of undergraduate and postgraduate programs.
3. Cost Coverage: These loans go beyond just tuition fees. They can encompass living expenses (rent, food, etc.), exam fees, study materials, and even travel costs (especially for students studying abroad).
4. Loan Amount Options: Lenders offer a variety of loan amounts to cater to students' varying financial needs. You can typically secure loans ranging from a few lakh rupees to cover basic expenses up to significant sums for tuition fees at prestigious institutions abroad.
5. Collateralized vs. Uncollateralized Loans: The requirement for collateral (security like property) varies depending on the loan amount. Smaller loans might not require collateral, while larger ones might.
6. Attractive Interest Rates: Study loans generally offer competitive interest rates compared to other loan options. Some lenders might even provide lower rates for students with exceptional academic records.
7. Repayment Flexibility: Most study loans come with a grace period after graduation, allowing you time to find employment and stabilize your finances before starting loan repayments. The repayment period itself can extend for several years, offering manageable monthly installments.
8. Government Schemes: The Indian government offers various scholarship and subsidy schemes to ease the financial burden on students from economically weaker sections. Explore these options alongside study loans to maximize your financial aid.
9. Tax Benefits: In many cases, you can claim tax deductions on the interest paid on your education loan, offering additional financial relief.

Remember: It's important to compare different options among available student loans for undergraduate students from different banks and financial institutions to find the one that best suits your needs and budget. Carefully review the terms and conditions, including interest rates, processing fees, repayment structure, and any hidden charges, before signing any loan agreement.

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Eligibility Criteria for Student Loans for Undergraduate Students

Student loans for undergraduate students are a strategic move by the government. However, before diving in, it's essential to understand the eligibility criteria established by lenders. Here's a breakdown of the common requirements:

1. Academic Qualification

• Minimum Marks: Most lenders require a minimum percentage score in your Class 12 (or equivalent) board examinations. This benchmark typically falls between 50% and 60%, although some lenders may have higher requirements for specific courses or prestigious institutions.
• Entrance Exam Scores: For admission into certain professional undergraduate programs (engineering, medicine, etc.), lenders might consider your entrance exam scores (like JEE and NEET) alongside your academic record.

2. Age Limit

Applicants typically need to be between 18 and 35 years old at the time of applying for the loan. Some lenders might have slight variations in this age range.

3. Nationality

Indian citizens and resident Non-Resident Indians (NRIs) are generally eligible to apply for education loans in India.

4. Course and College Eligibility

• Course Accreditation: The undergraduate program you're pursuing should be offered by a recognized university or college affiliated with bodies like UGC (University Grants Commission) or AICTE (All India Council for Technical Education).
• Course Type: While some lenders might have limitations on specific fields of study, many offer loans for a broad range of undergraduate programs.

5. Co-applicant/Guarantor

For most education loans, a co-applicant (parent, guardian, or spouse) with a stable income source is required. This co-applicant acts as a guarantor, ensuring repayment if you're unable to meet your loan obligations.

6. Financial Background

While lenders don't necessarily require applicants to be from affluent families, they might consider your financial background or your co-applicants income to assess your loan repayment capacity.

Additional Considerations

• Some lenders might offer merit-based scholarships or reduced interest rates for students with exceptional academic records.
• Government scholarship and subsidy schemes can ease the financial burden for students from economically weaker sections. Explore these options alongside education loans.

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List of Documents Required to Avail Loans for College Students

Applying for a student loan for undergraduate students in India can streamline the process toward your academic goals. To ensure a smooth application journey, it's crucial to gather the necessary documents required by lenders. Here's a checklist to help you prepare:

Personal Documents:

1. Completed Application Form: Download and fill out the application form provided by the lender. Ensure all information is accurate and complete.
2. Proof of Identity (POI): A valid government-issued ID like an Aadhaar Card, PAN Card, Voter ID, Passport, or Driving License serves as proof of your identity.
3. Proof of Address (POA): Documents like an Aadhaar Card, Voter ID, utility bills (electricity, water), rent agreement, or passport (with address page) can verify your residential address.
4. Passport-size Photographs: Submit a few recent passport-sized photographs as per the lender's specifications.

Academic Documents:

• Class 10th and 12th Mark Sheets: Provide attested copies of your mark sheets from both Class 10 and Class 12 board examinations.
• Entrance Exam Scorecard (if applicable): If your chosen program requires entrance exams (JEE, NEET, etc.), submit a copy of your scorecard.

Financial Documents:

• Bank Statements: Provide bank statements (typically for the past 6 months) of your co-applicant (parent/guardian) or your bank account (if employed). This helps assess your financial background and repayment capacity.
• Income Proof of Co-applicant: Salary slips, income tax returns, or other documents that verify your co-applicant's income source are usually required.

Admission Documents:

• Offer Letter/Admission Letter: A copy of the official offer letter or admission letter from your chosen university/college is crucial.
• Fee Structure: Submit a document outlining the detailed fee structure of your undergraduate program.

Additional Documents (may vary by lender):

• Statement of Purpose (SOP): Some lenders might require a brief essay outlining your academic goals and career aspirations.
• Previous Loan Repayment Records (if applicable): If you have a history of previous loan repayments, proof of timely payments can strengthen your application.

Step-by-Step Guide to Applying for Education Loans Online:

Below, we have curated a step-by-step process for you to secure student loans for undergraduate students. 

1. Research and Compare Lenders: Explore online resources and compare different lenders to find the one with the most competitive interest rates, flexible repayment options, and terms that best suit your needs.
2. Visit Lender's Website: Once you've chosen a lender, navigate to their website and locate the online education loan application section.
3. Fill Out the Online Application Form: Carefully fill out the application form with accurate information.
4. Upload Required Documents: Ensure all scanned documents are clear and legible before uploading them.
5. Submit Your Application: Once you've reviewed all details and uploaded documents, submit your online application for processing.
6. Awaiting Approval: The lender will review your application and documents. You might be contacted for further information or verification.
7. Loan Approval and Disbursement: Upon approval, the loan amount will be electronically disbursed to your designated account (or your university/college as per agreement).

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Navigating Through Additional Information

While we've explored core eligibility and the online application process for student loans for undergraduate students, navigating your financing journey might involve venturing into additional territories. Here's a breakdown of some key aspects to consider:

1. Government Schemes and Subsidies:

The Indian government understands the financial burden of higher education and offers various schemes and subsidies to ease the loan burden, particularly for students from economically weaker sections. Here are some resources to explore:

• Ministry of Education (MoE) Scholarships: The MoE website provides information on various scholarships offered by the central government for different educational programs. 
• State Government Schemes: Many state governments offer scholarships and subsidies for students pursuing higher education within their state. Explore the official website of your state's education department for details.
• Caste-Based Scholarships: Schemes like the Post Matric Scholarship Scheme for SC (Scheduled Castes) and ST (Scheduled Tribes) Students provide financial assistance to students belonging to these communities. 

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2. Tax Benefits under Section 80E:

Fortunately, the Indian government offers tax benefits to incentivize education loans! Section 80E of the Income Tax Act allows you to claim a deduction on the interest paid on your education loan. Here's a quick breakdown:

• Who Can Claim: Individuals who have taken an education loan for themselves or a spouse, child, or legally dependent ward can claim this deduction.
• What's Deductible: Only the interest portion of your EMI payments qualifies for deduction under Section 80E.
• Maximum Deduction Limit: There's no upper limit on the number of years you can claim this deduction. However, the interest paid during the course period and a maximum of 8 years thereafter is eligible for deduction.

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3. Options for Loans Without Collateral and for Students Studying Abroad:

Collateral-Free Loans:

Traditionally, education loans required collateral (security like property) to mitigate risk for lenders. However, some NDFCs like Propelld now offer collateral-free education loans beyond traditional credit parameters to also consider your future potential and merit. 

Education Loans for Studying Abroad:

Many Indian banks and financial institutions offer education loans specifically tailored for students pursuing studies abroad. These loans might cover additional expenses like travel and living costs. Here are some factors to consider:

• Loan amount: These loans can cover higher amounts to accommodate the often steeper costs of studying abroad.
• Interest Rates: Interest rates for foreign education loans might be slightly higher compared to domestic education loans.
• Currency Fluctuations: Some lenders offer loans in foreign currency to avoid exchange rate fluctuations. Carefully evaluate the pros and cons of this option.

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Next Steps: Get Started with Propelld

Understanding the options for online education loans in India equips you to make an informed decision. However, traditional loans often require collateral, which can be a hurdle for many students. This is where Propelld steps in.

Propelld offers a unique solution: collateral-free education loans specifically designed for undergraduate students in India. Our streamlined online application process makes securing funds for your education faster and easier. With Propelld, you can focus on your studies without the burden of complex loan structures or the need for collateral.

Visit Propelld today to explore your options and unlock the door to your educational aspirations. Remember, investing in your education is an investment in your future, and Propelld is here to help you make it a reality.

FAQs for Student Loans for Undergraduate Students

What expenses are covered under a student loan for undergraduate students?

Education loans cover a wide range of expenses, including tuition fees, hostel charges, travel costs, study materials, and other necessary expenses related to your education.

What is the maximum loan amount that can be availed?

You can secure education loans starting from ₹50,000 up to ₹40 lakhs depending on the bank's policy and the applicant's requirements and eligibility.

What is the typical repayment tenure for undergraduate student loans?

The repayment tenure for education loans can be up to 15 years after the completion of your course, providing flexibility and ease in managing the repayment.

Are there any tax benefits available on student loans for undergraduate students?

Yes, the interest paid on education loans is eligible for tax deduction under Section 80E of the Income Tax Act, which can be claimed for a maximum of 8 years.

How is the interest rate determined for undergraduate student loans?

The interest rates on education loans can be either fixed or floating and are often linked to the Repo rate as per the RBI guidelines. The actual rate can vary based on the bank's terms and the applicant's profile.

What happens if there is a default in repayment of an education loan?

In case of non-repayment, banks may impose penalties, which may affect the borrower's credit score. Continuous default might lead to legal actions and collateral enforcement.

Can I apply for a student loan without a co-signer or guarantor? 

Yes, some banks and financial institutions offer student loans without a co-signer or guarantor, but this depends on the applicant's creditworthiness and the specific loan program.

What are the eligibility criteria for obtaining a student loan? 

Eligibility criteria typically include academic performance, admission to a recognized institution, course type, and, in some cases, the financial background of the applicant and their family.

Are there any moratorium periods on student loans? 

Most student loans offer a moratorium period, which is the time during which repayment is not required. This period usually includes the course duration plus an additional 6-12 months after course completion.

How can I apply for a student loan online? 

You can apply for a student loan online through the bank’s official website or third-party financial service providers. The process usually involves filling out an application form, uploading necessary documents, and sometimes an online interview or assessment.

What documents are required to apply for a student loan? 

Commonly required documents include admission proof, academic records, identity proof, address proof, income proof of parents or guardians, and collateral documents if applicable.