Planning to take Education Loan? Check some Important FAQs on Education loan
Good education is the only tool to upgrade and uplift the standard of life however, many students don't have the privilege of getting higher education that too from abroad locations as education is costly in the current scenario and if you belong to a middle-class family then loanthe is the only option left. Education loans seem like a very lucrative opportunity but in the backend, it has a lot of complexities involved. Check here some of the most important FAQs related to education loans.
FAQs on Education Loan
For most in society, a good education is the only tool to upgrade and uplift their standard of life. And many students along with their parents are exploring this route to realize their middle-class dream. Quality education, especially abroad, demands abundant money, which is often beyond the reach of parents, leaving many a dream shattered. However, with education loans, these dreams can be nurtured.
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Read on to find out everything you want to know about education loans. From interest rates to documents needed, we have it all covered for you!
Also read:
- Which is the best Indian Bank to apply for Education Loans?
- What is the Interest Rate charged as of now?
- What will the loan cover?
- Which documents are required?
Which is the best Indian Bank to apply for Education Loans?
The Reserve Bank of India along with the Indian Banker's Association have come together to frame an educational loan scheme that ensures every deserving student can get access to quality education without worrying about finances.
The exam body Indira Gandhi National Open University (IGNOU) will soon rleease the IGNOU B.Ed entrance exam dates. Candidates can start submitting their BEd applications from January month. The IGNOU BEd entrance exam is expected to be conducted on March 2026, to shortlist candidates for BEd course offered at IGNOU through distance learning mode.
What is the loan scheme all about?
On average, the education loan scheme looks like this for most banks. The scheme makes available loans up to Rs 7.5 lakh for studies in India and up to Rs 15 lakh for studies overseas (this can vary according to individual banks’ guidelines). For loans up to the amount of Rs 4 lakh, no collateral or margin is required and the interest rate does not exceed the Prime Lending Rates (PLR). For loans above Rs 4 lakh, the interest rate will not exceed PLR plus 1 percent. You will get a window of 5 to 7 years with the provision of a grace period of one year after the completion of your studies. Generally, some banks offer a concession of 1% to borrowers if they have been regular in repaying their loans.
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Also read:
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What is the Interest Rate charged as of now?
| Name of the Bank |
Loan |
Loan amount |
Interest Rate |
|---|---|---|---|
| Axis Bank |
Education Loan (EL) |
Upwards of 7.5 lakhs |
16% |
| Bank of Baroda |
Baroda Scholar |
Upwards of 7.5 lakhs |
14% |
| Credila |
Education Loan |
|
11.75% + spread |
| Punjab National Bank |
Education Loan |
Upwards of 7.5 lakhs |
10.75% repayable in less than 3 years |
| State Bank of India |
Education Loan |
Upwards of 7.5 lakhs |
13.25% |
**Banks listed above are in no particular order/ preference
Loan for studying purposes is a part of the priority sector lending activity for Indian banks. The interest rates offered by banks are fixed interest rates and floating interest rates. Banks charge interest on a daily or monthly reducing balance. Usually, nationalized banks offer variable interest rates for student loans, while private and foreign banks offer fixed interest rates. Some banks also offer a choice between the two.
What are the formalities involved in applying for an education loan?
Applying for an education loan when you have an offer from a leading institute is a cakewalk. Generally, the offer letter/ letter of admission from an institute of repute can be your ticket to get an easy and hassle-free education loan. All you need to do is visit the banks that suit your budgetary requirements and get your education loan application going. Generally, the bank treats your parents as the co-borrowers.
Also read:
What will the loan cover?
The disbursement and quantum of the loan given will vary from one bank to another. On average, the loan will cover up to 75% to 85% of the entire tuition fees, hostel and mess charges, library fees, or any other fees/charges payable to the institution as well as one-way passage for those going abroad, subject to a maximum of Rs 5 Lakh for studying in India and Rs 10 Lakh for going abroad.
Which documents are required?
The complete loan application, proof of identity, proof of income, proof of residence, six-month record of the passbook, guarantor note, and other documents like a letter of admission, mark sheets, educational record of the student, etc, specified by the bank are required.
Also read:
Disclaimer: Banks revise the rules, regulations, eligibility conditions, repayments, interest rates, etc from time to time to keep pace with the changing capital market conditions. Therefore, students and parents are advised to thoroughly check the terms and conditions of the educational loan scheme on offer at the time of application.
Compiled by Garima Upadhyay Rawat
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9 years ago
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9 years ago
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9 years ago
The IGNOU B.Ed counseling schedule is expected to be released soon. The exam body will release the counselling schedule on its official website - ignou.ac.in.