Education loans
An education loan pays for a course — tuition, hostel, books, sometimes travel — in India or abroad. The student is the borrower; a parent or guardian usually joins as co-applicant. Repayment normally begins after the course and a further period, but interest usually builds up from the first disbursement.
We explain what lenders usually ask for and help you get your papers in order — the first call is free.
Estimate your EMI
Education loan estimator (estimate only)
Enter the amount, the yearly rate, the months until repayment starts (course plus moratorium) and the repayment tenure. If interest is not paid during the course, the estimate adds simple interest for that period to the loan before working out the EMI — that is how most banks treat it. Full disbursement on day one is assumed; real loans are disbursed in stages, so actual interest is lower.
Estimate only. Your lender sets the actual rate, EMI and charges.
The EMI starts after the moratorium. Interest accrued during the course is usually added to the loan unless you pay it as you go.
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Details
What lenders usually check
- Admission to a recognised institution and course; many lenders keep lists of institutions.
- The course’s cost and the student’s likely earning after it.
- The co-applicant’s income and repayment record.
- For larger amounts, security: property, deposits or other assets.
- Academic record, and for study abroad, the visa and country.
Documents to keep ready
- Admission letter and fee structure from the institution.
- Mark sheets and certificates of earlier qualifications.
- Identity, address and age proof of student and co-applicant.
- Co-applicant’s income proof: salary slips, ITR, bank statements.
- For loans above the lender’s unsecured limit: papers of the security offered.
- For study abroad: passport, visa or visa application, and cost estimates in the foreign currency.
Repayment
A moratorium usually covers the course period plus a further period after it; ask the lender for the exact moratorium in writing. After that, EMIs run for several years. Paying the interest during the course, if you can, reduces the total cost a lot.
Interest and charges
Often floating. Some lenders offer a small concession for women students or for paying interest during the course. Ask about processing fee, disbursement in tranches, and prepayment terms.
Security or own contribution
Up to a lender-set amount, usually no security beyond the co-applicant. Above that, a margin (a share paid by the family) and collateral are common. Government interest-subsidy schemes exist for some borrowers; ask the bank which apply.
How to prepare
Get the fee schedule in writing from the institution. Work out the full cost including living expenses. Check the co-applicant’s credit report. Decide who will pay interest during the course.
Questions about education loans
Who is the borrower — the student or the parent?
The student, with the parent or guardian as co-applicant. Both are responsible for repayment.
Is security always needed?
Not for smaller loans. Above a lender-set limit, collateral and a margin are usual.
What does the loan cover?
Tuition and fees, hostel, books and equipment, exam fees, and often travel and insurance for study abroad. Each lender lists what it will pay.
When does repayment start?
After the moratorium — usually the course period plus a further period. Get the exact terms in writing.
Do I pay interest during the course?
Interest accrues from disbursement. You can pay it as you go or let it add to the loan; paying it lowers the total cost.
Is there any tax benefit?
Interest paid on an education loan may qualify for a deduction under income-tax rules. Check the current rule or ask a tax adviser.
What if the course is not completed?
The loan remains payable. Tell the lender early and ask what options exist.
What we do here: we explain what lenders usually ask for and help you get your documents in order. We do not lend, arrange loans or take commission. The first call is free. See what we do.
