What is an Education Loan ?
An **Education Loan** is a financial product designed to help students fund their higher education, both in India and abroad. It covers expenses such as tuition fees, hostel fees, books, and other academic costs. Unlike other loans, an education loan often has a moratorium period, which allows the student to defer payments until after they complete their studies and secure a job.
Key Features of Education Loans
Covers Full Costs
Loans can cover a wide range of expenses beyond just tuition, including living and material costs.
Moratorium Period
Repayment starts after a certain period (e.g., 6 months to 1 year) after completing the course.
Security Required
For loans above a certain amount, a collateral (e.g., property) is often required.
Tax Benefits
Interest paid on the education loan is eligible for tax deduction under Section 80E of the Income Tax Act.
Calculate Your Education Loan EMI
Loan Details
Loan Summary
Monthly EMI
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Total Interest
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Total Payment
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Loan Repayment Breakdown
See the split between your principal and interest payments.
Principal Amount
Total Interest
View Full Amortization Schedule (Monthly)
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Types of Education Loans
Education loans are tailored to meet different needs, depending on the course and destination.
Domestic Education Loan 🇮🇳
This loan is for students pursuing higher education within India. It typically covers a wide range of courses, from professional degrees to vocational training, at recognized domestic institutions. Collateral may be required for loans above a certain amount.
Study Abroad Loan 🌍
Designed for students aspiring to study in a foreign country. These loans often have a higher loan amount limit and may have specific requirements related to the country and university. Collateral is usually mandatory for these loans.
Professional/Vocational Loan 🛠️
Specifically for students enrolling in diploma, certificate, or vocational courses. These loans are usually smaller in amount and have a shorter repayment tenure compared to loans for a bachelor's or master's degree.
Eligibility Criteria for Education Loans
Applicant's Age
Typically, the applicant should be a citizen of India between 16 and 35 years old.
Co-Applicant
A parent, legal guardian, or spouse must be a co-applicant for the loan.
Course & Institute
The course and institution must be recognized and approved by the lender.
Academic Record
A good academic record is often required to be eligible for a loan.
Documents Required for Education Loan
Student Documents
- Admission letter from the university
- Mark sheets of previous examinations
- Age and address proof
- Passport-size photographs
Co-Applicant Documents
- Proof of income (salary slips, IT returns)
- Bank statements (last 6 months)
- ID and address proof
- Net worth statement (for loans with collateral)
Course & Fee Documents
- Statement of course expenses from the institution
- Receipts of fees already paid
- Proof of scholarships received, if any
- Copy of the prospectus or fee schedule
Frequently Asked Questions
What expenses are covered in an education loan?
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Education loans typically cover a wide range of expenses, including tuition fees, hostel fees, examination fees, library fees, and the cost of books and equipment. Lenders may also cover the cost of travel to a foreign country, caution money, and building funds.
What is a moratorium period?
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The **moratorium period** is a time during which the borrower is not required to make EMI payments. It usually lasts for the duration of the course plus an additional period after graduation (e.g., 6 months to a year). Some lenders may require you to pay simple interest during this period.
Is a co-applicant mandatory for an education loan?
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Yes, a co-applicant, such as a parent or legal guardian, is mandatory for all education loans, as the student may not have a stable source of income during their studies. The co-applicant's income and credit history are used to determine the loan eligibility and amount.
Do I need to provide collateral for an education loan?
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For loans up to ₹4 lakhs, most banks do not require any collateral. For loans between ₹4 lakhs and ₹7.5 lakhs, a third-party guarantee may be required. For loans above ₹7.5 lakhs, lenders generally require collateral, which can be property, fixed deposits, or bonds.
What is the maximum loan tenure for an education loan?
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The maximum loan tenure for an education loan can vary between banks, but it is typically between **10 to 15 years** after the moratorium period. A longer tenure will result in smaller EMIs, but you will pay more in total interest.
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