In India, studying for a career or a postgraduate degree represents a greater challenge. One of the main problems or issues around this situation is that many students who finish high school do not achieve this degree of studies because the university to which they applied did not accept them, since there are many who enroll and few who are admitted. In addition, the cost to study in private schools is very high and most resort to an educational loan.
If you are thinking of taking an educational loan, it is good that you first ask yourself: What is an educational loan and how does it work? here we explain the different aspects of educational loans.
What is Education Loan?
An Educational loan is a type of financing that is granted to a student, or to a relative or friend of a student, with the aim of covering the cost or investment involved in higher university studies (careers) or postgraduate studies (master’s and doctorate).
In other words, we are talking about a personal loan, which is intended to pay for a career, a master’s degree, a diploma, or a doctorate. Therefore, we are talking about a type of loan, that a student requests with the aim of financing his university studies mainly.
Why Opt for an Education Loan?
Even if you have enough money and are qualified to pay off all of that school, college, or university fees, it’s always a good idea to take out an education loan for a variety of reasons, including:
- Financial Benefits: By taking the loan, people are relieved of financial stress and will not have to break their investments (mutual funds, FDs, etc.) that may provide better interest in the future. In addition, by taking an Education Loan, one will be eligible for tax relief from the government under Section 80 E of the Income Tax Act 1961.
- No, repay problems: The debtor needs not to pay the loan immediately. Rather, he is responsible for the repayment of the loan once he has completed his studies. There are a variety of loan choices available, ranging from medium to long-term, depending on family circumstances and income.
- Lots of benefits and offers: When a student goes overseas, an education loan covers a variety of expenses in addition to tuition fees, including airfare, living expenses, study materials, and much more. These financial responsibilities will be removed as well if you opt for a loan.
- Build a financial trust: After completing the course of study, a student will be able to repay the loan amount without difficulty, allowing the student to establish a good credit history and qualify for Low-interest Education Loans with benefits in the future.
Who Are Eligible for Education Loan?
Any student can apply for an education loan with the help of their parents or guardians as co-applicants. The repayment of your education loan begins one year after you finish your degree or six months after you get a job after you finish your study, whichever comes first.
Documents Required to Apply for an Education Loan
- All of the essential KYC documents, such as proof of address and identification.
- Your letter of acceptance to college.
- Your course’s cost structure.
- Income proofs such as bank statements, salary slips, and tax returns.
- If you need to study at a foreign university, you can also apply for a pre-admission education loan.
Course Covered Under Education Loan
One of the advantages is that with these educational loans students can finance different educational courses such as:
- Diplomas
- Specializations
- Professional updating courses
- doctorates
- Masters
Is it easy to get an education loan? How can I apply for an education loan?
Yes, Apply Education Loan Online with ReferLoan is easier than ever before! To avail of an education loan with ReferLoan you can:
- Click here and begin filling up your application form.
- Existing ReferLoan customers can also log in to Internet Banking and ReferLoan Mobile App to browse through pre-approved offers on Personal loans.
- Visit the nearest ReferLoan Branch.
- Get in touch with the Customer Care Executive.
What is the interest rate of an education loan?
Many Banks Offer Education loans at different interest rates. Below is a list of Banks with their respective interest rates:
Compare Education Loan Interest Rates 2022
| Banks | Interest Rates | Processing Fees |
| Punjab National Bank | RLLR + BSP + 1.25% | 1% of the loan amount |
| Andhra Bank | 10.25% p.a. | 1% of the loan amount |
| Canara Bank | One Year MCLR + 2.00% | Nil |
| State Bank of India | 8.65% | Up to Rs.10,000 |
| Bank of Baroda | BRLLR + 0.25% | 1% of the loan amount |
| IDBI Bank | 6.75% to 8.75% p.a. | Contact the bank |
| Bank of India | One Year MCLR + 1.70% |
|
| Tamilnad Mercantile Bank | 10.45% to 11.45% p.a. | 1% of the loan amount |
| HDFC | 9.55% to 13.25% p.a. | Up to 1% of the loan amount |
| UCO Bank | UCO Float Rate + 2.40% | Nil |
| Karnataka Bank | 9.98% to 12.38% p.a. | Contact the bank |
| Federal Bank | 10.45% p.a. onwards | Contact the bank |
| Karur Vysya Bank | 10.60% to 11.60% p.a. | Nil |
| Axis Bank | 13.70% to 15.20% p.a. | Rs.15,000 + GST |
| Kotak Mahindra Bank | 11.50% to 24% p.a. | Nil. |