Introduction

Anyone who has secured an admission into an approved course in India or elsewhere is eligible for an Educational Loan. The bank manager has discretion in approving the loan based on the student's academic performance and the expected employment opportunities for the course.

Eligibility

  • Graduation, post-graduation, technical and professional courses conducted by colleges approved by UGC/ AICTE/IMC/Govt
  • Courses conducted by autonomous institutions like IIT, IIM etc
  • Teacher training/ Nursing courses approved by Central/State Government
  • Regular Degree/Diploma Courses like Aeronautical, Pilot training, Shipping etc. approved by Director General of Civil Aviation/Shipping

Procedure

This loan is repayable from one year after the completion of the course or from 6 months from gainful employment whichever is earlier. The repayment period is typically 5-7 years. The interest until the beginning of repayment is borne by the Government of India for low income families. After repayment starts, the borrower can claim income deduction for the interest under section 80-E.

Required Documents

  • Completed Loan Application Form
  • 2 Passport Size Photographs
  • Proof of residence (passport, voter's ID card, etc)
  • Proof of admission
  • Parent's proof of income (salary slip, form 16)
  • Parent's bank account statement (last 6 months)
  • Parent's Income Tax Assessments of last 3 years
  • 10th/12th/Graduation/Post Graduation marks statements (all applicable)
  • A detailed statement from the institute giving the breakup of expected expenses
  • Proof of satisfactory academic performance after loan approval for every semester

If the individual was working full time before the course, he/she should also submit

  • Details of Present Employment.
  • Proof of income (salary slip, form 16) and Income Tax Returns for the last 3 years

Expenses Covered

  • Tuition Fee
  • Examination
  • Books/Computer
  • Hostel
  • Insurance
  • Educational trips
  • Uniforms
  • Library/Laboratory
  • Passage Money for travel abroad
  • Two-wheeler (uptoRs. 50,000/-)

Amount Loaned

  • In India - a maximum amount of Rs 10 lakhs can be drawn
  • Abroad - a maximum amount of Rs 20 lakhs can be drawn

For amounts less than Rs 4.5 lakhs, there's no need for security. Any amount between Rs 4.5 lakhs and uptoRs 7 lakhs requires a parent to be a co-obligant. For loans beyond Rs 7.5 lakhs, tangbile collateral security (usually a house) must be hypothecated. All loans are secured by parent of the student borrower. In case of married person, co-obligator can be either spouse or the parents/parents-in-law

Disbursement

The loan is disbursed in stages as per requirement directly to the institutions and associated vendors of educational paraphenalia. The lending institution may also make a request with the educational institution for your progress reports and link disbursals to it.

Things to Check 

  • Whether interest rate offered is fixed or floating
  • Whether certificates will be retained by bank during the period of the loan
  • Processing fees and prepayment penalty

Notes

Vocational training and skill development study courses are not covered

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    I hope by reading this article you got enlighten on ,Process and documents required for Education Loanfurther to mention before taken any financial decision based on this content it is prefered to take an expert opinion as matter can be subjective.