Education is the essence of life. Government of India is promoting education loans so that no deserving student is denied education. Student who has secured admission in any institute of repute, whose degree/diploma is recognized by University/Institute affiliated to any Central/State Statutory Body or recognized by AICTE (All India Council of Technical Education) and other institutes of repute, is eligible for educational loan. Banks give loans for paying fees of colleges, school, hostel, laboratory fees, buying equipments, purchasing books, to meet other course related expenses.

Applying for an education loan Factors to consider

Seek further education have a wide demand for educational loans. Banks provide these loans to eligible students who need financial assistance to pursue their studies. These loans have boosted student's careers and encouraged them to seek higher education that they otherwise would not have been able to finance. However, not everyone is suitable for a student loan. Before lending money for whatever reason, banks set certain conditions for borrowers to follow.


If you have availed an education loan and are repaying it, you can subtract the interest accrued as a deduction from your net income under Section 80E. The exemption, though, is only available for the interest portion of the EMI. The principal component of the EMI is not tax-free. This is a one-time deduction that can only be claimed by an individual. It does not apply to HUFs or other types of taxpayers. The loan must be used to fund the higher education of the borrower, his or her spouse or children, or a student for whom the borrower is the legal guardian, in order to claim this deduction. This deduction is conveniently claimed by parents for Loans taken for their children's higher education. The cumulative interest component of the EMI reimbursed during the financial year is deducted. There is no upper limit on the amount that can be deducted. The entire amount of interest paid can be claimed as an exemption. This exemption is valid for up to eight years, or until the debt is paid off, whichever comes first.

When a bank receives an application for an educational loan, the following are the major considerations one must need to know

  • The student's academic experience and credentials. The track record of grades, credits, and attainments will be taken into account.
  • Accredited courses should be worthwhile to learn. They must have a high likelihood of placement and career structure in order for the borrower to be able to repay the loan.
  • The organization where the course will be administered must also have importance. The university, college, or college you want should be certified and well-known.
  • The applicant's ability to provide collateral for the loan, which makes the bank consider the type of collateral provided as well as its value.
  • You can use the Education Loan EMI Calculator to figure out how much your monthly payments will be if you apply for an education loan and how much the overall amount of the loan will be. You will get an estimation of your equated monthly installment (EMI) by inserting a few loan-related specifics such as the loan amount, tenure, and interest rate.
  • Once you've settled on a bank, read all the terms and conditions as well as the specifics on the loan application form.
  • In most cases, you should select a bank that allows you to extend the repayment period in the event of a pause due to unexpected scenarios.
  • You do not receive the loan amount. At the start of each semester, it is forwarded directly to the organization where you want to study. As a result, it must comprise all the perks and services provided so that you don't have to pay more.
  • Documents required to apply for an education loan

      While applying for an education loan, make sure that you have kept the below-listed documents ready:
  • Statement of admission from the educational establishment
  • Marksheets from past educational experiences
  • Age proof, ID Proof, address proof of the student
  • Salary slip of the last 3 months
  • Bank account statement of the last 6 months
  • Recent passport size photographs
  • Valid VISA for students going to study abroad
  • Sr No.         Banks          ROI in %
  • 1         Union Bank of India          6.80
  • 2         Central Bank of India          6.85
  • 3         Bank of India           6.85
  • 4         Bank of Baroda           6.85
  • 5         State Bank of India           6.85
  • 6         Punjab National Bank           6.90
  • 7         IDBI Bank           6.90
  • 8         Canara Bank           6.90
  • 9         Bank of Maharashtra           7.05
  • 10         Indian Bank           7.15
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