🎓 Loans

What is Education Loan?

Student loan for higher studies - interest rates, moratorium, and repayment

8.5-12%
Interest Rate
15 Years
Max Tenure
₹1.5Cr
Max Amount
Moratorium
Period Available

What is Education Loan?

Education Loan is a financial assistance provided by banks and financial institutions to help students pursue higher education in India or abroad. It covers tuition fees, living expenses, and other study-related costs.

Education loans offer special benefits like moratorium period (no EMI during studies), competitive interest rates, and tax benefits, making quality education accessible to deserving students regardless of financial background.

💡 Key Point: Education loans invest in your future earning potential, with repayment starting only after course completion or job placement.

Types of Education Loans

Domestic Education Loan

  • • Studies within India
  • • Lower interest rates
  • • Up to ₹10-20 lakhs
  • • Simpler documentation
  • • No collateral up to ₹7.5L

Abroad Education Loan

  • • International studies
  • • Higher loan amounts
  • • Up to ₹1.5 crores
  • • Collateral usually required
  • • Covers living expenses

Secured Education Loan

  • • Collateral required
  • • Lower interest rates
  • • Higher loan amounts
  • • Property/FD as security
  • • Better terms & conditions

Unsecured Education Loan

  • • No collateral needed
  • • Higher interest rates
  • • Limited loan amount
  • • Co-applicant required
  • • Faster processing

What Education Loan Covers

Academic Expenses

  • • Tuition fees
  • • Examination fees
  • • Library fees
  • • Laboratory fees
  • • Development fees
  • • Caution deposit

Living Expenses

  • • Hostel/accommodation
  • • Food and meals
  • • Books and stationery
  • • Computer/laptop
  • • Travel expenses
  • • Study tour costs

For Abroad Studies

  • • Visa fees
  • • Passport expenses
  • • Air travel costs
  • • Foreign exchange
  • • Insurance premium
  • • Admission test fees

Additional Costs

  • • Project work expenses
  • • Thesis costs
  • • Study materials
  • • Equipment purchase
  • • Conference participation
  • • Research expenses

Education Loan Eligibility

Student Criteria

  • • Indian citizen
  • • Age: 16-35 years
  • • Admission to recognized course
  • • Good academic record
  • • Entrance exam scores

Co-applicant Criteria

  • • Parent/spouse/sibling
  • • Stable income source
  • • Good credit history
  • • Age: 21-65 years
  • • Income proof required

Eligible Courses

  • • Engineering (B.Tech/M.Tech)
  • • Medical (MBBS/MD/MS)
  • • Management (MBA/PGDM)
  • • CA/CS/CMA
  • • PhD/Research programs
  • • Diploma courses (1+ year)
  • • Foreign university degrees
  • • Professional courses

Interest Rates & Repayment

Interest Rate Structure

  • • Domestic: 8.5-11% per annum
  • • Abroad: 9-12% per annum
  • • Floating rates (market-linked)
  • • Women get 0.5% concession
  • • Rural students get benefits

Moratorium Period

  • • No EMI during studies
  • • Course duration + 6 months
  • • Or 1 year after job
  • • Interest accrues during period
  • • Can pay interest to reduce burden

Repayment Example

  • • Loan Amount: ₹20 lakhs
  • • Interest Rate: 10% per annum
  • • Repayment Tenure: 10 years
  • • Moratorium: 2 years (course + 6 months)
  • Monthly EMI: ₹30,424
  • • Total Interest: ₹16.51 lakhs

Tax Benefits

Section 80E Benefits

  • • Interest payment deduction
  • • No upper limit on deduction
  • • Available for 8 years
  • • From year of repayment start
  • • Only interest, not principal

Eligibility for 80E

  • • Individual taxpayer only
  • • Loan for self/spouse/children
  • • Higher education purpose
  • • From approved institutions
  • • Valid loan certificate required

Tax Savings Example

  • • Annual Interest Payment: ₹2 lakhs
  • • Tax Bracket: 30%
  • Tax Saved: ₹60,000 per year
  • • Available for 8 years
  • • Total Tax Benefit: ₹4.8 lakhs

Education Loan EMI Calculator

Loan Amount:₹15,00,000
Interest Rate:10%
Tenure:10 years
Moratorium:2 years
Monthly EMI:₹22,818
Total Interest:₹12,38,160
Calculate Your EMI →

Education Loan Rates

SBI

Domestic

8.85%

HDFC Credila

Abroad

10.25%

Axis Bank

Domestic

9.15%

*Rates vary based on course and collateral.

Loan Amount Limits

Domestic Studies:₹10-20 lakhs
Abroad Studies:₹20L-1.5Cr
Without Collateral:Up to ₹7.5L
With Collateral:Higher amounts

💡 Tip

Government schemes offer up to ₹10L without collateral

Government Schemes

Central Sector Scheme

Interest subsidy for economically weaker sections

Padho Pardesh

Loan guarantee for abroad studies

Dr. APJ Abdul Kalam

Interest subsidy for technical education

Frequently Asked Questions

When do I start repaying education loan?

Repayment starts after moratorium period ends - either 6 months after course completion or 1 year after getting a job, whichever is earlier.

Can I get education loan without co-applicant?

Most banks require co-applicant (parent/spouse/sibling) for education loans. Some NBFCs may offer loans without co-applicant for smaller amounts.

What if I don't get a job after studies?

Banks may extend moratorium period or restructure loan. Some offer income-based repayment plans. Communicate with bank early to avoid default.

Can I prepay education loan?

Yes, most banks allow prepayment without penalty. This reduces total interest burden and helps in faster loan closure.

Is collateral always required?

No collateral required for loans up to ₹7.5 lakhs. For higher amounts, banks typically require property, FD, or other securities as collateral.

Can parents claim tax benefit?

Only the person who is legally liable to pay (borrower) can claim Section 80E benefit. If parent is co-borrower, they can claim the deduction.