Education loan: How to get an education loan? The name of your college can be a big advantage, understand this...

In today's competitive environment, financial difficulties often stand in the way of pursuing one's desired course of study. Students or their families may not have enough money to pay the hefty fees charged by educational institutions. Whether it's studying abroad or enrolling in engineering, management, or medical courses, the fees have increased so much that the savings of a middle-class family fall short. Often, students are forced to give up on their dreams and consider other courses out of necessity. It is in such situations that education loans come to the rescue.

Who can apply for an education loan?
If you have qualified for admission to an engineering, medical, or management course, you can apply for an education loan. A good academic record makes it easier to get a loan. Education loan applications are usually processed within 7 to 30 days. If you have already paid the first semester's fees and secured admission, you can also convert this amount into a loan.

For an education loan, the student is the primary applicant, and their parents/guardians are the co-applicants. Before granting the loan, banks also check the financial status of the co-applicant. In many states, the state and central governments also provide subsidies on education loans for certain categories of students. You can check this before taking out a loan.

What documents are required for an education loan?
10th and 12th-grade mark sheets
KYC documents for the applicant
Student's bank passbook
Identity proof such as a passport, a driving license, a voter ID
Entrance exam result
Proof of clearing the entrance exam for the chosen course
Institute documents detailing the fees for the entire course
University or college fee and regulations booklet/rules
Age proof
Aadhaar cards of both the student and parents
Parents' income tax returns for the last three years

The institution also matters.
In the case of education loans, students and their parents need to be aware of 'Grade 1' or 'Premium' institutions. If you get admission to these top institutions, banks offer you loans without any collateral, at low interest rates, and with easy terms. Your application is also processed quickly. For example, the State Bank of India (SBI) has included more than 250 institutions in the country under its 'Scholar Loan Scheme'. These are divided into several categories:

AA Category: This mainly includes several IIMs. IIM Ahmedabad, IIM Bangalore, IIM Calcutta, IIM Indore, IIM Kozhikode, IIM Lucknow, etc.
A Category: This includes major IITs and other top medical colleges. IIT Mumbai, Delhi, Kanpur, Madras, Kharagpur, Roorkee, Guwahati, Bhubaneswar. Top institutes like AIIMS (Delhi), AFMC (Pune), and CMC (Vellore).
Others: BITS Pilani (all three campuses), ISB (Hyderabad/Mohali), NITs (major campuses like Trichy, Warangal, Surathkal) are also included in the list.

How much is the education loan?
For admission to top institutions, banks can provide loans ranging from Rs. 40 lakh to Rs. 1 crore without any collateral (property/FD). ​​Students are charged a lower interest rate of 0.50% to 1% for these institutions. Banks have pre-approved lists for these educational institutions, which speeds up the loan process. You can contact your nearest bank branch for the list of these educational institutions. Education loans do not only cover college tuition fees, but also several other expenses. Most banks include these expenses:

Tuition fees, college fees: Officially requested fees for the entire duration of the course.
Hostel/Mess: Expenses if the student is staying in a hostel.
Books and equipment: Necessary laptops, computers, scientific equipment, and library fees for studies.
Travel expenses: Especially for students studying abroad, air tickets and travel expenses. Other expenses: Incidental expenses for study tours, project work, and thesis.

What is the interest rate on education loans?
Interest rates on education loans can vary depending on the bank and the loan amount. Generally, these rates range from 8% to 12%. Many government banks also offer an additional 0.5% concession on interest rates for female students.

SBI: Starting from 7.25% per annum
ICICI Bank: Approximately 11.27%
Tata Capital: Starting from 10.99%
UCO Bank: Starting from 7.50%
IDFC First Bank: Starting from 9.99% per annum
(Disclaimer: These interest rates may vary. Please check the exact rates at the nearest branch of the respective bank at the time you are applying for the education loan.)

Understanding the Moratorium Period
The biggest feature of an education loan is its 'moratorium period' or 'holiday period'. This is the time during which the student does not have to repay any money to the bank. Typically, this period is 6 months to 1 year after the completion of your course. The purpose is to allow the student to find a good job and become financially stable after completing their studies.

Disclaimer: This content has been sourced and edited from Navbharat Times. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.