As the educational expenses are going higher, education loans have become a most well known method of funding higher education. Education loan is becoming popular because of the rise in the fee structure. This is due to the spreading of self financing institutions in the field of engineering, medical and management sides. These institutions have a very high fee structure, as they have less funding from the government. So funding higher education in India now becomes a tough task. With a certain limit this issue can be overcome by the help of education loans from various banks.

Both public sector and private sector banks offer education loans. It came in to existence in 1995 by SBI bank and after that many banks started offering education loan. As this loan scheme is not a main loan stream, people have no thorough idea about the terms and conditions.

For no doubt that education cost a great deal today. In today’s job trend, higher degrees offer better job opportunities. Education loans can help students to pay for their educational needs, so as to get jobs that are well paying and offer a bright future.

Full time Graduate and post graduate courses, professional courses include Engineering, Medical, Architecture, Management, Law, Agriculture, Veterinary, Dental, Computer etc are some of the courses that are applicable for getting education loan. Bank typically has their own list of courses, which are eligible for loans. They sanction loan for only that allotted courses. If you are looking for education loan first visit the bank to check whether the course you are going for is covered under the bank and also check the interest rates and general eligibility criteria.

The students who are pursuing higher degree are eligible for education loan. The loan amount covers the expenses such as tuition fees, other fees payable to the academic institution, caution fund, hostel fees, traveling expenses, cost of books, computers, instruments and other education materials.

The loan amount sanctioned should be subject to the repayment capacity of the parent/student. Bank typically asks for margin money. Margin money is the upfront money paid by the parents. For an amount of 4 lakhs no margin money is needed. Most of the banks Structure with Educational Loan.

Studies in India-Maximum Rs 7.5 lakhs

Studies Abroad-Maximum Rs 15 lakhs

Above 4 lakhs margin money is needed. Its range should be

Studies in India: 5%

Studies abroad: 15 %( rates vary from bank to bank)

Education loans have lowest interest rates as compared with other financial loans, which ranges between,

Loan up to 4 lakhs: 11-12%p.a

Loan over 4 lakhs: 13-14% p.a

The processing fees for education loan include title search fees, documentation preparation fees, cost for general validation and verification etc. This is the range of 2-2.5 %

The required documents that would be submitted while applying for education loan may vary from bank to bank. The most common documents include

1. proof of admission

2. Fee structure from the educational institution

3. Mark list of the qualifying examination

4. Photographs

If the applicant is earning the documents such as Income tax assessment order of last two years, bank account statement, income proof etc are needed.

Almost every bank requires a cosigner or guarantor for every loan. Parents or relatives typically act as cosigners or guarantors. If the student defaults on the loan amount the guarantor has the responsibility to repay the loan. Typically bank looks at the employment and financial details of the in relation. Instead of Guarantor, bank accepts securities such as house, gold, share, fixed deposit receipts, National Savings Certificates etc are also acc

Education loan has generous repayment option. The students should spend their school time for studying, not working to repay the loan. For this reason most banks allow students to pay back their debts only after six months or one year (varies from bank to bank) after you complete the course or six months after you have secured a job, whichever happens first. This gives students to settle down and find a job before starting repayment.

There is a tax advantage to take loans. Interest repayments on education loans are tax deductible. A deduction under section 80E of the Income-Tax act for the interest paid on an educational loan can be claimed. This deduction is allowed for 7 years and the loan must be taken for higher education purposes only and loan has to be from a financial institution or a government approved charitable institution.

If you are worry about your cost of study, you should not feel that money has to decide your education,” The financial aid-Education Loan” that will surely help you. Based on your requirements, select the more apt financial institution that grants you better dealings.

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