How to get an Education Loan in India – A Complete Guide

08 Jun 2022

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An education loan is a loan borrowed for funding higher education and higher-education related expenses. These loans cover the cost of tuition, books accommodation and other expense required to complete the course.

How to get education loan

Here is a comprehensive guide of the eligibility criteria and documentation for an education loan. We have also listed a few helpful tips that applicants should keep in mind.

Eligibility criteria

Any student who wishes to pursue higher education can seek financial aid after fulfilling the eligibility criteria. The criteria are not limited to individual eligibility; the lender must consider the type of course and institutions as well.

Eligible courses

Lenders usually offer education loans for higher degrees, such as:

  • Bachelor's degree (B.Com, B.Sc., B.A, B.Sc.IT, B.M.S, LL. B., B.E, MBBS etc.)
  • Master's degree (M.Com, M.Sc., M.A, M.Sc.IT, LL. M., MBA, etc.)
  • Doctor of Philosophy (PhD) and Doctoral degree
  • Diploma courses
  • Certificate course

Some lenders will extend an education loan if you wish to pursue professional or certificate courses such as:

  • Industrial Training Institute (ITI) courses
  • Government-backed vocational courses
  • Courses by National Skill Development Corporation, State Skill Corporations or State Skill Missions
  • Job-oriented diplomas
  • Courses held by recognised bodies in aeronautics, pilot training or shipping in India or abroad.

Eligible institutions

Apart from the courses, the institution you are applying to also plays a major role as well. Reputed academies or universities are favourable when it comes to lenders approving education loans. Since the students will be paying the loan, the lender must be assured that the students study in a good college and get a good job to pay off the loan. “Most of the banks are having its own list of premium colleges/Institutes. Collateral free Loans are available in selected premium institutes. The students pursing study in these premium colleges/ Institutes will have extra benefit in ROI. You are more likely to get approval on your education loan if you are applying to study at:

  • Universities and colleges recognised by University Grants Commission (UGC) Delhi, All India Council for Technical Education (AICTE), Institute for Mediation & Conflict Resolution (IMCR), etc. and reputed polytechnic colleges.
  • Reputed foreign universities.

Things you should know before you start your education loan process

While applying for an education loan, the following are the standard regulations you must follow:

  • You must apply for an education loan with a co-applicant, who can be your parents or spouse.
  • A guarantor or security is not mandatory for loan amounts less than INR 4 Lakh.
  • A third-party guarantor is mandatory for loan amounts greater than INR 4 Lakh.
  • Collateral is necessary for loan amounts greater than INR 7.5 Lakh.
  • Insurance is mandatory for students who wish to pursue education abroad.

Document requirements for education loan in India

The standard documentation process across banks for an education loan is as follows:

  • Duly filled loan application form
  • Marksheets and passing certificates from 10th standard.
  • Proof of ID (PAN/Aadhaar card/passport/voter ID/driver's license, etc.)
  • Proof of address (Aadhaar card/passport/voter ID/latest utility bills, etc.)
  • Proof of age (birth certificate/PAN/Aadhaar card/school leaving certificate, etc.)
  • Proof of income of Co-applicant/ Guarantor (as applicable)
  • In case you need to pledge collateral, documents of immovable property or fixed deposits
  • Latest passport size photographs

If you want to study overseas, you will need to provide:

  • Duly filled application form
  • Copy of statement of marks or certificates of the last examination passed
  • Proof of admission to the foreign university and the course details
  • Details and schedule of the course expenses
  • Copy of the scholarship letter (if received)
  • Copy of foreign exchange permit if you have it
  • Last 6 months bank statements of the borrower, parents or guardian
  • Proof of ID (PAN/Aadhaar card/passport/voter ID/driver's license, etc.)
  • Proof of address (Aadhaar card/passport/voter ID/latest utility bills, etc.)
  • Proof of age (birth certificate/PAN/Aadhaar card/school leaving certificate, etc.)
  • Proof of signature (PAN/driver's license/bank passbook, etc.)
  • Last 2 years Income Tax Returns (ITR) of the borrower, parents, or guardian (as applicable)
  • In case you need to pledge collateral, details of securities and a report from an advocate about its mortgage ability and marketability must be furnished

Tips for education loan application

Here are a few tips you ought to know before applying for an education loan:

  • The responsibility of repaying the education loan solely falls on you if you are a student. Therefore, plan your higher studies considering your family's financial capabilities for worst-case scenarios.
  • Read all the terms and conditions word to word to check for any hidden costs.
  • Select a bank that offers a good moratorium period, in case of delays due to unforeseen conditions.
  • As a female student applicant, you can enjoy concession on the interest rates. So, ensure that you check with your bank before applying.
  • If you wish to study abroad, look for part-time jobs around your campus, as the education loan does not cover daily expenses like grocery shopping or commuting.

Bank of Baroda education loan benefits

An education loan is the most popular loan amongst students and professionals who wish to pursue higher studies. At Bank of Baroda, we want students to opt for higher education by facilitating a hassle-free loan application process.

  • No Processing Fees: We charge zero processing fees on our collateral-free education loan in India.
  • Affordable Interest Rates: Bank of Baroda offers competitive interest rates.
  • Higher Loan Limit: You enjoy a high loan amount of up to INR 80 Lakhs for top-tier institutes and for Medical and aviation higher loan limit is Rs.125 Lakhs in India. For study abroad Maximum Loan limit is Rs.150 Lakhs for premier institutes.
  • Flexible Repayment Period: You can repay the loan in a period of 10 to 15 years after the moratorium period.
  • Tax Benefits: After disbursal, you are eligible for tax benefits under Section 80C of the Income Tax Act, 1961.

The high costs of a university degree should not stand between you and your dreams. Reach out to us at Bank of Baroda today to know how we can help you with the right education loan.


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