education loan

Education Loan

What Is Education Loan?

The baton of good future of any country is in the hands of its youngsters which is possible not only through good but quality education.

As per the census, ~48% of Indian population belongs to lower income group and ~46% of population belongs to lower-middle and middle-middle class group. This means that children of majority of population in the country remains deprive of good and higher education. Due to such poverty like situation baton holders of country start doing labour work so as to become helping hand in their family.

We, as a team are committed in helping such families so that not a single deserving child remains deprived of higher education. We help these baton holders in getting “Education Loan” for their higher studies from different financial institutions.

Why Education Loan?

The standard of living is continuously increasing day by day. The proportion of private institutions is increasing at a faster pace than government institutions because of increasing demand for quality education. For funding such increased cost of education, financial institutions have come up with a product called “Education Loan”.

In this product of Education Loan, financial institutions funds for tuition fees, living expenses, hostel fees, mess fees, laptop expenses, travel expenses, etc.

Benefits of Education Loan:

  • Reduction in financial burden of parents as they need not pay the whole cost in one go
  • Financial institutions give moratorium period for the course duration during which the parents need not to pay anything.
  • The interest paid on education loan is deductible under section 80E of Income Tax Act, 1961 for period of 8 consecutive years.

Eligibility for Education Loan:

  • Student must be resident of India
  • You should fall in the age bracket defined by the respective financial institution
  • You need to apply to a recognized college/institution
  • Co-applicant who has a regular source of income

Documents required for applying for Education Loan:

For Salaried:

For Self-Employed:

Salary slip of last 6 months

IT Return of last 2 years along with copy of Profit & Loss A/c and Balance Sheet.

IT return of last 2 years

GST Registration Certificate.

Form 16 of latest Financial Year

Business Establishment Certificate.

Banking of last 6 months

Banking of last 12 months

Employment Certificate from current employer

Other Documents:

  • Loan Application form duly filled and signed
  • Signature proof
  • Passport copy in case of abroad education

Educational Documents:

  • SSC, HSC, Graduation, Post-Graduation degree certificate
  • Admission Letter/CAS/i20 if applicable
  • Test Score of entrance exams such as GMAT, GRE, TOEFL etc.

Financial Documents of Co-Borrower:

For Salaried Co-Borrower:
*Salary slip of last 6 months.

* IT return of last 2 years.

* Form 16 of latest Financial Year.

* Banking of last 6 months.

* Employment Certificate from current employer
For Self-Employed Co-Borrower:

* IT Return of last 2 years along with copy of Profit & Loss A/c and Balance Sheet certified by CA

* GST Registration Certificate.

* Business Establishment Certificate.

* Banking of last 12 months of all Savings A/C and Current A/C.

* Professional Qualification certificate (if co-borrower is self-employed professional)

* KYC of Partnership firm & Partnership deed (if co-borrower is partnership firm)

* KYC of company, MOA & AOA, Shareholding pattern attested by CA (in case co-borrower is company)

Documents required If co-borrower is NRI

For Salaried NRI Co-Borrower:

* VISA stamped passport.

* Copy of work permit.

* Salary slip for 3 months and salary account of latest 6 months.

* Updated bank statement of NRE/NRO account of latest 6 months.

* Copy of CDC of 2 months for Merchant Navy.

* Copy of card of POI/OCI for person not having Indian passport.

* 2 years of employment proof abroad with latest contract copy.

* Residence proof of abroad & India.

* Power of Attorney to be executed from the country of stay.

* HR E-Mail Id

Interest Rates & Charges:

  • Processing fees on Education loan ranges from 1% to 2% of loan amount. Some financial institutions charge flat processing fees
  • Interest rate on loan ranges from 9% to 15% depending on the course opted by student, academic background of the student, collateral offered by student’s parents
  • Travel Insurance is to be compulsorily availed by the student
  • MRTA is to be compulsorily taken by the student

Frequently Asked Questions:

1.From when does the repayment of loan gets started?

There are 3 types of products in Education loan

(i) Simple Interest Loan: In this type of loan the borrower has to pay only the interest amount accrued on loan till the completion of course. After course completion actual EMI starts.

(ii)Partial Simple Interest Loan: In this type of loan the borrower has to pay only lump sum fixed amount as decided by the financial institution till the completion of the course tenure.

(iii)Equated Monthly Installments: In this type of loan actual EMI starts from the day of disbursement. There is no moratorium period in this type of loan

2.What is moratorium period?

The period for which the actual EMI doesn’t gets started is known as moratorium period. Generally, the moratorium period is equal to the course tenure

3.Is Education loan always secured?

No. In secured Education Loan some property is offered as collateral. But sometimes if the academic background of the student is strong then the financial institutions may offer Unsecured education Loan means loan without any collateral.

Normally the rate of interest on Unsecured Education loan is slightly higher

4.Can Education loan be availed for both Domestic & Overseas education?

Yes, Education loan can be availed for both Domestic & Overseas Education

5.On what factors the rate of interest on Education Loan depends?

Following are some of the major reasons on which interest rate on Education loan varies:

  • Course preferred by the student
  • Country in which the student is willing to study
  • Academic background of the student
  • Whether the loan is secured or Unsecured
  • Type of collateral offered by the borrower
  • Credit score of the applicants

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