Things to Know Before Getting a Education Loan - Credit Help India


Education loans are the only realistic way to fund higher education today, since education costs are increasing at a faster pace every day. Since most students in high-level schools expect to receive high salaries at the end of their studies, they will be able to repay education loans over a time span. Both public and private sector banks provide loans for educational students wishing to undertake higher education. These education loans are offered in the fields of engineering, medicine, architecture, administration, law, agriculture, the veterinary, dentistry, computer sciences, etc. Some banks have their own course list, and only such courses can be funded by loans. Nevertheless, before taking an educational loan, let's look at some relevant considerations.

Eligibility for loan

You need to know the eligibility requirements before applying for an educational loan, since various banks have their own terms and conditions. You must be an Indian citizen and have been admitted into an accredited college to qualify for a loan. If the parents or siblings are not received when they apply for a loan, they become their co- applicant. The provided loan amounts vary from bank to bank, so it is best to quickly verify the type of courses covered by the loan in order to prevent potential uncertainty. If the guardian's income is not enough, banks also request collateral for loan penalties between INR 4 and INR 7 lakh. Any amount more than INR 7.5, together with some tangible collateral of equivalent value, requires joint borrowers.

Interest rate and repayment period

Once you have verified your admission to a specific university, it is best for you to consider all loan options available. It is important to compare the interest rate offered by various banks and the period permitted for repayment. According to the updates available, an INR 4 Lakhs or lower loan comes with an interest of 10% – 15% paid in three years, while the higher loan is typically offered at lower interest rates but with a duration of 5 – 7 years of longer repayment. In the event of a loan default, some banks typically ask for a guarantee. This person is usually your parent or guardian for students.

Future EMI burden

Students at the start of a career receive nothing, and so can opt for a lengthy 10-12-year loan term. This helps the student with comparatively smaller EMIs in a significant way with the repayment burden.

Check existing loan amount

If a guardian or parent has taken other loans already, please refer to them before burdening them with additional loans. And if the amount of the loan that you already have is tiny, there is no need to worry. If the amount of the loan is high, another major loan should be avoided simultaneously. This is one reason why after graduation you need good work prospects to repay your education loan on time.

Read terms and conditions well

Credit penalty terms and conditions vary from bank to bank. Many of the requirements in the terms and conditions section may not be transmitted to you when your loan is disbursed, but you must all verify before you continue with the loan. Read these clauses carefully and be sure you know all related costs, such as pre-payment or late payment fees for EMIs, etc.

Special schemes

Many banks in India are offering special arrangements for girls who opt for education loans, especially government banks. In reality, for girls studying for higher education, some banks give 1 per cent lower interest rates. Often, during their studies, the government offers girl students the subsidy for the interest charged on the balance of the loan. It is therefore prudent to verify all special arrangements with your bank.


Taking an education loan is an important step in making a successful loan, since it is the first loan in the life of a student. If the loan is paid on time without defaults, you will apply in the future for a home loan or car loan.

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