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Education is of utmost importance nowadays and with rising inflation, the cost of education is also increasing. So, to support such, education loans are provided at competitive rates and repayment starting after completion of whole education.
Most of the Indian banks offer such loans to the deserving candidates at a low interest rate with flexible terms and conditions. Moreover, the documentation process is kept minimal to enable the students get the loan amount within a quick span without much complexity.

Types of Loan

1. Based on Location
a. Domestic Education Loan
Students who would like to pursue education in India can apply for this loan type.
b. Overseas Education Loan
Students who would like to pursue education outside India can apply for this loan type. The loan covers the airfare, accommodation, and tuition fee.

2. Based on Course
a. Undergraduate Loans
An undergraduate degree will usually be a 3 to the 4-year long course under various specialisations. Having an undergraduate degree helps individuals to land a decent job and start earning.
b. Postgraduate Loans
Many undergraduates would like to continue their education with a postgraduate course, usually a 2-year long course in India. An advanced degree is desired to get more profound knowledge in the area of interest.

3. Career Development Loans
Many professionals who work in corporate jobs prefer to pause their career and take up professional courses to improve their employment prospects. Such individuals would strive hard to get into reputed business and technical schools to polish their skills.

4. Based on Collateral
a. Loan Against Property, Deposits, and Securities
You can pledge immovable assets, such as agricultural land, residential land, flat, house, and others, fixed deposit certificates, recurring deposits, gold deposits, bonds, debentures, and equity shares to get the necessary financing to pursue education.
b. Third-Party Guarantee
A guarantee letter from an employee of the bank or a home bank can help the student get an education loan.


1. Age – Minimum 18 years and Maximum – 35 years
2. Qualification – Pursuing graduate/post graduate degree or a PG Diploma
3. Nationality – Indian
4. Academic record – Good
5. Income Source – Parents/Guardian
6. Income – Stable means regular income
7. University Applied to – In India/Abroad
8. Admission Status – Confirmed
9. Security – Tangible collateral or guarantor


Age proof
Copy of Aadhaar Card /Voter ID/Passport/Driving License
Identity proof
Copy of Voter ID/Aadhaar Card/Driving License/Passport
Residence proof
Rental agreement/Bank statement of 6 months of the student or co-borrower/guarantor/Copy of Ration card/Gas Book/Electricity Bill/Tel Bill
Income proof
1. Most recent salary slips or Form 16 of the parent/ guardian/co-borrower
2. 6 months bank statement of the borrower or updated passbook of bank
3. Updated ITR (Income Tax Return with income computation) of 2 years or IT assessment order of last 2 years of parent/co-borrower/guardian
4. Documents stating the assets and liabilities of the parent/co-borrower/guardian

Tax Benefits on Education Loan

When you start repaying the education loan, the interest portion you pay towards the loan every can be claimed as income tax deduction under Section 80E. However, the deduction cannot be claimed for principal portion.
There is no limit on the amount you can claim for interest repayment on an education loan. As proof of this, you need to obtain a certificate from the bank. The facility is available only for eight years from the year you start repaying the loan or until the interest is fully repaid, whichever comes first.

Repayment System

Some banks provide a 6-month grace period after completing the course to land a suitable job and start the repayment process. This grace period may vary with the lender. Once you land a job within this period, you may start the repayment process in the form of EMIs.

Frequently Asked Questions

Yes, you can change the education loan from a fixed rate to a floating rate.
Yes, lenders levy a penalty in the case of late payments. Depending on the lender, the charges may vary.
Yes, you can apply for an education loan in case your application is rejected the first time.

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