Personal Loan for Students
When it comes to pursuing better education, the cost can often be a major concern. However, fret not, for there exists a beacon of hope in the form of personal loans exclusively tailored to finance education. In this comprehensive guide, we shall explore the myriad features, enticing benefits, essential eligibility criteria, streamlined application process, and other pivotal aspects surrounding personal loans for education. Whether you're a student or a devoted parent seeking financial support for your child's educational pursuits, allow us to enlighten you on how a personal loan can seamlessly bridge the gap between your lofty aspirations and economic feasibility.
Features and Benefits of Students Loan
Some of the vital features and benefits of student loans include:
Customised and generous loan amount: Fund up to 100% of education expenses, covering essential aspects like tuition fees, study materials, accommodation, and more.
Low-interest rates: Competitive and fixed interest rates, assuring borrowers that their interest rates will remain unchanged throughout the entire duration of the loan tenure.
Zero collateral: Personal loans for education require no collateral, providing convenient and accessible financing for educational pursuits without the worry of putting valuable assets at risk.
Tax Benefit: The student or their co-signer can claim tax deductions for the loan interest paid. Under Section 80E of the Income Tax Act, this deduction can be claimed for up to eight years.
Completely online process: Instant education loans are available with a completely online process, ensuring a speedy approval process. Once your application is approved, the amount will be swiftly transferred to your respective bank account.
Flexibility: Personal loans are renowned for their remarkable flexibility, allowing borrowers to tailor the loan amount, interest rates, and repayment tenure to align with their unique financial capacity perfectly.
Benefits that go beyond funding: Nowadays, many lenders go the extra mile to cater to their customers by offering additional services that extend beyond mere funding. These services include career development guidance, visa support, and resources on topics that hold great significance for international students.
Interest Rate On Student Loan From Various Banks
When you consider applying for a student loan, it's crucial to compare the interest rates different banks offer. Here is a list of banks that provide the best personal loans for students and their current interest rates, allowing you to make an informed decision:
|Union Bank of India
|8.20% p.a. onwards
|Bank of India
|8.25% p.a. onwards
|Central Bank of India
|8.30% p.a. onwards
|State Bank of India
|8.30% p.a. onwards
|Punjab National Bank
|8.55% p.a. onwards
|IDFC FIRST Bank
|9.00% p.a. onwards
|Bank of Baroda
|9.10% p.a. onwards
|Bank of Maharashtra
|9.20% p.a. onwards
|9.25% p.a. onwards
|9.50% p.a. onwards
|9.50% p.a. onwards
|Indian Overseas Bank
|9.75% p.a. onwards
|9.95% p.a. onwards
|Tamilnad Mercantile Bank
|11.15% p.a. onwards
|Karur Vysya Bank
|11.48% p.a. onwards
|13.25% p.a. onwards
|13.70% p.a. onwards
Types of Personal Loans for Student
You can choose from different types of personal loans for students in India. Some of the most common types include:
Undergraduate student loans: Undergraduate student loans are specifically designed to support students pursuing their bachelor's degree. These education loans cover tuition fees, educational expenses, and living costs during the undergraduate years. With competitive interest rates and flexible repayment options, undergraduate student loans provide financial assistance without immediate repayment burdens. They often come with benefits like grace periods after graduation, allowing borrowers time to establish their careers before beginning loan repayments.
Graduate Student Loans: Graduate student loans cater to individuals pursuing advanced degrees such as master's or doctoral programs: these education loan finance tuition fees, research expenses, and other academic costs. Graduate student loans may provide higher borrowing limits and favourable interest rates compared to undergraduate loans. They enable students to focus on their studies and advance their education without worrying about immediate financial pressures.
Professional Education Loans/Career Education Loans: Professional education loans, also known as career education loans, are tailored for individuals seeking specialised training or certification programs to enhance their professional skills. These loans support courses in fields such as business, technology, healthcare, or vocational training. Moreover, these easy student loans cover program fees, training materials, and related expenses. They also offer borrowers flexible repayment options, enabling them to effectively manage loan repayments while making significant strides in advancing their careers.
Study Abroad Education Loan: Study abroad education loans are designed to assist students who wish to pursue their education in foreign countries. These personal loans for students comprehensively cover expenses like tuition fees, living costs, travel expenses, and other study-related expenditures abroad. Besides, these study abroad education loans offer competitive interest rates and flexible repayment terms, enabling students to fulfil their international academic aspirations.
Eligibility Criteria for Student Loan
When we talk about education loans, aspiring borrowers are inevitably required to meet certain criteria established by the lending institution. And these are the common criteria that applicants typically need to fulfil:
- Indian citizen.
- Secured admission to a recognised course in India or abroad.
- Good academic record.
- Co-applicant to act as a co-borrower.
- Passport/i20 form/visa in case of studies abroad
Education Loan EMI Calculation
Understanding the EMI calculation is crucial before considering any instant loan for students. You can use the following formula to calculate the EMI for your education loan.
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
Where: P = Loan amount; R = Monthly interest rate; N = Loan tenure in months
Notably, by utilising online EMI calculators, one can effortlessly determine the monthly instalment of personal loans for students.
How to Apply Personal Loan for Education
Applying for education loans become easier with the advent of online education loans. Here are the general steps to follow for an education loan online application:
- Research different lenders and compare their interest rates and terms.
- Check your eligibility and gather the necessary documents (discussed in the next topic).
- Visit the lender's website or use their mobile application to fill out the online education loan and submit it along with the required documents.
- Await approval and verification from the lender.
- Upon approval, review the loan terms and conditions, including interest rates, repayment tenure, and any associated fees.
- Sign the loan agreement and receive the funds in your designated bank account.
Documents Required for Student Loan
To complete the application process for an offline or online education loan, you will typically need to provide the following documents to get an instant personal loan for students:
- Proof of identity (Aadhaar card, PAN card, or Voter ID card)
- Proof of address (Utility bill, rental agreement, driving license, or passport)
- Academic documents (Mark sheets, admission letters, etc.)
- Admission letter from the educational institution along with the fee schedule.
- Self-attested passport-size photograph
- Income proof of applicant/co-applicant (Salary slips, IT returns, bank statements)
Tips for Responsible Borrowing Education Loan
- Assess your repayment capacity before taking on a loan.
- Borrow only the required amount and avoid excessive borrowing.
- Compare interest rates and terms offered by different lenders.
- Read the loan agreement thoroughly and understand the terms and conditions.
- Plan your finances and create a budget to manage loan repayment effectively.
- Pay your EMIs on time to maintain a good credit score.
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- Employee Provident Fund
- Systematic Investment Plan
- Fixed Deposit
- Mutual Funds
- Recurring Deposit
- Systematic Investment Plan (SIP)
- Employees Provident Fund (EPF)
- Public Provident Fund (PPF)
- Voluntary Provident Fund (VPF)
- National Pension Scheme (NPS)
- National Savings Certificate (NSC)
- Senior Citizen Saving Scheme
Top 10 AMC
Top 10 Banks
Frequently Asked Questions (FAQs)
Can I take a personal loan for education?
Yes, certainly, you can!
Can we get a 0% student loan?
0% interest education loans are rare. However, some lenders in India offer concessions for meritorious students, minority communities, and female borrowers. For instance, the NMDFC provides a 0.50% interest rate concession for minority students. Besides, certain lenders may provide lower interest rates or interest-free periods for education loans. It’s important to compare the interest rates and terms of different lenders before selecting one.
Which type of loan is best for education?
Determining the best loan type relies on your individual requirements, whether you are seeking undergraduate, graduate, or professional education loans. It is crucial to carefully evaluate each option by considering factors such as interest rates, repayment terms, and eligibility criteria. Educational loans can also be categorised into two types— federal and private. Federal student loans typically have lower interest rates and more flexible repayment options than private student loans.
Which bank provides education loans easily?
Bank of Baroda provides appealing education loan options for students, featuring competitive interest rates and repayment tenure of up to 15 years. They offer loans of up to Rs. 40 lacks for premier institutes without the need for collateral. However, it’s advisable to explore other options from banks like the State Bank of India, Punjab National Bank, Union Bank of India, and Central Bank of India before making a final decision.
What is the interest rate for a personal loan for student ?
The interest rate for an education loan can vary depending on the lender, loan amount, tenure, and the borrower’s credit profile. Usually, student loans can be availed for interest rates ranging from 7% to 15% p.a. And it’s important to compare interest rates from different lenders to find the most competitive option.
Are personal loans for education secured or unsecured?
Personal loans for education can be both secured and unsecured. Secured loans require collateral, while unsecured loans do not. However, nowadays, many lenders are willing to extend loans without the requirement of collateral.
Can I apply for a personal loan for education if I have bad credit?
Having bad credit may affect your eligibility for a personal loan for education. However, some lenders specialise in providing loans to individuals with less-than-perfect credit. It’s recommended to explore these options and consider applying with a cosigner to improve your chances of approval.
What documents and information are required to apply for a personal loan for education?
The documents and information required may vary among lenders, but commonly requested documents include identification proof, address proof, income proof, educational institution admission letter, fee structure, and bank statements of the co-signer.
How long does it take to get approved for a personal loan for education?
This can take anywhere between a few days to a few weeks. Nevertheless, certain lenders offer instant approvals, ensuring an expedited process and delivering funds within 24 hours.
What are the repayment terms for a personal loan for education?
Typically, this will commence within 6 to 12 months after you complete your education program. Besides, some lenders ideally proffer the term like, either 12 months after the completion of the course or 6 months after gaining employment, whichever occurs earlier.
Can I repay my personal loan for education early without penalties?
Some lenders impose a prepayment penalty for early repayment of personal loans for education, while many others permit early repayments without any associated penalties. It is prudent to carefully review the loan terms and conditions or seek clarification from the lender regarding their policy on early repayment.
Are there any fees or charges associated with a personal loan for education?
Personal loans for education may involve certain fees and charges, such as processing fees, administrative charges, or late payment fees. It’s important to review the loan agreement and understand all associated fees and charges before proceeding with the loan.
Can I use a personal loan for education to cover living expenses?
Personal loans for education can generally be used to cover various expenses related to education, including tuition fees, books, equipment, living expenses, and other study-related costs. However, it’s recommended to check with the lender to confirm their specific loan usage policies.
Are there any alternatives to personal loans for education?
Yes, there are alternatives to personal loans for education. Some of them include scholarships, grants, assistance programs offered by educational institutions or government organisations, considering work-study offers, or college access loan (CAL) Programs.
Can I get a personal loan for education as an international student?
Yes, many lenders offer personal loans for education to international students. But they are different from federal student loans, which are funded by the government and usually require permanent residency status to qualify. It is advisable to conduct research on lenders that specialise in providing such loans. These lenders can include banks, credit unions, or online lending platforms.
Are there any tax benefits or deductions associated with personal loans for education
Yes, there are tax benefits associated with personal loans for education. Section 80E of the Income Tax Act offers deductions on the interest paid on loans taken for higher education. The principal payments made towards the loan, however, do not qualify for such a deduction. Notably, whether you’re taking a loan for yourself, your spouse, or your children, you’re eligible for tax deductions under Section 80E.
Can I consolidate my existing student loans with a personal loan for education?
It is possible to consolidate existing student loans with a personal loan for education, depending on the lender and their consolidation policies. Consolidation can simplify loan management by combining multiple loans into a single loan with potentially better terms.
What happens if I can't repay my personal loan for education?
If you are unable to repay your personal loan for education, it can negatively impact your credit score and may result in penalties, late fees, or even legal action by the lender if you consistently fail to repay your loan. It’s crucial to communicate with your lender and explore options such as loan restructuring, deferment, or seeking financial advice to address the situation.
How does taking a personal loan for education impact my credit score?
Taking a personal loan for education can impact your credit score, as it adds to your overall debt. It’s important to make timely repayments and manage your loan responsibly to maintain a good credit history. Defaulting on payments can have a negative impact on your credit score.