Are you confused about how to get a student loan in India? Keep reading this blog till the end, and we promise to solve all your doubts about how to get a student loan in India. Due to the expensive cost of tuition and living in other countries, many students are hesitant to explore this opportunity. Student loans can be a great help. Keep in mind that loans are borrowings and must be refunded.
What is a Student Loan?
A student loan is a specific kind of loan intended to assist students in covering the costs of post-secondary education and related expenses, including tuition, books, and living costs. In comparison to other loan kinds, it could have a much cheaper interest rate and a delayed repayment plan. At the same time, the borrower is still enrolled in school.
Types of Student Loans
For different types of educational courses, there are different educational loans available. There are two main categories of Student loans:
- Domestic education loans are available for courses within the nation's borders. The lenders will sanction the loan if the student has a guaranteed seat at an institution that satisfies the lenders' standards after the applicant meets various qualifying conditions.
- Education Loans for Abroad Studies- For academic programmes beyond the nation's borders. Like domestic education loans, the borrower must have a guaranteed spot in a college or university on the list of approved educational institutions for the loan to be approved.
In addition, there are a few more categories on which the student loan debt may be further split. They consist of the following:
Based on the course of education:
- Graduate Student Loans: Students who wish to continue their studies at domestic schools would fit under the eligibility criteria to get a student loan. Students who want to pursue postgraduate degrees are expressly qualified for these loans. The students must have finished their undergraduate degree to qualify for this loan.
- Loans for Undergraduate Education: These loans help students with the costs of pursuing undergraduate degrees. An undergraduate curriculum can last three to five years, after which the students have many work prospects.
- Loans for Professional Education: Many NBFCs and financial institutions offered loans to students who wanted to pursue a profession in education.
Based on a guarantee or the security of collateral
- Loan against deposits: Education loans are available in exchange for gold, fixed or recurring deposits, and fixed deposits.
- Loan against property: Banks and NBFCs also provide student loans secured by moveable properties, including houses, apartments, farms, and other lands.
- Loan against securities: The borrower can avail of education loans against debentures/bonds/equity shares.
- Student Maintenance Loan
Where to get a Student Loan in India?
In India, you can obtain a student loan from various financial institutions, including banks, non-banking financial companies (NBFCs), and government-sponsored schemes. Here are some popular options to explore:
- Banks: Many nationalised banks, private banks, and cooperative banks offer student loans in India. Some well-known banks include State Bank of India (SBI), Punjab National Bank (PNB), ICICI Bank, HDFC Bank, and Axis Bank. You can visit their websites or branches to inquire about their student loan programs.
- Non-Banking Financial Companies (NBFCs): NBFCs such as Tata Capital, Avanse Financial Services, and Credila (a subsidiary of HDFC Bank) specialise in providing education loans to students. They often have flexible repayment options and tailored loan schemes.
- Government Schemes: The Government of India has initiated several schemes to support students in pursuing higher education. One prominent scheme is the Vidya Lakshmi Portal, an online portal that allows students to apply for educational loans from multiple banks.
- Payable to a college, school, or institution is the tuition
- University student accommodations
- Hostel and mess fees
- Exam, library, and laboratory fees
- The purchase of study materials, equipment, instruments, and uniforms
- Purchase a computer or laptop at an affordable rate, if necessary, to complete the course.
- Expenses for travel and transit to study abroad
- Fee for admission acceptance
- Any additional costs needed to finish the course, such as those for study abroad, projects, theses, etc.
Eligibility criteria to get a student loan in India
Remember that the eligibility criteria to get a student loan in India can vary among banks and financial institutions. It's essential to contact the respective bank or lender to get accurate information about their specific requirements and procedures for student loans in India.
- Nationality: Generally, you need to be an Indian citizen to be eligible for a student loan in India. Some banks may also provide loans to Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs).
- Age: Most banks have an age limit for student loan applicants, usually between 16 and 35 years. The age limit may vary depending on the bank and the type of loan.
- Academic qualifications: To be eligible for a student loan in India, you typically need to have secured admission to a recognised educational institution in India or abroad. The courses eligible for loans are usually degree or diploma programs, professional courses, and vocational courses.
- Admission and institution: The educational institution where you have secured admission should be recognised by a competent authority or a government body. The specific institutions and courses eligible for loans may vary among banks.
- Loan amount: The amount of education loan in India may vary depending on the institution, course, and the lending institution's policies. Typically, banks may have a minimum loan amount and a maximum limit, which is subject to the course and the financial ability of the borrower and co-borrower (if applicable).
- Co-borrower or guarantor: Many banks require a co-borrower or guarantor for the loan, who should be a parent, spouse, or guardian. The co-borrower/guarantor will be responsible for repaying the loan in case the borrower is unable to do so.
- Financial eligibility: Banks will assess the financial capability of the borrower and co-borrower to repay the loan. This includes factors such as the income, assets, and liabilities of the borrower and co-borrower, among other financial considerations.
- Credit history: Banks may consider the credit history of the borrower and co-borrower to evaluate the creditworthiness. A good credit score and repayment history can increase the chances of approval for an education loan in India.
- Other requirements: Banks may have additional requirements, such as the need for collateral or security for higher loan amounts. Some banks may also have specific eligibility criteria for certain loan schemes, such as those for economically weaker sections or specific courses.
Documents Required to get a Student Loan in India
When seeking an education loan in India, documentation is crucial. Lenders typically require the following documents.
- A letter of acceptance from the school
- Properly completed loan application
- Detailed course cost breakdown
- The applicant's academic record
- Evidence of age
- ID documents such as a passport, driving licence, and citizenship evidence.
- Recently taken passport-size photos
- Proof of address
- Signature evidence
- Evidence of income
- Banking statements
Note: Since each bank has distinct requirements for documents, you should check with the bank first.
How to pay off Student Loan in India?
When you don't have enough money to pay for higher education, it is best to get a student loan. The difficulty arises when you have to pay back the borrowed sum plus interest. There is a chance of falling into debt. We have a blog catering to repaying student loans fast to help you out in the process. After repayment begins, a student loan in India is meant to be returned in 5-7 years. A maximum of two years of additional time may be given to the student to finish the course if they are unable to do so in the allotted period. You usually have up to 10 years to pay back the entire loan.
Repayment doesn't begin until the course has concluded, and it begins immediately after one to six months from the date of employment if the student obtains work within a year of course completion (time varies from bank to bank). Regardless of your work situation, the payback begins if you are unable to find employment within a full year after finishing the course.
How To Get a Student Loan in India
Now that you know your eligibility criteria, let’s figure out how to get a student loan in India!
Step 1: Determine whether the bank recognises the course or institution you wish to enrol in. For this, you can go to your desired bank and derive information about the same.
Step 2: Calculate the amount of loan you'll require. Make a rough estimate of the loan amount you'll need, then talk to your family about how much they can afford.
Step 3: Research various loan possibilities. Get all the information about loan alternatives by doing an internet search, making calls to the banks of your choosing, or visiting them in person.
Step 4: Compare the choices to determine which is best. Before you choose to take out an education loan, make sure you understand all the terms and conditions specified by the bank. Make sure you are very clear about the following:
- Which bank has the most affordable interest rates?
- How long will I be making loan payments?
- How long may I put off paying while I'm in school?
Step 5: Once all of your inquiries have been resolved, and you figured out how to get a student loan in India, apply and fulfil your dream of studying abroad!
Getting a student loan in India is a difficult process. You must carry out your research, determine how much finance you require and how much you must arrange on your own, and determine whether the programme and university you want to attend are on the bank's list of approved institutions. We hope this blog has helped you figure out how to get a student loan in India. You’re now ready to fly off the nest!