Demystifying the Process: How to Get a Student Loan in India?

Are high education costs coming in the way of your study abroad dreams? Worry not; student loans are here to save the day! If you’re in India and want to know all about how to get a student loan in India, then keep reading this blog till the end. We will 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 kinds of loans for students in India. There are two main categories of loans for students in India: 

1. Domestic Education Loans

These loans are available for courses within India’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.

2. Education Loans for Abroad Studies

These loans are 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:

3. Based on the Course of Education

1. Graduate Student Loan in India: 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. It’s essential to complete your undergraduate degree to qualify for this loan.
2. Undergraduate Education Student Loan in India: 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.
3. Professional Education Student Loan in India: Many NBFCs and financial institutions offer loans to students who want to pursue a profession in education.

4. Based on a Guarantee or the Security of Collateral

1. Loan against deposits: Education loans are available in exchange for gold, fixed or recurring deposits, and fixed deposits.
2. Loan against property: Banks and NBFCs also provide student loans secured by moveable properties, including houses, apartments, farms, and other lands.
3. Loan against securities: The borrower can avail of loans for students in India against debentures/bonds/equity shares.

And what if you want education loans without collaterals? You can read our guide on how to get education loans without collateral. You can also get a student upkeep on your existing loan for your daily needs and maintenance. This is called a Student Maintenance Loan. Read our complete guide to apply for the loan easily.

Where to get a Student Loan in India?

Before getting into how to get a student loan in India, let’s first explore where you can get an Indian student loan. 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:

1. Banks: Many nationalised, private, 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.
2. Non-Banking Financial Companies (NBFCs): NBFCs such as Tata Capital, Avanse Financial Services, and Credila (a subsidiary of HDFC Bank) specialise in providing loans for students in India. They often have flexible repayment options and tailored loan schemes.
3. 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.

Which Courses are Eligible for a Student Loan in India?

Students can apply for a student loan in India for any course of their choice. All they need to ensure is to be accredited by an approved or highly-reputed institution. The courses covered for student loan in India include PhD degrees, graduation, PG, diploma, technical, professional, and management courses from reputed universities. For education loan abroad,  PhD, graduation, PG, and certified degree courses offered by CIMA (Chartered Institute of Management Accountants), London, CPA (Certified Public Accountant), USA, and others are eligible.

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.

1. 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).
2. 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.
3. Academic qualifications: To be eligible for a student loan, you typically need to have secured admission to a recognised educational institution in India or abroad.
4. 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.
5. 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).
6. 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.
7. 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.
8. 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.
9. 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.

Expenses Covered in Student Loan in India

There are several expenses that are covered under student loan in India. We’ve listed them below: 

1. Payable to a college, school, or institution is the tuition
2. University student accommodations
3. Hostel and mess fees
4. Exam, library, and laboratory fees
5. Study material, equipment, instrument, and uniform expenses
6. Purchase a computer or laptop at an affordable rate, if necessary, to complete the course
7. Expenses for travel and transit to study abroad
8. Fee for admission acceptance
9. Any additional costs needed to finish the course, such as those for study abroad, projects, and theses

Read our ultimate guide on how to pay rent with student loans before you book your next accommodation.

Top Student Loan Offers by Indian Banks

Here are the interest rates and processing fees for some of the top banks in India.

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. 

1. A letter of acceptance from the school
2. Completed loan application
3. Detailed course cost breakdown
4. Applicant's academic record
5. Evidence of age 
6. ID documents such as a passport, driving licence, and citizenship evidence. 
7. Recently taken passport-size photos 
8. Proof of address
9. Signature evidence
10. Evidence of income
11. 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. Therefore, it's essential to know about 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.

Process of Getting a Student Loan in India

Now that you know your eligibility criteria, let’s figure out how to get a student loan for abroad studies in India! 

Step 1: Determine whether the bank recognises the course or institution you wish to enrol in. 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 in India, make sure you understand all the terms and conditions specified by the bank. 
Step 5: Once all of your inquiries have been resolved, and you figure out how to take a student loan, apply and fulfil your dream of studying abroad!

Do keep the following pointers in mind:

1. Which bank has the most affordable interest rates?
2. How long will I be making loan payments?
3. How long may I put off paying while I'm in school?

Getting a student loan in India is a difficult process. You must do thorough 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 the nest!