Education is the bare necessity for all yet it’s the one area which lacks affordability. Day by day education is becoming costlier. Getting a substantial good education has become a luxury which many can’t afford. Education loans or Edu Loans come to our rescue most of the times. With the cost of education increasing 5-fold in the coming 2 decades, Edu Loans will become absolutely crucial.

Despite this, students and their families largely remain apprehensive of taking an education loan. They fear about defaulting and the burden of it. However, edu loans are a safe bet. You can trust them. However, it is important to choose wisely and go for viable edu loans. It’s as important as choosing your college and courses.

How does it help you?

Today, children’s higher education can become an uphill task for the parents. At times, parents have to use all their. Parents should encourage their children to opt for an education loan. Not only is it a huge burden off the parents’ shoulders but it also saves them from the embarrassment of asking for money outside family.

  • An education loan is the first loan in a child’s life that has to be paid when he starts earning.
  • Also, there is a great life lesson here, the child will learn the value of money, opportunity and time.
  • Not to mention the benefits of paying the loan amount before due time, it improves the child’s credit score and this helps in getting other future loans easily.

Why should you opt for it?

It is heartbreaking to see that sometimes deserving students have to compromise with their career goals due to the shortage of funds. But with the rising education costs, education loans are becoming a feasible option.

It’s comparatively easy to avail education loans at attractive rates these days. Moreover, students should opt for education loans to ease off their parent’s burden and to build good credit history early in their lives for future prospects.

Selecting an Education Loan

Students need to know the answer to this question before applying for an education loan. There are a plethora of educational institutes in India. Everyone knows about the top B-schools, engineering, and medical colleges but these institutes remain out of reach for many students who may not be the top scorers in the country per se.

These students must understand the importance of selecting the most suited college for themselves in order to make an informed decision that will provide value for money along with best career prospects in future.

How does it work?

Education loans are basically taken to fund the expenditures of graduation and post-graduation courses that also include lodging expenses, books, travel and other related expenses. Education loans are offered in three slabs; below Rs 4 lakh, between Rs 4 lakh and Rs 7.5 lakh and above Rs 7.5 lakh A student is eligible to apply for an education loan if his admission has been confirmed for a graduate or post-graduate course/degree in India or abroad. Although there are some banks which provide education loans regardless of this criterion.


  • Most banks including SBI approve education loans within 15 day period. Government banks provide education loans at lower interest rates than private banks. SBI is the only bank in India that offers education loans up to Rs 1.5 crore.
  • There is no processing fee while applying for the loan. Only some financial institutes charge 1% processing fee which depends on the type of loan.
  • Banks provide ‘moratorium period’, a holiday period of six months to one-and-a-half years after the course/degree is over to search for jobs and pay back the loan amount only starts after this period.
  • Loans below Rs 4 lakh can be availed without any margin costs, that is, all the money will be financed by the bank without asking the borrower to contribute anything. Also, there is no security collateral required if the loan amount is below Rs 4 lakh.
  • Repayment of the loan amount can be done in 10 years after moratorium period. (The period of repayment of the loan amount will vary depending upon the type of education loan.)
  • Education loan saves tax according to Section 80-E of the Income Tax Act, 1961.
  • Some banks are also known to provide life insurance cover with an education loan.

Source: The Pioneer