Every financial institution has its own set of requirements for sanctioning education loans. Although there are a set of common requirements that most banks/NBFCs will ask for before sanctioning education loans and these are:

• Academic documents of the student
• Income proof of co-applicant
• Proof of residence
• KYC documents (Passport, PAN card, etc.)
• Parent/Co-applicant’s income proof
• Passport size photograph
• Scores of entrance tests
• Proof of admission/confirmation of enrollment
• Collateral documents (if applicable)

Your education loan can cover both full and part of the total costs, you can choose the loan that best fits your needs. The loan amount you are eligible to receive also depends on a lot of factors like your academic history, your parent/co-applicant’s credit rating, the university you’re applying to, etc.

But in general, the expenses that an education loan covers are discussed below:

• Tuition fee
• Rent
• Living Expenses
• Examination, library, and laboratory fee, if any
• Cost of books, uniform, equipment, etc.
• Travel expenses/airfare

Yes, as per Section 80E of the Income Tax Act of India, tax deductions can be claimed for a total period of 8 consecutive years or till the interest amount of your education loan is completely paid off.

All scheduled Indian banks and gazetted financial institutions are eligible to offer tax deductions to the applicant who has taken a loan for self, spouse, children, or a student for whom the individual is a legal guardian.

The asset pledged against your loan is called Collateral. It can be a house, apartment, bungalow, shop, non-agricultural land, vehicle, fixed deposits, life insurance, stocks, etc. Generally, you don’t need collateral for a loan amount up to 7.5 lakhs but beyond that, every financial institution has a different set of terms for collateral.

For starters, you need to duly fill out your loan application form which is followed by a personal discussion with your loan provider/lender. In the next step, the applicant needs to provide all the supporting documents required by the bank in order to be eligible for a loan. The bank now takes some time to verify and check all aspects of your loan application after which it decides to either approve or deny the loan. Based on their decision loan amount is disbursed.

Ideally, you should start your research for the right education loan way before you start your college application. Check with your shortlisted loan providers for their eligibility requirements and loan terms. By the time you start your college application process, you should have already selected a financial institution that you’ve discussed terms with. Since your loan cannot be sanctioned before receiving a Confirmation of Enrollment (CoE) letter from the university first, make sure to be ready with other aspects of your loan application.

Yes, you can get your education loan pre-approved by banks/NBFCs even before admission confirmation. And it is always advised to do so since universities generally give you a smaller window between confirmation and the deadline for fee payment. A pre-approved education loan also acts as a strong proof of funds that works in favor of your student application.

Your bank or NBFC offers you sometime after the completion of your course post which you are required to start paying towards your outstanding loan that time is known as the moratorium period. The standard moratorium period stretches from 6 months to a year.

It is always advised to learn well in advance about the flexibility of the moratorium period that your loan offers and the charges for extension of this period due to unprecedented circumstances like unavailability of jobs or a global pandemic for example.

Your education loan can be repaid in simple and flexible Equated Monthly Installments or EMIs throughout the loan tenure.

The percentage of the total cost that is contributed by the borrower and the loan doesn’t cover is called margin money. Education loans can cover both full or part of the total cost of your education and likewise, your margin money depends on the type of loan you go for and the loan that best fits your needs.

There’s certainly no sense in dragging to accumulate interest if you are able to pay the loan before your term ends. So, it is important to check the prepayment terms of your education loan and the details about the penalty on prepayment before making the decision.