Education Loan


With thousands of colleges & millions of students, India is moving fast towards becoming world’s knowledge hub. The Indian economy on the upswing requires millions of people with various engineering skill, so there has never been a better time to study engineering.


As explained in previous topics, with exorbitant cost of education in premium engineering colleges, the answer to your worries is education loan. The govt of India in collaboration with RBI & Indian bankers association has put up an education loan system in place. The plan covers the financing of all technical education courses in the engineering colleges. The scheme covers not only the tuition & hostel fee but all other expanses required to pursue the degree. Even the cost of a two wheeler & laptop can also be considered as per necessity.


Almost all the pvt and public sector banks have made provisions for granting the edu loans to deserving students. No security is required for loans upto Rs. 4 lac. Repayment starts 6 months after the completion of the course. Girl students are given discount of about 0.5% in interest rate by some banks. Detailed terms & conditions of edu loan scheme of state bank of India is as under:


A term loan is granted to Indian Nationals for pursuing higher education in India or abroad where admission has been secured.

Eligible Courses

All courses having employment prospects are eligible.

  • Graduation courses/ Post graduation courses/ Professional courses
  • Other courses approved by UGC/Government/AICTE etc.

Expenses considered for study loan                                 

  • Fees payable to college/school/hostel
  • Examination/Library/Laboratory fees
  • Purchase of Books/Equipment/Instruments/Uniforms
  • Caution Deposit/Building Fund/Refundable Deposit (maximum 10% tution fees for the entire course) 
  • Travel Expenses/Passage money for studies abroad
  • Purchase of computers considered necessary for completion of course
  • Cost of a Two-wheeler upto Rs. 50,000/-

Any other expenses required to complete the course like study tours, project work etc.

Amount of Loan  

  • For studies in India, maximum Rs. 10 lacs
  • Studies abroad, maximum Rs. 20 lacs



Interest Rates

w.e.f. 29.06.2009 (SBAR 11.75%)


SBI Student Loan Scheme

Loan Amount

Rate of Interest

Loans upto Rs. 4.00 Lacs

0.50% below SBAR i.e. 11.25% p.a.

Loans above Rs. 4.00 Lacs and

upto Rs. 7.50 Lacs

1.00% above SBAR i.e. 12.75% p.a.

Loans above Rs. 7.50 Lacs

At SBAR i.e. 11.75% p.a.


An Interest Rate concession of 0.50% to Girl Student availing Student Loans



Processing Fees

  • No processing fee/ upfront charges
  • Deposit of Rs. 5000/- for education loan for studies abroad which will be adjusted in the margin money



Repayment Tenure

Repayment will commence one year after completion of course or  6 months after securing a job, whichever is earlier.

Place of Study

Loan Amount

Repayment Period
in Years

Studies in India

Rs. 10.0 lacs


Studies Abroad

Rs. 20.0 lacs






For loans upto Rs. 10.00 lacs for Studies in India and upto Rs. 20.00 lacs for studies abroad

Upto Rs. 4 lacs

No Security

Above Rs. 4 lacs to Rs. 7.50 lacs

Collateral security in the form of suitable third party guarantee. The bank may, at its discretion, in exceptional cases, waive third party guarantee if satisfied with the net-worth/means of parent/s who would be executing the documents as "joint borrower".

Above Rs. 7.50 lacs.

Tangible collateral security of suitable value, along with the assignment of future income of the student for payment of installments.

All loans should be secured by parent(s)/guardian of the student borrower. In case of married person, co-obligator can be either spouse or the parent(s)/ parents-in-law





  • For loans up to Rs.4.0 lacs : No Margin
  • For loans above Rs.4.0 lacs:
    • Studies in India: 5%
    • Studies Abroad: 15%



Documentation Required

  • Completed Education Loan Application Form.
  • Mark sheets of last qualifying examination
  • Proof of admission scholarship, studentship etc
  • Schedule of expenses for the specified course
  • 2 passport size photographs
  • Borrower's Bank account statement for the last six months
  • Income tax assessment order, of last 2 years
  • Brief statement of assets and liabilities, of the Co-borrower
  • Proof of Income (i.e. Salary slips/ Form 16 etc)
  • Conditions Apply



In addition to fulfilling your money requirement, education loan also gives tax  benefit as the repayment of loan amount up to Rs. 40000/-  is deductible under income tax section 80-E.


Education loan scheme of allahabad bank


Education loan scheme of credila 


The latest news on the study loan front  is the govt has implemented a great scheme  for engineering & other professional courses under which the students with parental income less than Rs. 4.5 lac per annum will be granted loans @ 4% per annum by scheduled banks  & even the students with parental income more 4.5 lac will also get loans at the subsidized rate of 7% per annum only.


Latest Education Loan Scheme


Indian Banks Association's Guidelines for Education Loan Scheme


Ministry of Human Resource Guidelines for Education Loans









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