Education Loan
It is said that an investment in education or in upgradation of
your skills is the best investment that a person can ever do in
life as it will repay you back many times over. Education is the
biggest means by which a nation can reduce the gap between
the rich and the poor. Hence, the government of India is also
putting in efforts to ensure that education loans are being
made available to students at competitive interest rates and
the process becomes simpler.

Most nationalized banks today offer education loans and
some of the more prominent ones are State Bank of India,
Bank of Baroda, Central Bank, Canara Bank, Punjab National
Bank, etc. The terms and conditions of most of these banks
are similar whilst handling with student loan applications.
Slowly private banks have also started to enter into the
education loan market for e.g. HDFC bank has also started
giving education loans to students now. There are specialized
players like CREDILA who specialize only in the field of
education loans.

Most of the students who go abroad for higher studies take
education loans to take care of their University tuition fee and
living expenses. Infact many banks are willing to pay for the
flight tickets, laptop and books, etc.

Common Features of an Education Loan:
  • Loan amount of upto 15 Lakhs are available for studies
    in India whilst loans upto 20 Lakhs can be availed of for
    studies abroad. These are generalistic figures and may
    vary from bank to bank.
  • The rate of interest may vary from 12% - 14%.
  • The loan repayment period is upto a maximum of 7
    years including the moratorium period.
  • The repayment of loan starts 12 months after course
    completion or 6 months after getting a job, whichever is
    earlier. The interest is however accruing during the
    moratorium period.
  • Tax benefits are available under section 80E of the IT
  • The processing period may vary from 1 week upto 1
  • The education loan is disbursed directly to the
    educational institution via demand draft or telegraphic
    transfer. It is very rare that a bank will disburse the loan
    amount directly into the student’s bank account.
  • Banks offer loans for undergraduate, post-graduate
    and vocational courses. What the bank looks for is
    whether the student will be able to get a job after
    course completion which will help him to replay the
    bank loan.
Frequently asked questions

  • Who is eligible for an Education Loan ?
Students who wish to pursue higher education .You need to be an Indian resident having secured admission in any of
the bank’s list of approved course or universities.

  • Which courses can I take an Education Loan for ?
Management Courses ( Full-Time + Part Time ) - PostGraduation
Engineering Courses ( Government + Private ) - Graduation
Medicine - Graducation + Post Graducation
Masters in Computer Application ( MCA/MCM) - Post Graduation
Online / Distance Learning courses.
Wherever it is a private institution,the same has to be recongized by the relevant/competent government body.
Fine Arts and Designing - Graduation + Post Graduation
Architecture - Graduation
Hotel and Hospitality - Graduation + Post Graduation
Agriculture - Post Graduation
Pure Science - Graduation + Post Graduation
Courses such as SAP , ERP , GNIIT , Air Hostess Training programmes, Merchant Navy courses,  etc.

  • Which expenses does the loan cover ?
Fee Payable to College/School/Hostel
Exam/Library/Lab fees
Caution deposit / Refundable deposit asked by the institution/Building fund - supported by Institution bills/receipts
Purchase of Books/equipments/instrument/uniforms
Travel expenses/passage money for studies abroad
Purchase of computers - essential for completion of the course
Any other expense required to complete the course - like study tours, project work, thesis, etc.

  • Do I have to pay part of the fees ?
100% loan is available for select courses. Margin ranges from 5-15 % for courses in India & Abroad .This may vary from
bank to bank.

  • Is there moratorium/repayment holiday available ?
Yes. A moratorium/repayment holiday is available for select courses. Please contact your nearest branch for further

  • What is the moratorium period ?
Repayment holiday/ moratorium would be for the course period + 1 year or 6 months after the student gets a job/start
earning whichever is earlier.

  • Is there any kind of repayment that has to be made in the moratorium period ?
Interest would have to be paid during the moratorium, the interest servicing would be of simple interest calculated on the
loan amount disbursed payable monthly.

  • What would be the mode of repayment ?
Customer has the option of paying through Standing instructions/ ECS/Post dated cheques.

  • What would be the tenure of the loan ?
Maximum tenure of the loan can be 7 years including moratarium period.

  • Is there a need of a co-applicant ?
Yes, a co-applicant is required for all Full-Time courses . The co-applicant can be your parents, siblings, spouse or
Family Relative . Loan eligiblity would be calculated on the basis of the co-applicant's income. In case of Part Time
courses , No Co-applicant required . However in order to increase the eligibility a co-applicant may be added .
  • Which document have to be furnished to avail the loan ?
Declaration/Affidavit confirming that no loan has been availed from other Bank/Institution
Completely filled Application Form with Photographs.
Letter of admission from the Institute
Letter from the Institute stating cost break up of the program (term-wise, year-wise)
Marksheets from SSC onwards till the latest examination passed
KYC Documents for the Applicant & Co-applicant (Residence Proof , ID Proof , Signature Verfication Proof , Age proof )
Income Documents of the Co-applicant ( Pay Slips / ITR copy etc )
For studies abroad - In addition to the above list of documents – Pls Provide :
Letter from the Head Of Department ( University)
Visa approval papers
Travel papers
I-20 in case of applicant going to the USA

  • Would the loan be disbursed in favour of the Institute ?
Yes. Tution & hostel fee will be disbursed directly to the educational Institute as per the schedule of fee given by the
Institute/college ( semester - wise/yearly).

  • Is there any documention required post the sanction of the loan ?
Progress reports to be provided at the time of every disbursement tranch. Progress report includes mark sheets or a
letter from the Institute, in case the mark sheet are not available while processing the fresh disbursement tranch.
The following documents have to be submitted post the sanction of the loan
Education Loan Agreement
SI/ECS Mandate as applicable
Post Dated Security Cheques as per Policy
Any other documents which might be required as per policy.

  • What are the acceptable collaterals for taking an educational Loan?
Collaterals are usually required only for educational Loans above Rs.7.5 lakhs. This may also vary from bank to bank
and from applicant to applicant. If the bank manager knows that a co-applicant has a good credit standing, he may not
ask for collateral. Usually, the acceptable collaterals are:
Fixed deposits
Property (Residential)
National Savings Certificates

Merchant Navy student loan applications usually face certain unique hurdles for e.g. many nationalized banks may not
opt to give an education loan if the course is not a Degree or a Diploma course. The Merchant Navy courses are
vocational courses, somewhat similar to the airline pilot courses and hence can’t be categorized simply into Diploma or
Degree courses. Also, many of the merchant navy courses are short term courses ranging from 3 to 6 months which
also is not look very favourably by the banks as they are more used to courses which are 1 – 4 years in duration.
Hence, it is advisable for Merchant Navy students to apply to atleast 4 – 5 different banks and not rely entirely on one
bank. It has been seen in the past that banks have assured students and finally backed out at the last minute causing a
lot of heart ache and problems to students. Therefore, it is in the interest of the students that they should apply to
atleast 4 – 5 different banks and not depend entirely on only one bank. If the co-applicant has had a good loan
payment track record and good professional relationship with the bank, the loan processing becomes a lot easier.
For education loans for Merchant Navy courses, please contact:

Mr. Sunil Sawant,
Assistant Manager, Credila Financial Services, Mumbai.
Tel: 09987759433

Credila Financial Services is a lender specialising in education loans only and they cater to over 150 cities in India. They
are well known for fast disbursement of education loans.