Education loan: online courses Process, EMI, Interest 2024

Pursuing higher education is an expensive affair in India. With the rising costs of college degrees and advanced certifications, many aspiring students are unable to self-finance their higher studies. Education loans provide a viable solution to fund the dreams of students without compromising on quality. In 2024, applying for education loans has become easier, especially for online certification courses. Many banks and NBFCs now offer loans without any delay with minimal paperwork and lower interest rates. The loan amount coverage also extends to related expenses like a laptop, project costs, travel, etc. besides just the tuition fees.

The education loan interest rates in 2024 currently range from 10.5% to 16% depending on the credit profile, course type, and loan amount of the student. Interest subsidy schemes by the Central government provide 1-3 percent concession on interest rates for certain categories of borrowers. The maximum repayment tenure goes up to 15 years after the completion of the course. The EMI payments usually commence 6-12 months after completing the course or getting placement – whichever happens earlier. Many lenders like SBI also offer a moratorium period extension of up to 3 years for overseas courses. So you get the flexibility to start repayments only after you start earning.

In this blog post, we will guide students through all the intricacies of an online education loan platform that has made the entire financing process transparent and quicker for aspirants in 2024. This guide will help students choose the lender that offers them the maximum loan amount with favorable repayment terms for their desired online course.

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What are the different types of Education Loans?

1. By Location:- Two types of loans have been given to students based on the location of universities or colleges they are willing to get admission.

• Domestic Education Loan:- A Domestic Education Loan applies to those students who want to further their studies in India. Admission to an Indian educational institution/ University and the satisfaction of additional lender requirements are prerequisites for approval. 
• Overseas Education Loan:- Overseas Educational Loan is intended for those students who are seeking admission in their desired courses overseas. If students meet the requirements, the Overseas Education Loan pays for their tuition, flights, and lodging.

2. By Course:- Based on course whether it is a UG, PG, or career development course loans have been sanctioned to students in India.

• Undergraduate Loans:- Financial assistance for students enrolled in three- or four-year undergraduate programs with a variety of specializations. Earning potential and employment chances are improved with an undergraduate degree.
• Postgraduate Loans:- Postgraduate loans are designed specifically for undergraduates willing to pursue a two-year postgraduate program in India that offers in-depth knowledge in their area of interest.
• Career Development Loans:- Career development loans are perfect for working professionals who are seeking career advancement in their current jobs in their respective fields by pursuing professional courses and training while taking or not a career vacation. Career Development loans are designed to help such individuals get into respectable business and technical colleges so they can progress their careers and develop their skills.

3. By Collateral:-

• Loan Against Property, Deposits, and Securities:- To secure finance for education, one can pledge immovable assets such as residential property, flats, homes, and agricultural land, as well as FD certificates, RDs, gold deposits, bonds, debentures, and equity shares. These can all be secured through loans secured against property, deposits, and securities. 
• Third-party Guarantee:- Third-party Guarantee permits students to obtain a home bank or bank employee guarantee letter to obtain an education loan.

List of Expenses Covered in Education Loan

Here is the list of expenses an education loan amount will cover for a student:

• Tuition fees
• Hostel fees
• Passage money for students studying abroad covering travel fees
• Expenses that include books, equipment, instruments, uniforms; insurance premium, Examination, lab, and library costs
• The cost of a laptop or computer if needed by the student to finish the course
• Building funds, caution deposits, and refundable deposits backed by institution invoices or receipts
• Any additional costs associated with finishing the course, such as study tours, writing a thesis, or projects.

Benefits of an Education Loan

• There is loan financing available up to Rs. 1 crore.
• The maximum loan repayment period is 15 years.
• Obtain student loans for study overseas and in India.
• A few lenders allow loan payment before submitting a visa application.
• door-step service to pick up the necessary paperwork.
• Several banks offer special rates to children of bank employees.
• Female students can receive discounted interest rates from several banks.
• Enjoy a one-year moratorium upon the conclusion of the course. You are not required to make loan installments during this time.
• Take advantage of tax benefits on interest paid for a maximum of eight years.

Does a Student get Taxation Benefit on Education Loan?

Section 80E of the 1961 Income Tax Act allows students to claim tax deductions on education loan interest payments. Only those who have taken education loans to pursue their higher studies either in India or abroad from banks and NBFCs can claim the tax deductions. It covers all fields including vocational and academic courses.

The tax deduction is limited to the interest portion paid as part of the EMI. It does not apply to the principal amount. To claim this, borrowers need a certificate from their bank separating the principal and interest breakdown of EMIs. There is no cap on the number of times a borrower can claim deductions on education loan interest under Sec 80E. It is accessible for the earlier of 8 years from the commencement of loan repayment or until the full interest component is paid off.

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What are the Courses Covered Under an Educational Loan

Here’s the list of names of the courses that are covered under an Educational Loan 

• Undergraduate degrees
• Postgraduate degrees
• Undergraduate diplomas
• Postgraduate diplomas
• Vocational training courses
• Skill development courses
• Doctoral programs

Online UG Courses

Online PG Courses

Types of MBA

Who is Eligible for an Educational Loan?

• Loans are available for approved PhDs, postgraduate degrees, undergraduate degrees, certificate programs lasting six months or longer, courses designed for working professionals, and technical and professional courses.
• Candidates must be enrolled in or gain admission to internationally recognized universities/colleges, as well as government and professional educational institutions. 
• Candidates must have completed their 10+2 (12th standard) standard for undergraduate programs which is necessary for applying to postgraduate programs.

What documents will be required for an Educational Loan?

We have mentioned below the indicative list of the documents that are required while applying for an educational loan or the lender will ask for:

• Admission letter from the educational institution/university
• Marksheets (previous education - school/college)
• Age proof, ID proof, Address proof, Signature proof
• Salary slips
• Recent bank account statements
• ITR with the income computation
• Audited balance sheet
• Recent bank statements
• Proof of turnover (service tax return/sales receipt)
• Completed application form with signature
• Latest passport-size photographs
• Appropriate Visa for studies abroad

Procedure to Apply for an Education Loan

Students who are applying Online for an education loan through the official website of a bank, need to follow the below-mentioned steps:

• Applicants should visit the official website of the concerned bank from which they are seeking an education loan.
• They should navigate to the education loan product page. Applicants are then required to complete the application-cum-consent form by filling out their personal details and contact information.

Applicants are required to surrender their prior academic records along with their financial details, when contacted by the bank.
To complete the loan approval process, visit the bank in person or select the doorstep service option for a study loan.

Applying for an Education Loan Offline

Students who are applying for an education loan by visiting the bank in person, need to follow the below-mentioned steps:

• Students are required to visit the bank branch in person. 
• Get an application for a student loan.
• Provide your personal, academic, and financial information on the form. 
• Verify loan conditions with a bank representative. 
• Send in the filled-out application and supporting documentation. 
• After authorization, obtain a formal student loan agreement. 

What is an Education Loan EMI Calculator

An education loan EMI calculator is an online tool that allows potential students to estimate their equated monthly installment (EMI) payouts based on the loan amount, interest rate, and repayment tenure. Students planning to fund higher studies via education loans can use EMI calculators to determine the impact of different loan amounts, rates, and tenures on their monthly outflows. This helps them assess affordability, compare scenarios, and make an informed decision before applying for the loan. The calculator takes key details like loan amount, interest type, and repayment years as input and provides the breakup of loan components paid in each EMI as output. This includes interest payment, principal amount, total EMI payable each month, and total interest outflow over the lifetime of the loan.

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How does an Education Loan Calculator help

An education loan EMI calculator is a useful tool for students planning to avail of a loan for higher studies. Education Loan Calculator helps students to assess affordability and make informed decisions about the loan amount and tenure. Using the Education Loan Calculator, students can input different combinations of loan amounts, interest rates, repayment periods, etc., and instantly determine the EMI amount payable every month. Education Loan Calculator gives clarity on cash outflows and allows borrowers to identify loan quantum and tenure combinations that fit their current and future income levels. The easy scenario testing and impact visualization help students pick optimal education loan packages with comfortable EMIs. Education Loan Calculator ensures manageable repayment and avoids future financial stress or repayment defaults due to high EMIs.

How to Calculate Educational Loan EMI

By using the following formula, one can easily calculate the Educational Loan EMI:

EMI= [P*R*(1+R)^n]/[(1+R)^n-1]  

Where

• P = Principal amount 
• R = Rate of interest 
• n = Tenure (in months)

Key Benefits of Using the Educational Loan EMI Calculator

• The Educational Loan EMI Calculator gives the monthly EMI amount instantly. 
• It provides a clear summary of monthly EMI obligations. 
• It makes saving and budgeting for financial objectives easier. 
• The Educational Loan EMI Calculator shows the amortisation plan with the paid-off EMIs highlighted. 
• Highlights the excellent rule for efficient fund management. 
• The Educational Loan EMI Calculator is free of charge and available from anywhere.

Is an Education Loan also available for Online Courses?

With the rising popularity of online education platforms, financing options for online courses have increased substantially over the years in India and around the globe. Most banks and Non-Banking Financial Companies (NBFC) now offer education loans to students who are willing to pursue their higher studies in their courses and it will cover expenses related to full-time, part-time, and certification courses offered by leading global online learning platforms. So if any student is planning to enroll in reputed online programs on Coursera, edX, Udemy, Skillshare, or platforms like upGrad, Emeritus, etc. you can fund the fees through student loans.

The eligibility and documents required to apply for online course loans are similar to regular education loans. Most lenders (Banks or NBFCs) would need proof of admission confirmation from the student’s selected online platform, course details, fee breakup, and KYC documents. The types of costs covered can vary across lenders but usually include online course tuition fees, application fees, exam charges, laptop costs, travel expenses, etc. Many also cover living expenses up to a certain limit as part of the online course loan amount. The maximum loan quantum can range from 2 lakhs to 20 lakhs based on course type, duration, and credit profile. The interest rate and EMIs are almost at par with education loans for regular full-time degrees. So an online loan significantly eases the financing needs of students to upgrade their skills.

Compare Top Education Loan Offers 2024

Note:- The interest rates listed above are valid as of January 2024, but they could alter in accordance with the policies and guidelines of the bank.

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