Education Loans for Admission to Engineering Institutes
Last Updated : May 4, 2020, 12:17 p.m.
There are a large number of students who want to be an engineer across different streams. Someone likes to be an IT professional, someone likes to be a civil engineer and so. Considering that a lot of students want to pursue engineering, a lot of engineering colleges have been set up across the country. But the expenses of such colleges and institutes are increasing year after year, making it very difficult for many talented kids to pursue their dream because they don’t come from a strong financial background. Engineering courses happen in 6-8 semesters. The cost of a semester can be around INR 50,000 to INR 1.5 Lakh. This is just the average cost, the actual one could differ. But there are banks willing to help you pursue your dream with its education loan. The best part is that the loan repayment starts 6 months or a year after the course is over. So, even if you don’t get the job immediately after finishing the course, you still have time to get a job and pay the loan in EMIs.
What Does an Education Loan Cover?
A loan covers the following expenses of your engineering course.
- Tuition Fee
- Semester Exams
- Library or Project work
- Donation Fund
- Annual Fee
Top Lenders Offering Education Loans for Engineering Courses
| Bank or NBFC | Loan Amount | Interest Rate | Margin |
|---|---|---|---|
| State Bank of India (SBI) | INR 20 Lakh & above | 6.90% - 9.30% | 5% for loans above INR 4 lakh |
| Punjab National Bank (PNB) | Need-Based Finance | 6.90% - 9.55% | 5% for loans above INR 4 lakh |
| Bank of Baroda | INR 60 Lakh | 6.85% - 9.95% | 5% for loans above INR 4 lakh |
| Axis Bank | INR 40 Lakh | 13.70% - 15.20% | 5% for loans above INR 4 lakh |
| HDFC Credila | INR 25 Lakh | 12.25% | NIL |
| Tata Capital | INR 25 Lakh | 10.99% | Not-Mentioned |
| Canara Bank | Need-Based Finance | 7.40% - 9.40% | 5% for loans above INR 4 lakh |
| Central Bank of India | INR 10 Lakh | 6.85% - 9.00% | 5% for loans above INR 4 lakh |
| Bank of India | INR 10 Lakh | 9.05% - 9.85% | 5% for above INR 4 lakh |
Margin Money
As the bank puts a margin of 5% over a certain limit of loan that indicates that 5% of the applied amount needs to be financed by the borrower himself for the higher studies. But you can manage the main money with scholarship or assistantship as well.
How does margin affect an education loan?
Suppose, you apply for a loan of INR 15 lakh from the bank and a margin of 5% is applied to your loan, the sanctioned amount would be INR 14,25,000. And the margin money needs to be paid to the college or institution which is INR 75,000.
HDFC Credila Education Loan (No Margin Required)
You can manage your education expenses for engineering with HDFC Credila with no margin on your loan. The maximum amount you can borrow is INR 25 lakh. You need to provide academic proofs and income details of your parents to the financial institution to apply for the loan. The tenure for the loan payment is of 10 years, and the interest rate starts from 12.25% per annum. Your loan interest rate is of the floating type, it means your EMI changes during the tenure due to the floating rate of interest. And later you can save on the interest payment of your education loan under the income tax act of 80E.
Collateral on Education Loan
Banks ask for a collateral to secure the education loan they give to students. The unexpected financial strain can’t be ruled out. As and when it happens, you find it hard to service your obligations on time. And when you are servicing a very high loan amount, you expose the risk greatly on the lender which gives you the loan. Education loans upto INR 7.5 lakh are given without any collateral. But once the loan quantum exceeds INR 7.5 Lakh, you will be asked to provide a collateral to the lender. You can submit anything from a fixed deposit, property, non-agricultural land, life insurance policy, etc.
Documents Required
KYC Proof
- Voter ID Card
- Aadhar Card
- PAN Card
- Passport
- Driving Licence
Academic Proof
- 10+2 Certificate/Marksheet
- Admission Letter
Income Proof (Required of Earning Co-applicant)
- Salary Slip/Certificate
- ITR Report
- Form 16
- Bank Statement
Collateral Proof (If You Require to Submit the Same)
- Ownership proof of property or house
- Fixed Deposit Receipt
- Insurance Policy