About Education Loan

A barebones explanation for an education loan is thus, ‘funds offered by financial institutions to meritorious and deserving students so that the latter can pursue their basic or higher education in India or abroad. Almost all banks & some NBFCs in India offer education loans, and the demand for it has remained stable with the Indian student community.

Features and Benefits

  • Tax Concession: One of the benefits of education loan is the deductible interest rates on your education loan from your taxable income till 8 years as per the Section 80E of the Income Tax Act, 1961. If you claim this tax exemption then you'll be required to pay over 30% less interest on the loan than what is originally cited.
  • Easy online loan approval process: Online application platform like Afinoz provides faster loan approval application process with zero processing fees. The whole loan approval process takes place just by submitting the required documents and then choosing the best suitable bank from the list for getting the loan.
  • Marginal Interest Rates: Low fixed interest rates are offered by nationalized banks which do not fluctuate during the repayment timeline of the loan.
  • Flexible repayment options: There is no need to start the repayment of the loan immediately after completing your studies. Banks provide a 'moratorium period', wherein you can start repaying your loan after 1 year of the completion of your education or after 6 months of getting a job. You can get tenure of 10 to 15 years to repay your loan after the completion of your degree.
  • Security: Most of the banks offer you with an option to take insurance on your education loan. Wherein, you can get the extra benefits of discount on interest rates. Also in case of death, your loan will be paid off from insurance.

Eligibility & Document Required


For an individual to be eligible for education loan in India, certain eligibility criteria’s must be fulfilled:

  • Citizenship: Any individual applying for an educational loan must be a citizen of India.
  • Age: Your age should be ranging from 16 to 35 years.
  • Good Marks: Should have secured a minimum of 50% marks throughout HSC and graduation.
  • Co-applicant eligibility:
    • Age: Should be ranging from 21 to 60 years
    • Employment: Minimum of 2 years in the current company and should satisfy the minimum monthly salary criteria.
  • Eligible Courses: The candidate must have secured admission in one of the courses to get an educational loan:
    • For India Studies:
      1. Any graduate/post-graduate degree courses like Management course, Engineering, Medicine, Architecture, Agriculture, Hotel and Hospitality, Pure Science and P.G diploma courses approved and affiliated by AICTE/UGC/State Government/Central Government/ICMR.
      2. Professional courses like CA, ICWA, ICSI, CS.
      3. Central/State government approved courses like IIT, IIM, IISc, XLRI, ISI, XIM.
      4. Degree/Diploma in any nursing courses and any aviation job oriented courses like PGS, IDSL, IATA, and Aeronautical degree or diploma course.
    • For Abroad Studies:
      1. Any job oriented graduation courses related to technical or professional fields and approved by reputed universities.
      2. Professional Post-Graduation courses like MS, MBA, MCA.
      3. Special reputed courses offered by foreign universities such as ACCA, CPA, CIMA, AICPA.


You would need to submit the following documents along with the completed application form for the education loan process:

  1. Identity proof: (Any one) Aadhar Card / Voters ID / Passport / Driving License / PAN Card of applicant and co-applicant.
  2. Residence proof: (Any one) Passport, Electricity bill (not more than 3 months old), Aadhar Card, Voter's ID.
  3. Admission proof: Admission letter with the letterhead of the university or the institute you have applied.
  4. Co-applicants documents:
    • If Salaried:
      • Last 6 months salary slips/Form16 or salary bank account statements.
    • If self-employed:
      • Last 2 years IT assessment/returns income certificate.
      • Office ownership proof(utility bill, maintenance bill, property deed - any one)
  5. Students Academic Score Documents:
    • 12th Mark sheet
    • Mark sheet of the previous highest qualification
    • If applicable GRE/TOEFL/IELTS certificates
    • Scholarship document(if applicable)
  6. If applicable collateral documents of any immovable property like property deed, allotment letter by municipal corporation or government bodies like MHADA, HUDA., current Property tax statement receipt.

Interest Rate & Charges

Education loan interest rates

At Afinoz you can avail the best in class education loan products not only at competitive pricing but also keeping in mind many other benefits that you can take advantage of. Rates of some major institution providing education loan are given below.

1. Axis Bank 13.5% – 15% NIL
2. HDFC Bank Ltd 9% - 13.75% Up to 1% of the loan amount
3. ICICI Bank Ltd 10.75% - 11.75 NIL
4. TATA Capital 11% - 15% Max. up to 1% of the loan amount
5. RBL Bank Ltd. 14.15% - 15.15% NIL
6. Kotak Mahindra 11.5% - 24% 0.5% of the loan amount
7. IIFL 13.50% - 18% N.A
8. Avanse 11.50% - 14.50% Up to 1 % of the loan amount
9. Aditya Birla capital 11.75% - 13.75% 1% of the loan amount ( one time)

Disclaimer:*Rates are subject to periodic change. Education loan interest rates & other fees and charges are subject to regular review and can vary with each customer. These can differ depending on few factors. The final interest rate will be based on different criteria including the bank’s internal policies & applicable rates at the time of approval. Please note that the interest rates provided here are based on the market research. To facilitate the comparison insight, certain set of data has been reorganized/restructured/tabulated. It is advisable to recheck the same with the individual companies / organizations. This website does not take any responsibility for any sudden or uninformed changes in interest rates. Banks or Financial Institutions can contact us at info@afinoz.com for inclusions or updates.

For any further query, please visit us at afinoz.com, contact us at +918795021552 or email us at info@afinoz.com .


Q. What are the benefits of an education loan?

    Benefits of Education Loans:
  1. Pursue higher studies: Best way to get higher education in India or abroad while avail financial support is by applying for an education loan.
  2. Easy availability: Applying for educational loans through online service providers like Afinoz, has made it easy to process and get loans approved in no time.
  3. No penalty for early repayment: No charges/penalties against pre-payment of the loan.
  4. Deductible Interest rates: You can deduct the interest you are required to pay from your taxable income and reduce some of your burdens.

Q. What type of courses can I apply an Education Loan for?

Education loans can be availed for all graduation, post-graduation and professional courses approved from foreign universities or universities authorized by the state and central government of India.

Q. If the loan request has been rejected by bank once, can I apply again?

Yes, you can re-apply for an education loan to a bank if you have fulfilled all the requirements and the necessary documentation of eligibility.

Q. Will education loan cover my accommodation expenses for courses in India?

An education loan generally covers your tuition fees, books and library fees, examination fees, lodging charges, travel expenses and if necessary some other expenses granted you are not exceeding your loan amount limit.

Q. How is the disbursement of education loan made?

The educational loan will be disbursed in full or in installments directly to the educational institute or university depending on the specific requirements of the institute. While the other expenses related to the loan like books, the hostel will be disbursed in installments over the duration of the study and will be transferred to co-applicant’s account. For abroad courses, a third party service provider will be consulted for loan disbursement.

Q. Do I need to provide security/collateral while applying for an education loan?

If the loan amount is less than 4 lakhs then security is not required, but you need to provide a co-applicant as a guarantor. However, for loan amounts of more than 4 lakhs banks demand a tangible property of suitable value as a security.

Q. When do I start repaying my educational loan?

If you want you can pay your EMI's or interest servicing during the period of your course. Generally, banks in India provide repayment option of one year after the completion of your course or 6 months after the starting of your job, whichever is early.

Q. What are the charges for processing education loan?

Most of the banks and NBFC's do not charge any processing fee for education loan. However, some banks may incur a small processing fee of 1-2% of the total loan amount to cover the operational costs.

Q. What is meant by margin money?

Usually banks do not sanction 100% of your required loan amount. Only a portion is provided by banks, while the rest 20% needs to come from your funds. In an education loan, the student's contribution is referred to as the margin money.

For example, let’s just assume your course fee is 10lakhs and bank agreed to fund 80% of your total loan amount. So, the remaining 20% (4lakhs), which is margin, needs to come from your pockets.

Q. How much fee will be funded by the bank?

  • For loans up to 4 lakhs : Entire loan amount will be sanctioned by the bank.
  • For loans above 4 lakhs: Studies in India: 5% margin needs to be funded by the student.
  • Abroad studies : 15% margin needs to be brought by the student.

Q. Can management quota students avail the benefits of education loans?

Yes, even management quota students can get educational loans for pursuing higher studies. But the rate of interest charged will be slightly higher based on the student's academic records and the credit history of co-applicants.

Q. What is the repayment schedule for education loan?

The repayment would begin one year after the course period or six months after you get a job, whichever is earlier. You are expected to pay a minimum amount equivalent to the EMI on a monthly basis. However, you can choose to pay more than the EMI, and we do not charge any prepayment penalty.

Q. Do I need a co-applicant?

If the loan amount is less than 7.5 lakhs then bank demands for a co-applicant as a guarantor instead of any security.

Q. What is moratorium period?

In education loan, it is not mandatory for you to start repayment of the loan from the day you finish your studies. Bank provides you certain waiting period called the moratorium period after which the repayment of loan commences.

Q. Can I make repayment during the moratorium period?

You can repay the interest credited during your moratorium period to reduce the burden of EMI’s to some extent afterward.

Q. Will the education loan application process affect my credit score?

Like any other loan, education loans can also impact your credit score depending on your repayment behavior. Not paying your credit card dues on time or delayed EMI payments can have a negative effect on your credit score.

Q. Is there a penalty for repaying the loan early?

No penalty is charged on the applicant for early loan repayment.

Q.Can I get an education loan in the second or third year of my studies?

The answer is yes. If your percentages are good then you can avail an educational loan during any time of your course studies.

Q. What is the maximum amount of education loan, which I can avail?

For abroad studies, the maximum amount of loan you can get is up to Rs. 20 lakhs. While the maximum loan amount sanctioned for studies in India is 10 lakhs.

Q. What is the mode of repayment?

You can draw a cheque in favor of the borrowed bank or if you have an account with the bank then the monthly EMI will be directly debited from your account on due dates.

Q. What is the tenure of the loan?

The commencement of repayment starts after one year of course completion or 6 months from joining a job. The loan should be re-payed within the tenure of 5 to 7 years after the commencement of repayment.

Q. What tax benefit do I get by taking education loan?

As per the Income Tax Act Section 80E, you might be eligible for a deduction from your taxable income on entire loan interest. Given the loan was taken from a recognizable financial or charitable institution.

For any further query, please contact us at +92-8795021552, or email us at info@afinoz.com .


Afinoz provides good education loan schemes comparison that can be borrowed as per requirements. I am very impressed by their processing of loan applications. My SBI education loan got approved at a very low interest rate and lowest processing fee.
Rated- 4.5/5 Review By -
I took ICICI Bank education loan for my son through Afinoz and it got approved instantly without any additional charges. I really dont have any issues with them till now. Great going Afinoz!
Rated- 5/5 Review By -
They need to improve their service with online facilities. I am extremely content with Akhand as he is exceptionally reassuring and helpful at each stage while applying for education loan.
Rated- 3/5 Review By -
I had to apply for an education loan immediately as my CAT results were out and I had to plan quickly of all the arrangements. I wasn not aware of how much time a bank would take. I visited Afinoz to know about all the education loan schemes. I applied for an education loan from SBI as it was giving me the option of lowest interest rate for my loan amount.
Rated- 4.5/5 Review By -
Afinoz is a very good and they have well trained professionals to solve any issue. My car loan from HDFC got a quick approval with very minimal and easy documentation process. Great services by Afinoz!
Rated- 5/5 Review By -