Educational Loans

According to Crif High Mark, an RBI-approved credit bureau, 90 percent of education loans
taken are from public-sector banks by value and volume. Further, 20 percent of loans are in the
Rs 4-Rs 10 lakh bracket.

loans are categorized as below:

a. Loans to students admitted to top rated institutions

b. Loans to students admitted to other domestic institutions

c. Loans to students seeking studies abroad.

NBFCs like Avanse, Tata Capital, and HDFC Credila offer education loans. Such NBFCs may
be more flexible in offering loans when it comes to the choice of courses. NBFCs like Avanse
offer loans on unconventional and vocational courses like new age technology courses, data
sciences, photography, sports engineering, music, animation, painting, theatre, dance, language
etc

The Employment Predictability Model' before lending. Gainda informs, "This model has been
developed to derive the future income of the student and takes into consideration critical factors
like Entrance Test Score, Academics (U/G results), Work Experience, the stream, course and
University where the student has secured admission and combines it with data about the
employment history of the university and program. Therefore, Avanse evaluates not only the
student but also colleges and courses for their potential employability before lending."

Things to look at while taking education loan

Moratorium
What makes the education loan unique is the moratorium period which is equal to the length of
the course. During this period, different issuers may structure the loan differently.

Maximum amount
As per the Indian Banks Association guidelines, the maximum loan for studies in India can be up
to Rs 10 lakh, while for studies abroad it can be up to Rs 20 lakh

Collaterals
Depending on the loan amount, bank may ask for collateral. For loans up to Rs 4 lakh, there is no
collateral required, what one needs is a co-borrower who can be the student's parent . under
Credit Guarantee Fund Scheme for Education Loans (CGFSEL). Under the CGFSEL, the
maximum loan limit under this scheme is Rs 7.5 lakh without any collateral security and third
party guarantee

The tax benefits

To avail section 80E tax benefit, the loan has to be from an approved entity. Get it conformed
from the bank or the NBFC upfront before proceeding further if you want to avail tax benefits.
 Educational Loans

Types of Education Loans:

There are two basic types of education loans – secured and unsecured loans. A secured loan, as
the name suggests, means that the financial institution will offer a loan that is backed or
‘secured’ by an asset or security. Securities that are usually accepted by institutions are real
estate property, government securities or similar assets. Secured loans are ideal for buying a car
or a house, both of which will be held as collateral or security against the loan. Secured loans are
less common for education loans. However, they do possess advantages that make them
lucrative:

 Credit score will matter less, as collateral is in place.

 Higher borrowings are permitted owing to the presence of collateral.
 Longer loan payback durations are permitted.
 Most important of all, interest rates are lower for secured loans.

Unsecured loans, true to their name, meaning that the financial institution offers a loan without
any security or collateral. This is, naturally, a higher risk proposition for them, and so they tend
to offer higher interest rates and fees for such loans.

The advantages of obtaining an unsecured loan include:

 Your assets are secure in case things go awry.

 This is ideally suited for individuals with a steady income or those that expect a steady
source of income in the future, such as students, and don’t currently possess any assets
that can be used to back the loan

Credila:

A subsidiary of the HDFC Ltd, Credila is India’s first dedicated Educational Loan-focused
NBFC. Credila has been around since 2006.

Important figures:

 Current Base Rate of Interest: 11.85%

 Type of Interest Rate: Floating and may change every year
 Minimum Loan Amount: Rs. 1,00,000
 Maximum Loan Amount: No cap but must meet Credila’s criteria
 Maximum Loan Tenure: 12 Years

Other key advantages that the company boasts of include a potential exemption in tax under
Section 80E and the company also offers loans against properties that are mortgaged with its parent
company HDFC Ltd.Processing Fees: 1% of Loan Amount
 Educational Loans
Avanse:

Founded in 2012, Avanse is also a specialized NBFC targeting education loans. It is an associate
company of Dewan Housing Finance Loan (DHFL) Ltd. The Company offers several custom
made loans such as pre-admission loans and pre-visa loans, that banks don’t offer.

Important Figures:

 Current Base Rate of Interest: 11.5%

 Type of Interest Rate: Floating and may change every year
 Minimum Loan Amount: Rs. 1,00,000
 Maximum Loan Amount: No cap
 Maximum Loan Tenure: 10 Years
 Processing Fees: 1% of the Loan Amount, usually

The loan amount also covers essential living costs (but this figure shouldn’t excel 20% of the
total loan amount). Caution deposit and fees of the like are covered to the tune of up to 10% of
the Loan Amount. Travel expenses is also covered for students travelling abroad. Get more detail
@ Avanse Education Loan

InCred:

This Mumbai based NBFC offers loans for Housing, SME Loans, Personal Loans and
Educational Loans and has been in existence since 2016. The organization offers education loans
to students studying in India as well as those going abroad. Get more detail @ Incred Education
Loan

Important Figures:

 Current Base Rate of Interest: 12%

 Type of Interest Rate: Floating and may vary every year
 Minimum Loan Amount: Rs. 2,00,000
 Maximum Loan Amount: Rs. 1,00,00,000
 Maximum Loan Tenure: 15 Years
 Processing Fees: 1% of the Loan Amount

Auxilo:

This the latest NBFC Firm to come into existence and was established in 2017. They specialize
in educational loans for students studying both in India and abroad.

Important Figures:

 Current Base Rate of Interest: 12.7%

 Type of Interest Rate: Floating and may vary every year
 Minimum Loan Amount: Rs. 1,00,000
 Educational Loans
 Maximum Loan Amount: No cap
 Maximum Loan Tenure: 10 Years
 Processing Fees: 1% of the Loan

GyanDhan and NBFCs

GyanDhan is a student-centric IIT-alumni initiated startup, who work tirelessly towards easing
the loan process. And in order to make sure that financial aid in not a deterant to any student’s
dream of studying abroad, GyanDhan has partnered with several banks and NBFCs such as State
Bank of India, Axis Bank, Bank of Baroda and even Avanse, and takes care of the complete loan
process - application, sanction and even the follow up the process, in case of any roadblocks.
GyanDhan has helped hundreds of student get education loans from NBFC’s even in situations
when it was a time-critical case.

NBFCs like Avanse, Tata Capital, and HDFC Credila offer education loans. Such NBFCs may
be more flexible in offering loans when it comes to the choice of courses. NBFCs like Avanse
offer loans on unconventional and vocational courses like new age technology courses, data
sciences, photography, sports engineering, music, animation, painting, theatre, dance, language
etc

The Employment Predictability Model' before lending. Gainda informs, "This model has been
developed to derive the future income of the student and takes into consideration critical factors
like Entrance Test Score, Academics (U/G results), Work Experience, the stream, course and
University where the student has secured admission and combines it with data about the
employment history of the university and program. Therefore, Avanse evaluates not only the
student but also colleges and courses for their potential employability before lending."