Get the basics right before applying for an education loan
By Neelima Shankar
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As the educational expenses are soaring, education loans have become very common means of financing higher education. Most students expect to earn high salaries at the end of their professional training and are likely to be in a position to repay these loans over a period of time.

Both public sector and private sector banks offer education loans. State Bank of India is the pioneer in the education loan segment. It started offering education loans from 1995 and thereafter many banks followed its footsteps.

Today education loans are provided for both graduate and post graduate courses including Engineering, Medical, Architecture, Management, Law, Agriculture, Veterinary, Dental, Computer etc. Banks usually have their own list of courses and they sanction loans only for these courses.


Before sanctioning the loan, banks look for the viability of the borrower by having personal discussions with the student, family's assets and annual income, the type of the course and reputation of the institute.

In most banks for loans up to Rs. 4 lakh no collateral or margin is required and the interest rate will not exceed the Prime Lending Rates (PLR). For loans above Rs. 4 lakh the interest rate will be PLR plus 1 percent.

Security to the loan depends on the amount. Security is some form of investment (i.e bank deposits, house property etc) that are parked with bank while taking the loan. Security is not needed for loan amounts up to Rs. 4 lakhs. Instead of security, some bank may ask for a third party guarantee ( guarantor) for higher loan amounts.

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(Comments Posted : 3) Post Your Comments
1. hiiii
your artical for education loans is very nice.
i just want some more information regarding this.
my topic is impact of education loans on indian economy.
if there is some information than plese submit it on my e mail id .
thank you
pooja pawar (Posted: Oct 1, 2011)
2. Such a important & valuable information given!!! Really Nice!

D. N. Raut (Posted: Aug 15, 2011)
3. A good article explaining the basics.
Ved Prakash (Posted: Dec 29, 2010)
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