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Raising a child is no child's play at all. Besides his/her security, what is really a worry for most parents is the rising cost in education. Most professional courses are beyond parents' reach, and as per the latest trends, the cost of education is increasing at least 15 percent per annum. For example, the cost of an MBA has gone up from Rs 2.5 lakh to Rs 20 lakh in the last three decades. When aspirational and talented students want to do a particular course, they look for alternative solutions to fuel their dreams. One of the easiest and safest options is students' loan.

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Who can apply for education loans?

- Must be a resident of India
- Must have secured admission for a recognised course in India or abroad
- NRI applicants must have a valid Indian Passport
- Applicant must provide collateral enforceable in India
- Generally, the age limit is 30.

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What does an education loan cover?

It covers the basic course fee and other related expenses such as (college) accommodation, exam and other miscellaneous expenses. As per the Reserve Bank of India (RBI) guidelines, there are no restrictions on the upper age limit, but some banks do have self-imposed limits.

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What do you need to submit?

The banks require additional documents such as admission letter of the institution, fee structure, Class X, XII and graduation (if applicable) marksheets. Also required are the income documents such as salary slips or income-tax returns (ITR) of the co-applicant.

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What's the average interest rate?

The banks use marginal Cost of Funds based Lending Rate (MCLR), plus an additional spread to set an interest rate. Among major banks, SBI and Axis offer loans with the lowest interest rates.

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What about repayment?

The loan is repaid by the student. Generally, the repayment starts when the course is completed. Some banks even provide a relaxation period of six months after securing a job or a year after the completion of studies for repayment. The repayment period is generally between 5 and 7 years, but can be extended

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Vidya Lakshmi is a first-of-its-kind portal for students, seeking Education Loan. This portal has been developed under the guidance of Department of Financial Services, (Ministry of Finance) , Department of Higher Education (Ministry of Human Resource Development) and Indian Banks Association (IBA). Students can view, apply and track the education loan applications to banks anytime, anywhere by accessing the portal. The portal also provides linkages to National Scholarship Portal.


A Kochi-based bank manager says at least 10 students visit his bank every month, seeking information about student loans and its availability."Most students come with a plan to go abroad. Earlier, there used to be nursing students. Now, it's mostly about foreign education. IITs, IIMs and BITS-PILANI also are in demand," says the manager.

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