Education Loan Eligibility Criteria in India for Students

Age Criteria

The age criteria can be considered in relation to some educational loan products. The exact age criterion will vary from one lending institution to another and from one loan product to another.

The age factor will be considered together with the level of education that the student is at and the type of course he or she wishes to pursue. For instance, the age requirement of one lending institution will vary when considering a loan applicant at the undergraduate and postgraduate levels.

Because age requirements vary among lenders, one must check what the current age requirement is before applying. If the age of the student is not within the typical range, there may be extra stipulations from the lender or an alternative loan type that should be sought out.

Loan Amount and Margin Requirements

Various things influence the amount of money one is able to borrow from different lenders, such as cost of the course, institution where one studies, location, household income, collateral, and the lender’s policies.

Educational loans may be used to finance tuition fees, exam fees, accommodation, books, equipment, travel expenses where applicable for international study courses, among other educational costs. Nevertheless, the exact expenses financed differ from one lender to another.

The borrower can also be made to contribute a certain percentage of the total educational cost from personal or family sources. This concept is known as margin requirement.

For instance, if the total eligible educational expenditure is ₹10 lakh and margin requirement is imposed by the bank, then the student will have to arrange for some amount on his/her own while the rest will be arranged by the bank.

It is necessary to understand margin requirement as the sanctioned amount of the loan may not cover the total cost of education.

Collateral and Security Requirements

The requirement for collateral is largely determined by the amount of the loan and the education loan policy of the institution that lends money. A smaller loan may not need any collateral, whereas a larger one will need it. Collaterals may include land, fixed deposits, life insurance policies, or any other suitable collateral as per the lender.

It is necessary to know whether the collateral will be needed or not at the time of application as it can influence the family’s decision on taking the loan. In case of collateral, the lender will evaluate ownership, value, and legal status of the security. For students who plan costly programs abroad, it is especially important to know how much loan requires collateral.

“Education loans have become an important enabler for students aspiring to pursue higher education abroad, particularly when the cost of tuition, accommodation, travel, and other expenses can be a significant financial commitment for families. From my own experience as a parent, education loans have provided the financial flexibility needed to support my children’s international education without having to meet the entire expenditure from personal savings. I have availed an education loan from IDBI Bank for my son’s M.Sc Management in UK and a non-collateral education loan from HDFC Bank for my daughter’s M.S Engineering and Management in USA. These experiences have shown me that access to timely and appropriately structured education finance can make overseas education more attainable for deserving students. However, students and parents should carefully evaluate interest rates, repayment terms, moratorium periods, processing charges, and other conditions before selecting a loan. When planned responsibly, an education loan is not merely financial assistance; it can be an investment in a student’s education, skills, career opportunities, and long-term future,” says Annapurani.K, Professor, Department of Networking and Communications, School of computing, SRM Institute of Science and Technology, Kattankulathur.