Know All About Education Loan Schemes and Criteria

According to the reports of a leading credit bureau, educational loan lenders have disbursed around Rs.11,000 crore in the 12 months till September 2020. Taking this data into account, it’s easy to see the popularity of education loans in this country.

Educational loans help students meet their higher education expenses, and the availability of different educational loan schemes further benefits them.

Top 5 educational loan schemes

Some notable study loan schemes are briefly explained below.

  1. CGFSEL or Credit Guarantee Fund Scheme for Education Loan

The Indian Government launched this scheme to provide easy access to financing for aspiring candidates. Under this plan, any loan up to Rs.7.5 lakh requires no collateral, but one can secure up to Rs.10 lakh to finance education in India and up to Rs.20 lakh for aboard. Individuals applying for a loan amount above Rs.7.5 lakh may need to provide collateral and a third-party guarantee.

  1. Vidyalakhsmi Portal

This is a purpose-built portal to help students find suitable education loan offers. Students can use this portal to apply for credits to various financial institutions through the common application form CELAF. They can also track their application status and associated information through this portal.

  1. Central Government Scheme of Interest Subsidy on Educational Loan

This loan aims to extend financial support to the economically weaker sections of the country. Applicants must fulfil the following criteria to qualify for the scheme:

  • The admission must be in a recognised college in India
  • The subsidy applies to a loan amount of Rs.7.5 lakh, even if the total quantum exceeds the same
  • The gross annual income of the applicant must not cross Rs.4.5 lakh, and borrowers must submit adequate income proof to support the same
  1. Padho Pardesh Scheme

This specially designed educational loan scheme extends financial assistance to students of minority communities. Some specifications of this plan are as follows:

  • Candidates pursuing their Masters, PhD, or M. Phil are eligible for the benefits of this scheme
  • The gross annual family income of the applicant must not cross Rs.6 lakh
  • Applicants must submit income proof
  • The scheme is reserved for higher studies abroad
  1. Dr Ambedkar Central Sector Scheme of Interest Subsidy on Educational Loan

This scheme is reserved for students from other backward classes (OBC) or economically backward classes (EBC) who seek to study abroad. Students applying for this subsidy must have secured admission at a higher and post-graduate level, and their annual income must not cross Rs.3 lakh and Rs.1 lakh for OBC and EBC respectively. 

Along with the application, one needs to submit ITR details to complete this process. Since the loan amount of such education loan schemes is limited and the processing time can be long, one can bypass the hassle with a loan against property for education.

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Why is an education loan against property a viable option?

Mortgage loan such as these allow individuals to use their property as collateral and avail funds against it. The benefits of this financial product allow individuals to meet their needs without hassle.

  • The quantum of a LAP loan depends on the market valuation of a property
  • There are no restrictions on the usage of funds for a loan against property
  • Property loan interest rates are competitive and lower compared to traditional educational loans; thus, EMIs are affordable
  • One can use a LAP EMI calculator to work out a comfortable repayment option
  • Eligibility terms and documentation are easy

Along with low mortgage loan rates and high loan amounts, top NBFCs also provide pre-approved offers for existing customers. These offers expedite the loan application process; applicants can check their pre-approved offers by submitting their basic contact details.

Educational loan schemes present an affordable way to secure the necessary funds to pursue higher studies. However, they have their limitations, and a loan against property offers a higher loan amount and better usage flexibility in comparison. Nonetheless, one should consider the charges of LAP before applying to ensure that they have a fair idea of their repayment liability.

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