Enrolling in a prestigious university or college means paying premium tuition fees or even moving out of the country. For most of us, footing this bill independently is impossible. This is where student loans can help. So, if you’re planning to pursue higher education but don’t have the capital for it, here's what you need to know about how to take out a student loan.

Student Loans in a Nutshell

Apart from the ‘how to pull out a student loan?’ question, other questions like ‘what all will the loan cover?’, ‘what are the eligibility criteria?’, ‘do I have to make a down payment?’, ‘what is the maximum loan amount?’ must be bothering you. If that’s the case, here’s a quick overview that’ll help:

• With interest rates starting from 8.30% p.a., student loans cover the course's cost and all other allied expenses like food, lodging, books, and others.
• While the eligibility requirements vary, if you’re an Indian citizen of 18-35 years with a good academic record and a confirmed admission letter, you should be good to go.
• No collateral or guarantor is needed for loans under Rs. 4 Lakhs. However, for a loan above Rs. 7.5 Lakhs, you must provide collateral and list your parents, sibling, or guardian as a guarantor.
• The maximum loan amount sanctioned can range up to Rs. 50 Lakhs. However, the sanctioned loan amount will depend on the course's cost and your income eligibility.
• For student loans above Rs. 4 Lakhs, down payment requirements range from 5%-15%.

How Do I Take Out a Student Loan?

If you can’t figure out how to take out a student loan in India, you can follow this simple step-by-step guide:

1. Select a Lender

In India, both banks and NBFCs offer student loans; however, their interest rates, processing fees, and loan terms differ. Thus, weighing all your options and comparing them is the key to selecting the most suitable lender.

2. Check Eligibility

Every lender has an eligibility checklist outlining the applicant's age, courses covered, and institutions included. You must review these parameters before submitting a loan application to prevent application rejections.

3. Fill-Out the Application Form

You can apply for the loan online on the lender’s website or visit the nearest branch office. Some lenders might also call you in for a counselling session.

4. Submit Your Supporting Documents

This will include your KYC documents, mark sheets, diploma certificates, as well as your course offer letter, collateral papers (if applicable).

5. Wait for Approval

Apart from verifying the submitted documents, your lender will also check your guarantor's credit score. Post this, if you’re deemed eligible, the loan application will be approved.

6. Receive your Loan

Your lender will directly disburse the sanctioned loan amount into the account of the selected institution. Usually, student loan disbursements post approvals can take up to 2 weeks.

The Bottom Line

Now that you know how to take out a student loan, getting one to finance your higher education won’t be a hassle. Repaying the loan shouldn’t be a problem, as you can comfortably clear the loan over 15 years. However, you should use an EMI calculator tool to ensure that EMI payments and interest rates fit your affordability parameters.

If your loan requirement is less than ₹5 Lakhs, you can also rely on instant loans from Fi Money. These pre-approved instant loans are available to select Fi users with good credit scores and come with varied benefits like 100% paperless processing, competitive interest rates, and automatic in-app payments.

Frequently Asked Questions

Who is eligible for an education loan?

You are eligible for an education loan if -

• You are an Indian citizen of 18-35 years pursuing a graduate or PG degree.
• You have a good academic record.
• You have the admission letter to a college or university (in India or abroad).

Your guarantor’s income matches the minimum income requirements of the lender.

How can I take my student loans?

You can take out a student loan by following these four easy steps:

• Finding the right lender.
• Checking the listed eligibility criteria.
• Filling out the application form.
• Submitting the right documents.

Once verified, your loan will be approved and disbursed after you sign the loan agreement.