HDFC Student Loan
Set up in the year 1994 as a subsidiary of Housing Development Finance Corporation Limited, HDFC Bank is one of “The Big Four’ banks in India. Primarily established to encourage housing finance, the bank now has presence across various financial and banking verticals / services and is among the most revenue generating financial institution. As of today, HDFC Bank is one of the top most private sector commercial bank with its network spread across 5,345 branches in about 2,787 cities and towns combined which is operated by more than 100,000 employees.
Overview of variants in education loan schemes offered by ICICI Bank
|HDFC Education Loan
- Loan facility for Indian national students who have secured admission to higher education in India only
Further details of the scheme mentioned in above table
1. HDFC Education Loan
HDFC Bank provides only one kind of education loan facility and its features are all inclusive.
The loan can be availed by Indian national students wanting to pursue and have secured admission to higher education courses like – Graduation / PG / Technical / Professional / Diploma / Engineering / Medical etc offered by recognized universities / colleges / institutes and approved by academic bodies such as UGC / AICTE / ICMR / AIBMS and both Central and State governments.
The loan can be availed by students between the ages of 16 – 35 years. The applicant, in order to apply for the loan, must have secured admission by way of merit – selection tests and all other relevant processes.
The maximum quantum of loan that can be availed from HDFC is up to ₹20 lacs wherein for loan amount not more than ₹7.50 lacs, no collateral security is applicable.
For any loan amount exceeding ₹7.50 lacs, collateral security is mandatory. The collateral security can include any tangible immovable property that is not in use or any non-agricultural plots not in use or any financial investments. The security must be equivalent in value of the loan amount availed.
It is also mandatory that the parents / guardian sign up as co-borrowers for the applicant / student, especially towards loans for full time courses.
Almost all expenses of the course (including study tours, hostels, library, laboratory, equipment, books, project work, examination, Insurance premium for the borrower, caution deposit, purchase of computer / laptop, etc.) are covered under the scheme.
Processing Charges –
Processing charges /fees of either up to 1% of loan amount or a minimum of ₹1,000/- is applicable, whichever is higher. Although, as per the terms and conditions of the Education loan, further charges are applicable, which are described in the following link – https://www.hdfcbank.com/personal/borrow/popular-loans/educational-loan/educational-loan-for-indian-education/fees-and-charges
The Rate of Interest would vary according to the Repo Rates as decided by RBI. The below describes the rate of interest that was applicable between January 2020 – March 2020.
The moratorium period of the loan availed, covers the entire course tenure with an additional 1 year or 6 months post landing a job, whichever is earlier. The period can also be decided by the bank at their discretion depending on the loan amount and as per what is mentioned in the bank’s Schedule Cum Key Factsheet.
The loan repayment period is up to a duration of 15 years post the completion of moratorium period.
Tax Benefits –
Tax Benefits are also applicable under Section 80E of the Income Tax Act, 1961 wherein the applicant would receive rebates on the interest payable towards the education loan.
Insurance – The education loan amount is covered under the insurance policy offered by HDFC Life Credit Protect.
Disbursement – The loan amount is directly disbursed by the bank to the college / university / institute as per the course and fee structure.
EMI payments – EMI payments are to be serviced within due date by the applicant. In case of any overdues / unpaid EMIs post due date, a charge of 24% per annum on the overdue EMI amount will be applicable.
Documents Required for the aforementioned loan scheme
Along with the duly filled loan application form, the self-attested copies of following documents need to be submitted to the bank:
- Copies of SSC, HSC, Graduation (if applicable) marksheets
- Entrance exam scorecard sheet (JEE / NEET / CLAT / CAT / XAT / SNAP / NMAT etc)
- Copy of Admission proof (offer letter / admission letter)
- Fee / expense break-up structure of the entire course
- Copies of any scholarship certificates
- Passport size photographs of applicant (student), co-borrower (parent), third party guarantor (if any) – photographs must be signed across
- In case of salaried persons –
- Copies of previous 2 salary slips (must include joining date)
- Copy of Form 16 / recently filed Income Tax Return
- In case of non-salaried persons –
- Address proof of business (if applicable)
- Copies of audited balance sheets for previous 2 years
- Copies of last 2 years of Income Tax Returns
- Bank account statements for the 6 months of Parent / Co-borrower/ guarantor
- Documents relating to collateral and tangible security
- PAN (Permanent Account Number) Card Copy for identity proof of applicant/ Co-borrower (parent)/ Guarantor (self-attested)
- Aadhar (UID) Card copy of student /co-borrower (parent)/guarantor for address proof (self-attested)
- Signature proof of applicant, co-borrowers
- Passport Copy (mandatory for loan availed towards studies abroad)
- Voter’s ID card issued by Election Commission of India
How to Apply for the loan
Online process – The above-mentioned HDFC Bank Education loan scheme can be applied via online from Vidya Lakshmi Portal, which is a centralized portal specifically catering to students wanting to explore multiple options offered by various banks before choosing the appropriate loan scheme which is in conjunction to the applicants’ needs.
The applicant can also directly apply through the website which again, leads them directly to Vidya Lakshmi Portal.
Offline process – The applicant will have to visit the nearest branch of HDFC Bank and apply for the Education loan by filling out the required forms and submitting the copies of mandatory documents.
Insurance – HDFC Bank has included insurance cover in the standard procedures of education loan application. The insurance cover is provided by the sister entity of HDFC Bank, its life insurance arm HDFC Life Insurance, under its scheme Credit Protect.
Many banks are now resorting to include insurance on the same. This subsequently raises the interest rates on these loans.
Few reasons for inclusion of insurance cover are –
- Covering of default risk rising due to poor job markets
- Exchange rate risks in the case of overseas education loans
- Below satisfactory campus placement records
- Possibility of discontinuation of course by student or debarring by institutions on disciplinary or academic grounds.
Note – It is also noted that HDFC Education loan does not cover overseas education loan facilities and only encourages loan schemes for studies in India.