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Federal Bank Education Loan

Last Modified : September 12, 2018

Federal Bank offers two diverse variants of loan for studies in India and Abroad. The loan is available for a loan amount of upto INR 10 Lacs for studies in India and INR 20 Lacs for studies abroad.

The bank offers Education Loans for India and Abroad through four popular schemes named as Special Vidya Loan, Fed Scholars Loan, Career Solutions Loan and Bon Voyage Loan.

Why Federal Bank?

The bank offers user-friendly services such as doorstep banking facilities and instant loan approval which make it popular in education loan market. The bank doesn’t demand any security for a loan up to INR 4 Lacs. Also, the maximum amount of loan for studies in India offered by the bank is INR 10 Lacs and INR 20 Lacs for studies overseas.

Are you eligible for Federal Bank Education Loan?

To get an education loan from Federal Bank, applicants are required to fulfill the following criteria laid down by the bank:

  • Indian National - Applicant must be an Indian National
  • Premier Universities - Candidates should have secured admission to Professional/ Technical courses through Entrance test or any other selection process from a recognized or approved university
  • Co-Signer - Students seeking education loan from Federal Bank must have a co-signer to act as a co-borrower

How can you apply for Federal Bank Education Loan?

Students who wish to avail the Education Loan facility from Federal Bank are required to follow the steps mentioned below:

  • Visit the official website of Federal Bank
  • Click on ‘Forms and Stationery’ and then on ‘SME Loans Applications and Agreements’
  • Download the pdf file
  • Fill all the details correctly in the application form
  • On filling the application form correctly, submit the same in the nearest branch of Federal Bank

Note: Students can also call on the customer care number provided on the Federal Bank’s official website. The executive will guide you further on the Loan process. You can also visit any branch of Federal Bank and ask for the application form for education loan and they will help you out in applying for education loan.

Various important aspects of education loan offered by the Federal Bank are provided below:

1. Special Vidya Loan

Federal Bank offers Special Vidya Loan scheme for meritorious students to pursue studies in India and Abroad. This loan scheme doesn’t cover Vocational Training and Skill Development courses.

What makes you eligible for Special Vidya Loan Scheme?

  • Indian National
  • Graduate/ Postgraduate Courses
  • Professional/ Technical  or career-oriented courses
  • Entrance Test/ Merit based selection process
  • Premier Universities in India and Abroad

Interest Rates on Federal Bank Special Vidya Loan

Loan TypeLoan AmountInterest Rates
Special Vidya LoanUpto INR 4 Lacs13.25%
Above INR 4 Lacs14.75%
Special Vidya Loan Scheme for girl studentsUpto INR 4 Lacs12.75%
Above INR 4 Lacs14.25%

Quick Facts about Federal Bank Special Vidya Loan Scheme

MarginLoan of Up to INR 4 Lacs – No Margin
Loan above INR 4 Lacs -
  • For India: 5%
  • For Studies Abroad: 15%
Maximum Loan LimitFor India – INR 10 Lacs
For Abroad – INR 20 Lacs
SecurityUp to INR 4 Lacs – No Security
Between INR 4 Lacs and INR 7.50 Lacs - Third Party Guarantee/ Collateral Security
Above INR 7.50 Lacs - Collateral security with stipulated margin
Moratorium PeriodCourse Period + 1 year or 6 months after getting the job
Repayment (Maximum)Moratorium Period + 5 to 7 years
Prepayment ChargesNo repayment during moratorium period

Additional Facts about the loan

  • Zero margins for loan amount up to INR 4 Lacs
  • 0.50% rebate in the rate of interest for female applicants
  • Zero processing fee (in India)
  • The loan is sanctioned co-jointly to the applicants and their guardians

Expenses Covered Under Federal Bank Special Vidya Loan Scheme

  • Tuition Fee
  • Examination fee
  • Library/ Laboratory fee
  • Hostel fee
  • Cost of books, equipment, instruments, uniform, travel expenses, computer etc.
  • Miscellaneous expenses such as project work/ study tours/ thesis etc.
  • Caution deposit, amount payable towards building fund, refundable deposit etc. but it cannot exceed 10% of the tuition fee

Documents required for Federal Bank Special Vidya Loan Scheme

  • Identity Proof – Passport/ Voter ID Card/ Driving License/ PAN Card
  • Address Proof – Ration Card/ Electricity Bill/ Telephone Bill/ Lease agreement/ Passport
  • Admission letter with all necessary details
  • Copies of qualifying courses and mark sheet
  • Proof of fee structure

2. Fed Scholars Loan

Federal Bank offers this loan to provide financial support to deserving and meritorious candidates who wish to pursue courses from premier institutes.

What makes you eligible for Fed Scholars Education Loan?

  • Indian National - Applicant should be an Indian National
  • Secured admission to any of the premier institutes in India or Abroad

Note: Management quota seats shall not be considered under this scheme

Present Rate of Interest

For Girl StudentsOne Year MCLR + 1.70% to One Year MCLR + 6.10% - 0.50%
For Other StudentsOne Year MCLR + 1.70% to One Year MCLR + 6.10%

Quick Facts about Fed Scholars Loan

MarginLoan of Up to INR 10 Lacs - Nil
Loan above INR 10 Lacs – 5%
Maximum Loan LimitUp to INR 20 Lacs
SecurityNo Security
Moratorium PeriodCourse Period + maximum 1 year + maximum 15 years
Repayment (Maximum)Moratorium Period + maximum 15 years
Prepayment ChargesNo repayment during moratorium period

Additional facts about Fed Scholars Loan

  • No processing fee
  • Subsidy is available for eligible students
  • Reimbursement of expenses during the ongoing academic year can be considered

Expenses Covered Under Fed Scholars Loan Scheme

  • Fee Payment
  • Hostel Fee and Examination fee
  • Expenditure on books, equipment, and uniforms
  • Miscellaneous expenses such as study tours, project work, thesis etc.

Courses Covered Under Fed Scholars Loan Scheme

  • Graduate/ postgraduate/ postgraduate diploma courses
  • Courses offered by institutions recognized by UGC, Government, AICTE, AIBMS or ICMR
  • Courses such as MBBS, PG in Medicine etc.
  • Courses offered by IIMs, IITs, IISc, XLRI, NIFT, NID etc.

Documents required for Fed Scholars Loan Scheme

  • Admission letter
  • Self-attested passport sized photograph of applicant, co-applicant, and guarantor
  • Address Proof – Ration Card/ Electricity Bill/ Telephone Bill/ Lease agreement/ Passport
  • Admission letter with all necessary details
  • Copies of qualifying courses and mark sheet
  • Proof of fee structure

3. Federal Career Solutions Loan

Federal Bank offers Career Solutions Loan to needy and deserving students who wish to pursue higher education, vocational training courses, pilot training, skill upgradation, diploma or degree courses in the field of Aviation, Hospitality and Travel Management, Executive Development etc. in India and Abroad.

What makes you eligible for Federal Career Solutions Loan?

  • Applicant must be an Indian National
  • Age - Minimum 18 years and maximum 45 years
  • Net Worth - At least double of the loan amount (combined with co-obligants)

Present Rate of Interest

For Girl StudentsOne Year MCLR + 1.70% to One Year MCLR + 6.10% - 0.50%
For Other StudentsOne Year MCLR + 1.70% to One Year MCLR + 6.10%

Quick Facts about Federal Career Solutions Loan

Maximum Loan LimitFor India: INR 75 Lacs
For Abroad: INR 100 Lacs
Moratorium PeriodCourse Period + 6 months or 3 months after getting a job, whichever is earlier
Repayment (Maximum)Maximum 120 months
Prepayment ChargesPeriodical interest should be charged during the course period and further cushion period

Additional facts about Federal Career Solutions Loan

  • Fast processing
  • Minimal Paperwork
  • Repayment can be made in easy EMIs
  • Loan can be availed for higher studies in India and Abroad excluding Vocational Training and Skill Development programs

Expenses Covered Under Federal Career Solutions Loan

  • Fee Payment
  • Hostel Fee and Examination fee
  • Expenditure on books, equipment and uniforms
  • Miscellaneous expenses such as study tours, project work, thesis etc.

Documents required for Federal Career Solutions Loan

  • Identity Proof – Passport/ Voter ID Card/ Driving License/ PAN Card
  • Address Proof – Ration Card/ Electricity Bill/ Telephone Bill/ Lease agreement/ Passport
  • Admission letter with all necessary details
  • Photograph of applicant and guardian
  • Copies of qualifying courses and mark sheet
  • Admission letter
  • Income proof of guardian
  • Details of the total expenditure of course

Interest Subsidy

CGISS (Central Government Interest Subsidy Scheme for Education Loans)

In addition to the education loans mentioned above, Federal bank also offers a Scheme to provide Interest subsidy on education loans for economically weaker students. Students who fulfill the following criteria will be eligible for the Interest Subsidy provided by the Federal Bank.

  • This subsidy scheme is given only to those students who are enrolled in any of the technical and professional courses after Class 12 in India.
  • This scheme is restricted only to the EWS Category students.
  • Candidates are required to submit the income certificate to avail this scheme
  • Students who left the program mid steam will not get any benefit of this scheme.
  • The Interest Subsidy under this scheme will be available to the eligible students only once i.e. either for the first undergraduate degree course or the PG degree course in India.

FAQs

Q: What schemes does Federal Bank considers for its education loans?

Answer: There is one scheme offered by Federal Bank apart from the basic education loan.

It is CSIS Scheme. The central government interest subsidy scheme is for economically weaker sections.

Q: In whose name is the loan granted?

Answer: The loan is granted in the name of the student

Q: What is the age limit for availing loan in Federal Bank?

Answer: There is no restriction on age. Student must clear the other eligibility criteria’s stated by the bank for general education loan schemes. For Federal Career Solution Loan the age limit is minimum 18 years and maximum 45 years

Q: What does margin on any loan mean?

Answer: Margin amount is the amount that a borrower has to pay through his/ her own sources in form of a down payment as his/ her contribution towards the education.

Q: Where can I avail Federal Bank Education Loan?

Answer: You can either contact your nearest branch for the application form or details regarding the loan or apply online.

Q: Is there any provision to apply for loan online?

Answer: Yes, you can apply online through Vidyalakshmi portal to avail for this loan.

Q: Is there any minimum aggregate marks to meet the eligibility criteria to avail Federal Bank education loan?

Answer: Yes, a student must have secured a minimum aggregate of 50% marks in their last qualifying examination (10+2 or Graduation)

Q: What is the discount/ rebate offered by Federal bank?

Answer:

  • 0.50% concession is given to girl students
  • 1% concession if interest is serviced during moratorium period
  • 1% concession if you have secured admission to premier institutes

Q: What all is included in tangible collateral security?

Answer: Mostly Federal bank asks tangible security in lieu of the loan amount sanctioned along with assignment of future salaries in favour of Federal Bank. Tangible security includes documents related to land/ building/ government security/ public sector bonds/ units of UTI, NSC, Life insurance policy/ bank deposits/ shares or debentures.The value of the security should be equal to the education loan amount.

Q: Is scholarship or assistantship included in the margin?

Answer: Yes any scholarship or assistantship will be a part of margin charged on education loan.

Q: What is Moratorium Period?

Answer: Course Period plus one year, or six months after getting a job

Q: What is tenure of an education loan?

Answer: Tenure of education loan provided by Federal Bank is 7 years

Q: What does MCLR stands for?

Answer: MCLR stands for Marginal Cost of funds based Lending Rate. It refers to the minimum interest rate of bank below which it cannot lend.

Q: What all expenses are covered under this course?

Answer: Expenses covered by Federal Bank education loan are:

  • Tuition/ college/ hostel fee
  • Examination/ lab/ library fee
  • Books/ uniform/ instruments
  • Caution deposit
  • Passage money for studies abroad, etc.

Q: Will my travel expense will be covered if I take loan from Federal Bank?

Answer: Yes, travel expenses are covered under this loan

Q: I have taken admission through management quota. Am I eligible?

Answer: Yes, even if you have taken admission through management quota, you are eligible for education loan by Federal bank

Q: What do you mean by reputed or recognized institutes?

Answer: Institutes that are affiliated to state/ central universities and comes under UGC or AICTE are considered as recognized institutes. Reputed institutes are those which are well known and have standard course of repute. More often, banks provide the list of institutes they consider for loan. (You can contact nearest branch for the same)

Q: Are there any special benefits if I have secured admission to one of the top premier institutes?

Answer: Federal Bank provides 1% concession to students securing admission to top premier institutes  

Q: What is the processing fee or prepayment charges?

Answer: The education loan offered by Federal Bank does not carry any processing fee or any other charges

Q: What are the charges for late payment of EMI?

Answer: Federal Bank charges a penal interest @24% per annum, that is, @2% per month.

Q: Will cost of my computer be covered under the loan sanctioned?

Answer: Reasonable cost for the computer or laptop well be covered under the loan if it is required to complete the course. 

Q: Why is Pan Card necessary?

Answer: Pan Card is one of the mandatory document required by banks these days. It is mandatory because:

  • Easy to assess Income
  • Easy to trace borrowers

Q: Are diploma or certificate courses considered under Federal Bank education Loan (both for India and Abroad)?

Answer: Yes diploma or certificate courses are eligible under Federal Bank Education Loan. Regular degree or diploma courses like, shipping, pilot training, and aeronautical that are approved by Director General of Civil Aviation or Shipping

Q: Is a co-borrower necessary for loan?

Answer: Yes, it is mandatory to have a co-borrower to avail loan from Federal bank.

Q: Who can be my co-borrower?

Answer: Your parent/ spouse/ guardian can be a co-borrower. A co-borrower should be your immediate family member, should have a steady source of income, and a good credit history.

Q: What all documents are required from the co-borrower?

Answer: Documents required from the co-borrower are:

  • Attested copies of age proof, residence proof and birth date.
  • Self-attested passport size photograph
  • Income proof and/or copy of income tax return file
  • Details of collateral security along with government approved valuation certificate (if any).

Q: What is the KYC requirement in education loan?

Answer: KYC requirements are the documents as a proof of personal identification and residence proof of the applicant as well as the co-borrower.

Q: What are maximum term for repayment?

Answer: Maximum term for repayment is 7 years

Q: How can I repay the loan?

Answer: You can repay the loan after the moratorium period by mode of EMI or through post- dated cheques.

Q: What is EMI? How are they calculated?

Answer: EMI stands for Equated Monthly Installments. It can be calculated by using the formula given below

EMI = [P x R x (1+R) ^n] / [(1+R)^ n-1]

Here, P is Amount of Education Loan, R is Rate of Interest, n is Tenure of the Loan.

Or simply you can use the EMI calculator provision available on Federal Bank’s official website.

Q: Is the loan disbursed in name of individual applicant or to the institute/ university directly?

Answer: The loan is disbursed directly to the institute/ university that you have taken admission to. Hence, an applicant is supposed to submit institute brochure with proper division of the fee

Q: If I am unable to complete my course in given tenure, will my repayment term be extended?

Answer: It is completely on the banks discretion to extend the moratorium period or not. You can contact your nearest branch for the same.

Q: What is method of application of interest on education loan?

Answer: The interest will be charged at simple rate from the date of disbursement till commencement of repayment of loan. After that, compound interest is charged on reducing balance. 

Q: What is interest rate of education loan?

Answer: The interest rate is different for different category of Institutes. Refer the table below:

1. Federal Special Vidya Loan

Loan TypeLoan AmountInterest Rates
Special Vidya LoanUpto INR 4 Lacs13.25%
Above INR 4 Lacs14.75%
Special Vidya Loan Scheme for girl studentsUpto INR 4 Lacs12.75%
Above INR 4 Lacs14.25%

2. Fed Scholar Loan and Federal Career Solution Loan

For Girl StudentsOne Year MCLR + 1.70% to One Year MCLR + 6.10% - 0.50%
For Other StudentsOne Year MCLR + 1.70% to One Year MCLR + 6.10%

Q: What is interest subsidy on education loan?

Answer: Federal Bank offers CSIS Interest Subsidy Scheme initiated by government of India. The scheme is for Economically Weaker Sections (EWS) of the society, to promote education amongst them.

Q: What documents do I need to submit to avail interest subsidy scheme?

Answer: The documents that need to be submitted are:

  • Income certificate issued by authorised authorities
  • Bonafide student certificate
  • Letter of undertaking or declaration signed by borrower/ co-borrower

Q: If I am availing loan for overseas studies, can I also avail interest subsidy scheme?

Answer: No, the interest subsidy scheme is available only for studies applying for studies in India.

Q: What is employment verification in an education loan?

Answer: The bank takes the responsibility to cross verify all the employment details of the applicant and co-borrower. If the banks fails to cross verify every detail provided, it might reject the loan application.

Q: Are there any tax benefits in education loans?

Answer: Under Section 80E of Income Tax Act, loan borrowers can avail the tax benefits. This benefit is only available over and above INR 1,50,000. Tax benefits can be availed once the borrower starts paying interest on loan. The deduction is available until borrower pays off full interest amount on loan or for maximum of 8 years (whichever is earlier). You can visit the official website of Federal Bank to calculate your tax benefit through their tax benefit calculator.

Q: Is it necessary to have bank account with the bank while availing loan from that particular bank?

Answer: It is not necessary to have a bank account while availing the loan but it makes it easier for the borrower to get loan application approved.

Q: Can I repay my loan in foreign currency even if my bank is in India?

Answer: Yes, you can pay the amount in foreign currency (Euro, Pound, Dollar, etc.) The bank might charge an additional currency conversion fee as per RBI regulations.

Q: Why do banks require insurance policy as security?

Answer: The banks require insurance policy as security in lieu of education loan provided. The insurance policy should be equal or more to the amount of loan sanctioned. In case of untimely demise of the borrower, the bank recovers the amount from the insurance policy

Q: Are there any additional benefits on availing loan from Federal Bank?

Answer: There are no such additional benefits on availing loan from Federal Bank. Though, there are no processing or pre-payment charges applied by bank on education loan.

Q: What is credit score? Is it important for education loan?

Answer: Credit Score is inclusive of various factors such as credit history (Loan history or credit card). If a student does not have a credit score, banks calculate it by considering factors such as University, College and the Course of admission. Banks consider the academic background of student and credit history of co-borrower.

Q: Are NRIs eligible for the education loan?

Answer: NRIs are eligible for the loan if they have Indian citizenship and are Indian passport holder.

Q: Is Visa a necessary document for studying abroad?

Answer: Visa is needed as a document proof but it is not a sole requirement.

Q: What do all procedures one have to go through while applying for abroad?

Answer: A student who is applying for studying abroad have to give necessary documents required by the bank. One needs to have a thorough knowledge of the course they are applying for and in which institute as it can be asked on the airport by the foreign officials.

Q: If a student has any query, where or whom to contact?

Answer: The student can reach out to the nearest branch in case of any query.

Customer Care Number: 1800 - 425 1199/ 1800 - 420 - 1199

Customer Care Id: contact@federalbank.co.in