Taking an education loan is often necessary to fund higher studies, especially in India where quality education comes at a high price.
However, the process of getting approved for an education loan can be tedious and time-consuming. This article analyses the education loan processing time across major banks in India.
Overview of Education Loans in India
Education loans allow students to borrow money from banks or financial institutions to pay for higher education expenses, including:
- Tuition and other academic fees
- Cost of textbooks, stationery and equipment
- Living expenses like hostel fees, food costs etc.
- Travel expenses
- Any other expense related to the course of study
Banks offer education loans typically up to ₹10-20 lakhs for studies in India and ₹20-40 lakhs for overseas education. The repayment usually begins one year after completing the course or six months after getting a job, whichever is earlier.
Popular education loan options in India include:
- Vidya Lakshmi Portal – A government portal allowing students to apply for loans from multiple banks through a single application. It has reduced overall processing times.
- Loans from public sector banks like SBI, Punjab National Bank etc. These tend to have lower interest rates but longer processing times.
- Loans from private banks like ICICI, HDFC, Axis Bank etc. These can be costlier but may have faster approval.
Stage 1 – Submitting Documents and Application
The first step is to check eligibility criteria and required documents for the bank you are applying to. Then submit a filled application form along with documents like identity proof, residence proof, college admission letter etc.
This initial documentation and application stage itself can take:
- Public Sector Banks: 1 to 2 weeks Banks like SBI allow online document uploads to reduce visits to branches but still require physical document verification later.
- Private Banks: 4 to 7 days
Most private banks today provide end-to-end online application options without need for branch visits. - Vidya Lakshmi Portal: 7 to 10 days The portal reduces overall time but depends on individual bank’s processing speed once application is redirected.
Stage 2 – Personal Discussion and Due Diligence
Once basic documents are submitted, the bank conducts various due diligence steps before sanctioning the loan:
- Scrutiny of documents and details for accuracy
- Telephonic or in-person discussion with applicant to assess eligibility
- Evaluation of income sources, existing loans, credit history etc.
- Inspection and valuation of property if offered as collateral
- Processing the application through credit team as per the bank’s policies
The due diligence and personal discussion stage takes:
- Public Sector Banks: 15 days to 1 month
- Private Banks: 7 to 15 days
- NBFCs: 1 to 2 weeks
This is the most time-consuming stage with back-and-forth communication between bank and applicant. Faster processing is possible with transparent communication from the applicant’s end.
Stage 3 – Loan Sanction and Disbursal
Once due diligence is completed, the bank issues a loan sanction letter outlining key terms and conditions if your application is approved.
Finally, the loan amount sanctioned is disbursed into the applicant’s account or directly to the educational institution.
This final stage takes:
- Public Sector Banks: 2 to 3 weeks
- Private Banks: 1 to 2 weeks
- NBFCs and fintech firms: Less than 1 week
So in total, the entire education loan processing timeline ranges from:
- Public sector banks: 6 weeks to 2 months
- Private banks: 2 to 4 weeks
- NBFCs and fintech firms: 3 to 4 weeks
The timeline also depends on prompt document submission, transparency about existing loans, and proper communication from the applicant’s end.
During peak admission seasons, it may take longer for approval and disbursal across all lenders. Applying well in advance is advisable.
Major Banks and Their Timelines
Here is a comparison of some of the biggest public, private and NBFC players when it comes to education loans in India:
| Bank | Documents & Application | Due Diligence | Sanction & Disbursal | Total Time |
| State Bank of India | 1-2 weeks | 15-30 days | 15-21 days | 6-8 weeks |
| Punjab National Bank | 1-2 weeks | 15-30 days | 15-21 days | 6-8 weeks |
| Bank of Baroda | 1-2 weeks | 10-15 days | 7-10 days | 4-5 weeks |
| HDFC Credila | 3-7 days | 8-15 days | 7-15 days | 3-4 weeks |
| Avanse Financial Services | 4-7 days | 8-14 days | 3-7 days | 3-4 weeks |
| ICICI | 4-7 days | 10-15 days | 7-14 days | 3-4 weeks |
While public sector banks like SBI and PNB provide education loans at cheaper interest rates, their processing timelines are quite long. Private NBFCs and fintech players score higher when it comes to faster approvals.
Factors like your credit score, income stability, chosen course and university reputation also impact loan approval decisions across all lenders.
Tips to Get Faster Approval
You can optimize your chances of getting an education loan rapidly by following these tips:
- Begin the application procedure at least 2-3 months prior to course commencement, since approval can take 4-8 weeks. Apply via Vidya Lakshmi to save time.
- Opt for a higher parental co-applicant income as it improves eligibility. Add co-applicant for better terms if permitted.
- Avoid having too many existing loans or defaults as it indicates credit risk.
- Provide all required documents upfront to avoid back and forth.
- Select course and institution carefully based on approvability. Banks have internal whitelists.
- Maintain clear and prompt communication with bank executives during due diligence.
- Consider NBFCs or private fintech firms like Avanse, Credila etc rather than public banks for faster approvals.
Following these tips will help you secure an education loan in a shorter timeline without last minute hassles.
Frequently Asked Questions
Q1. How can I reduce the education loan processing time?
You can reduce processing time by applying 2-3 months in advance, providing all documents upfront, opting for higher family income, avoiding too many existing loans, selecting course and college carefully, and considering new-age fintech lenders over public sector banks.
Q2. Which bank offers the lowest interest rate on education loans?
Public sector banks like SBI, PNB and Bank of India generally offer lower interest rates of 8.25% to 9.25% on education loans compared to private banks. But they tend to have longer processing times.
Q3. Can I get an education loan with a bad or low CIBIL score?
It is difficult to get education loans with a substandard credit score below 750. Having past defaults or too many loans negatively impacts your chances. Improve your score before applying.
Q4. Is a collateral or security necessary for getting an education loan?
Most banks provide collateral-free loans up to ₹7.5 lakhs. For higher loan amounts, some form of security is required which can be property, FD, insurance or a guarantor’s security.
Q5. How much funds can I get via an education loan?
You can obtain funding up to ₹10 lakhs for domestic higher education and ₹20 lakhs for overseas education via loans. Higher loan amounts may be approved based on course reputation, future employability and co-applicant’s eligibility.
Conclusion
Getting an education loan in India can be a time-intensive journey, especially with public sector banks where it may take 6-8 weeks for end-to-end approval. Private banks and NBFCs can be faster with approvals in 3-4 weeks.
Applying well in advance, completing documentation accurately, opting for higher co-applicant income and choosing new-age fintech lenders can help reduce the processing timeline substantially. With the right strategy, you can ensure funding is secured on time for your higher education goals.
