To secure a reputable job, sound educational qualification is a prerequisite. In order to give children a comfortable and secure life, parents strive hard to give rich quality education. Many fail due to the lack of funds to support their child’s education. We are all aware that education today has become a costly affair. However, the problem of shortage of funds has a solution.
Education loans have always been there to help but not many people are aware of its benefits and the process to avail it. Before that,
What is an education loan:
It is a loan taken by students from banks or other financial institutions. Through this loan, students complete their educational qualification without any financial barriers. An education loan usually covers the admission/course fee, accommodation (if it is distance studying), exam and miscellaneous charges. An education loan can be taken for full-time as well as part-time courses, vocational courses, bachelor’s and master’s courses in the fields of management, engineering, architecture, medical, MBA, etc.
Before you proceed to apply for an education loan, you must unfailingly consider the following:
Eligibility Criteria: To apply for an education loan, one must fulfil the required criteria. To apply for a loan:
- A student must be a citizen of the country from where he/she is willing to apply for the loan,
- The student needs to complete higher secondary level schooling if planning to study abroad,
- The student must be accepted or granted admission to a college/university. In rare cases, however, some banks offer loan even before getting admission into a college.
- A student must have a co-borrower; it should mainly be any one parent, or a family member or guardian having sufficient financial capability. As many students applying for an education loan might not have a source of income, banks will always demand a co-borrower.
- The student/applicant must provide proper documents for verification purpose like board examination mark sheets, letter of admission from the college/university, PAN card, bank account statements, photographs, etc.
The amount given in the form of a loan differs from bank to bank. The maximum loan amount granted is generally 15 lakh if studying in India itself, and 20 lakh if going abroad to study. If the amount of loan is above 7.5 lakh, the bank will ask the applicant to provide collateral in order to approve the loan. Before applying for the loan, the applicant must also make sure to understand how and in what way the interest rate is charged on the loan. Interest loan is subjected to changes depending on the financial market fluctuations. Remember, the interest rate charged by every bank is different.
The time given to repay the loan is somewhere between five to fifteen years but depends highly on the bank’s policies. The applicants/students are usually expected to repay the loan amount after the completion of the course/education. Thus, the bank can extend the tenure of repayment up to six months or one-year considering aspects like employment.
Students must always look out for good banks known for providing efficient services. A little research and background study about loans and the banks can be helpful in taking the right call. With the education industry flourishing, availing an education loan has become relatively easy than earlier.