Education loan is an answer to headaches caused by fees and fee structures to at least some of us who wish to pursue higher education in good colleges and universities but are not sure whether we can afford it or not. Sometimes, some of the best colleges come with the highest fee structures, and it might be tough for aspiring students to find the right financial backup. This is where education loans come into the picture, lending money to students so that they can complete their education and then, after getting a job, pay it back. In this article, you can read all the basic details about the education loan procedure in India.
Basics of Education Loan
- A basic education loan covers the course fees, accommodation fees, exam fees, and other miscellaneous fees of a student.
- Education loans are offered to students who want to pursue higher education in India or overseas. The loans given would differ based on the bank and the choice of the institution of the student for higher studies.
- The student is the one who has to take a loan, but a parent or sibling can be the co-applicant for the loan.
- A loan can be offered to any type of course- full-time, part-time, graduation, or post-graduation courses, in any field of study.
Eligibility Criteria
- The applicant should be an Indian citizen who has already been admitted into a university or college that has been recognized by authorities in India or abroad.
- Some banks do offer loans even before admission is secured.
- The Reserve Bank of India does not put forward any age limit for applying for the scholarships, but other banks can.
Documents Required
The documents required for availing of the education loan are as follows:
- Offer letter of the institution where the candidate has secured admission and the course fee structure.
- Marksheets of class 10th and 12th.
- Income documents of guardians or co-applicants.
Loans and Repayment
- For a loan of upto Rs. 4 lakh, no collaterals are required by banks. For loans of more than Rs. 7.5 lakh, collaterals or third party guarantee is required.
- Banks can give 100% of the required loan depending on the amount asked for.
- For studying in India, the candidate has to finance 5% of the required money and 15% if he/she wishes to study abroad.
- The amount is directly paid out to the college/ university by the bank once the loan application is passed.
- Simple interest is added onto the loans for repayment.
- The interests rate differ according to banks, but generally falls between 6% and 9%.
- The repayment starts when the course is completed, though some banks give the extension of upto 1 year for the students to secure a job.
- The period of repayment is generally as long as 5 to 7 years.
Hence, educational loans prove to be very important when it comes to higher education in prestigious colleges and universities where the tuition fee is higher than expected. Especially when it comes to studying abroad, students from India generally rely on educational loans since the tuition fee and cost of living in foreign countries are generally higher. Hope this article was of help to you in getting to know the basic details about educational loans. We wish you all the best in all your future endeavors.
