November 26, 2020

Education Loans In India – Everything you need to know about education loan

Quality education is absolutely necessary for a successful life. Many people have opted for the best institutions to get the right education. As the demand increases for quality education, the cost of studying has been on elevating on a greater scale. Even though we keep ranting about the institutions becoming commercialized on offering education service the parents want the kids to learn in a sophisticated environment. Hence, the rate of people opting to do higher studies is low. It is because of the money that they have to put in to get into a reputed college, and not all can afford it.  

Knowing the importance of education, the banks have brought forth a lot of education loan possibilities, so that everyone gets a fair chance of opportunities. Getting an education loan in India is simple, but a long process. It requires a lot of documentation and other terms that have to meet before approval of an education loan.

Here are a few things that you need to know about applying for an education loan in India

Eligibility:

Any student applying for an education loan should have completed their board exams.

If you are a student applying for higher studies, then you must have completed yours under graduation course from any of the reputed institution. The institution must have been approved from a government entity of the education board of India.

At times bank looks at the college or institution you have applied for.  It also adds the value of the course you choose. All these become an essential factor for the loan to get approved.

Documentation required:

  •   Letter of admission
  •   A detailed break-up of the costs of the course
  •   Completed loan application form and photographs
  •   KYC (Know Your Customer) document
  •   Mark sheets/passing certificates of S.S.C., H.S.C., degree courses
  •   P.A.N. Card of the student and parent/ guardian
  •   Aadhaar Card of the student and parent/guardian
  •   Proof of identity 
  •   Proof of residence 
  •   Student/Co-borrower/ guarantor’s last six months bank account statement
  •   I.T. return/I.T. assessment order of previous two years of parent/guardian/ other co-borrower (if I.T. Payee)
  •   A brief statement of assets & liabilities of parent/guardian/other co-borrower
  •   Proof of income 2 Passport size pictures

Bank interest policies:

Every bank has interest rates similar to one another; they do not differ by a lot. 

Banks have a different rate of interest for different valuation of the loan amount. And there is a cap on the maximum amount of loan that can be sanctioned for a person. And the banks expect the student to pay the loan back only after the completion of the course. 

There will also be guardians who will be the co-applicant for the loan. They are deemed reliable for the loan if the student fails to pay the loan back on time.

Types of education loan:

There are two types of education loan one being an education loan with collateral, and the other is an education loan without any guarantee,

Education loan with collateral is where you pledge a document or any other property for your loan. In education loan, without any collateral, you will need a person to hold reliable for your loan. The amount than can be sanctioned for both loan types is decided by the value of the collateral or the value of the surety. 

Holiday period:

There is something called a holiday period that comes with every education loan. The bank gives a period of 6 months to one year after the completion of the course before the student has to start repaying his loan. During this period, the student is expected to search for a job and settle down for paying the loan amount.

Conventionally, these loans used to cover only the tuition fee of the student. But in recent times they cover a lot more than just tuition fee: this includes 100% of the fee, accommodation charges, book, and library fee. A Laptop, and travel fee if the student is also covered if he/she is flying abroad for these studies.

There are a lot of banks that give education loan for students, but it is advisable to go to some well-known banks over any other. It is also recommended to check with different banks before taking a loan to make sure you get the maximum benefits with less interest rate for your loan.

image source-DNA India