A Few Things To Know Before You Take An Educational Loan

The level of education must be high to ensure a thriving student life. However, the increase in college fees year after year makes it difficult for students to have a quality education. Education in India, especially in renowned educational institutions, is quite expensive. The high cost of attending these institutions often makes it impossible for students to study there even if they are qualified for admission purely on merit. The price of education in India is high, but it is even higher abroad. Furthermore, the fees in private colleges are always higher than the fees in public colleges. Students can always take out instant loans in such circumstances.

A student or an education loan is a financial loan granted by a bank or other financial institution to help students finance their higher education expenses. Talented students of a country with good educational qualifications are given financial assistance to study in prominent institutes within India and abroad under this particular loan scheme.

Many banks provide student loans to qualified applicants at a low-interest rate with flexible terms and conditions. Additionally, unlike loans for business, the documentation process is kept to a minimum so that students can receive their loan funds on time.

Is an education loan better than personal loans?

Many students and parents might feel that taking a personal loan for higher education is beneficial. However, this is not true, as you take a personal loan at a higher interest rate and pay more. Instead, an education loan comes with several benefits and conveniences and is specially meant for education that serves the student’s purpose.

How much money can you avail of in an education loan?

An education loan covers your course fees and any charges related to the education like your study material, accommodation, travel, and equipment expenses. The amount of loan you can take will be based on the course fee and your family’s total income.

Who can avail of an education loan?

With co-applicants being guardians or parents, any student can obtain an education loan. And the education loan repayment usually starts after a year of completing your course or within six months of getting a job after your course completion, whichever is earlier.

What documents do you require to apply for a student loan?

  • All the required KYC documents, like your address and identity proof.
  • Your college admission letter.
  • Your courses fee structure.
  • Your income documents like salary slips, bank statements, and Income Tax returns.

You can avail of a pre-admission sanction of an education loan if you need to study at a foreign university.

Do you need a guarantee or collateral for an education loan

Your bank might ask for third-party security or even collateral, which is based on your loan’s value. The collateral can be in an insurance policy that favors the bank. The sum of your policy can be included in the education loan amount.

Two key things to note while taking an education loan in India:

  • After you have availed of the loan, you are eligible for IT benefit under section 80(E).
  • Girl students get concessional interest rates for education loans.