How to get an Education Loan?
For every kid, high-quality education is essential. However, rising college costs make it more challenging for all kids to afford a good education. Education is becoming more and more expensive, both in India specifically and globally in general.
Here are the two main characteristics of an education loan:
- You are qualified for income tax benefits under section 80 after taking out the loan (E).
- You will receive a student loan with a reduced interest rate if you are a female student.
Education Loan :-
The cost of education in India can range from Rs. 5 lakhs to Rs. 12 lakhs for undergraduate programs. Tuition for medical programs at private colleges in India can reach Rs. 50 lakh. The cost of attending a business school in India surpasses Rs. Studying abroad raises the cost of education. Due to the high-interest rate, borrowing money occasionally may result in large costs. The following is a general summary of how to get the best student loan.
For undergraduate programs, the price of education in India can range from Rs. 5 lakhs to Rs. 12 lakhs. In private colleges in India, tuition for medical programs can rise to Rs. 50 lakh. In India, tuition for business schools exceeds Rs. 10 lacks. Higher education is achieved. Occasionally, getting a loan can be expensive as the rate of interest is high. We have given below a brief on how to get the right education loan for you.
- Education Loan versus Personal Loan It may seem like the best course of action to take out a personal loan for further schooling. However, you will pay more if you take out a personal loan with a high-interest rate. Students who want to pay for their education can take out an education loan, which offers a variety of advantages and conveniences.
- Comprehensive Educational Loan Scheme: Government of India In collaboration with the Reserve Bank of India and the Indian Banker’s Association (IBA), the Indian Government has created a Comprehensive Educational Loan Scheme (RBI). The program includes all types of courses offered in universities and colleges in India and overseas.
Education Loan Eligibility
|Age||Minimum- 18 years Maximum- 35 years|
|Academic record||Proven- good|
|Qualification||Pursuing graduate/postgraduate degree or a PG diploma.|
|University Applied to||Recognized – In India/Abroad|
|Security||Tangible collateral or guarantor- depending on the loan amount and income source.|
|Minimum Interest Rate||8.40% p.a.|
Amount That can be Availed as Education Loan
The course tuition and any additional costs, such as those for books, lodging, transportation, and equipment, are covered by an education loan. The cost of the course and your family’s combined income will determine how much of a loan you are qualified for.
Who can get an Education Loan
With the parents or guardians as co-applicants, any student is eligible to apply for an education loan. One year after you finish your study, or within six months of finding employment after your course, whichever comes first, you must begin making payments on your student loan.
Documents Required to Apply for an Education Loan
- All the required Know Your Customers (KYC) , like address proof and identity proof.
- Your college admission letter.
- The fee structure of your course.
- Income documents like salary slips, bank statements, and Income Tax (IT) returns.
A pre-admission sanction of an education loan can be availed if you need to study at a foreign university.
Margin Percentage of an Education Loan
A loan for higher education up to Rs. 4 lakhs will not need a margin. However, there is a margin of 5% that is applicable for higher education in India for education loans beyond Rs. 4 lakhs. 15% is the margin percentage for international studies.
Guarantee or Collateral for an Education Loan
The bank can require collateral or even a third-party guarantee, depending on the size of your loan. Collateral may be insurance coverage issued in the bank’s favor. The entirety of your student loan debt may be subtracted from the cost of your insurance.
Benefits of Education Loans
- Applicable for all: Anyone who wishes to pursue education may apply for an education loan. Under government-sponsored subsidy programs like the “Central Scheme to Provide Interest Subsidy,” even the economically disadvantaged segments of society are eligible to borrow money for schooling (CSIS).
- Applicable for all courses: Any type of course, whether for graduation, post-graduation, a diploma, or a vocational degree, may be pursued with an education loan, whether at an Indian university or abroad.
- Easily available: Education loans are widely and easily available. In fact, they are a priority product in all banks as per the RBI’s guidelines.
- Varied loan amounts: For students who wish to study in India, banks may grant loans ranging from Rs. 2 lacks to Rs. 22 lakhs. Of course, the loan’s size is determined by the course being applied for. The loan amount can reach Rs. 20 lakhs if you want to study overseas.
- Helps in the completion of education: With inflation and fluctuating costs, the cost of schooling is rising. Education loans become crucial to avoid academic obstacles.
- Benefits: Additional perks offered by education loans include caution deposits, library fees, building deposits, laboratory fees, tuition, examination fees, hostel fees, funds for the purchase of books, instruments, and uniforms, as well as money for travel costs associated with studying abroad.
The low-interest rate for female students: Loans are provided at a lower interest rate for female students.
- Easy repayment: Another fantastic benefit of student loans is that they don’t have to be paid back in full right away. After the course is over, the repayment period may last for up to five to seven years. This makes repaying simple.
Conditions to apply for education loans in India
When applying for a loan, a few fundamental conditions must be met. The following are these circumstances:
- The cost of the course to be taken and the applicant’s annual family income is the primary deciding factors.
- There must be a co-applicant, who may be a parent, sibling, spouse, or other relative.
- A guarantor or security is not needed for loans under Rs. 4 lakh.
- A third-party guarantee is required for loans exceeding Rs. 4 lakh.
- Collateral is required for loans that are worth more than Rs. 7.5 lakh.
- A student who wants to study abroad must additionally hunt for sponsorship or part-time jobs because the loan amount alone is insufficient.
- Insurance is required for international students.
Repayment of loans
- The payback process should begin right away when the course is completed, although it can be delayed for an additional five to seven years.
- In the event of non-repayment, both the student’s personal credit history and the credit history of his co-applicant are impacted.
Interest rates of education loan
Banks in India set different interest rates for student loans. However, it can range from 12.00% to 16.00%, depending on the bank’s base lending rate and other variables, of course. According to instructions from the RBI, the benchmark lending rate for Indian banks is between 9 and 10%.
How To Apply For An Education Loan From the Government
A website for students looking for student loans is called the Vidya Lakshmi Portal. Students can access information and submit applications for government scholarships and student loans through its single-window web platform. It provides information on the following:
- Programs from several banks for student loans.
- Common forms for students to apply for college loans.
- Applying for student loans from various banks.
- Link to the National Scholarship Portal for details and to apply for loans.
The candidate must create a Vidya Lakshmi Portal account, log in, and then finish filling out the Common Education Loan Application Form (CELAF) by providing all necessary data. Through a single form, students can submit applications for student loans from numerous banks and program banks and programs through a single form. All banks accept this form, which is specified by the Indian Banks Association (IBA). The Vidya Lakshmi Portal offers it. The applicant can search for an educational loan and APPLY after completing the form, according to his or her needs, eligibility, and convenience.
Essential tips before applying for an education loan
- Before choosing an education loan, you should carefully assess your family’s financial resources and obligations.
- Before selecting the most advantageous bank, you should thoroughly review and comprehend the requirements for applying to various banks.
- Once you’ve decided on the bank, be sure to read all the criteria and checklists on the loan application form because there may be additional fees that aren’t disclosed.
- You want to pick a bank that offers the option of extending the repayment period in case of delay due to unforeseeable situations.
- Students from the economically underprivileged sections of society should choose government-controlled banks since they provide advantages in the form of student interest subsidies.
- At the start of each semester, the loan amount is often disbursed directly to the institution where you wish to apply. Therefore, it must include all of the advantages and services provided so that you do not have to pay any more fees.