Education Loan

What is an Education Loan?

Generally, student loans or education loans are advances provided by banks or financial institutions to assist students in paying their higher education expenses. Through this special loan Programme, students from the country who possess excellent academic credentials are offered financial assistance to study in renowned universities in India and abroad.

To assist students with their educational objectives, the Central Government facilitates Education Loan through 27 nationalized banks. Student loan documentation is kept to a minimum in order to facilitate quick loan disbursement without any delay.

One of India’s most valuable assets is its young population and their intellectual resources. Financial institutions provide student loans based on Government guidelines. Different banks have different eligibility requirements, interest rates, and repayment options. Students who have excellent academic records and do not have the financial means to continue their studies due to the financial circumstances of their family may apply for a loan. In the event of a loan approval, the financial institution guarantees the disbursement of the loan. However, you should prepare to study hard and work hard in order to repay the loan.

Applying for an Education Loan: Things to Consider

Due to the steep rise in education costs, educational loans have become an essential part of many people’s lives. Loans for education can be obtained by people who are interested in pursuing higher education. These are particularly useful if you plan to take expensive courses at a premier institution. Parents can send their children to higher education institutions with education loans. Additionally, the students can pay for their own education by repaying the education loan. Students can pay back the loans with the wages they receive from their jobs. The problem with student loans is that they can become a significant burden if not handled properly. The tips below can help you manage your loans and your further studies with ease.

Select your Course wisely:

You should not take out a personal loan for education just to go abroad. Choose a career that interests you, then turn it into a profession. The most important thing is to choose something you will excel at, regardless of what the world is doing. A student may not keep up if forced to study computers. They may not be interested. The same student could have become a great doctor if he had been interested in a medical career, leading to a wonderful career and life. Researching your passion is a good way to determine a course of study you want to pursue. Upon the completion of your course, consider what career options you have and whether you might be able to find a job. To decide all of these things, a lot of research is needed. You will not be disappointed if you do your homework properly.

Be careful when choosing your institution:

Getting to know the institution before you apply for a course is of the utmost importance. It may be the case that some universities have a good reputation but lack a sound placement strategy. Applying for courses abroad requires choosing the right institution. In many instances, students were asked to leave the country or were denied permission to fly to the United States. According to them, the reason for this was the fact that the university they selected was being investigated or blacklisted. Avoid choosing a university from a list of blacklisted universities to save time and money. They are under scrutiny because they admit students without academic qualifications to make money from their high tuition fees.

Self-application or taking the help of an overseas consultancy:

 The process of applying on your own is complex. There are a lot of steps you need to follow. In addition, you will also have to do extensive research and apply for a loan to various colleges yourself. You will have to approach the bank by yourself and find out what kind of loans you qualify for. There is no need to worry about details if you choose to go through a consultancy company. They will handle a lot of the details for you and assist you. Whatever option you choose, please make sure you take the time to learn about the laws and requirements of the country you are considering for higher studies. Every detail is researched by a wise student, including how able the professors are, the reputation of the institution, course details, the loan amount and its terms & conditions, placement after the completion of the course, etc.

Selecting the right Bank:

There are several banks in India and abroad that offer educational loans for a variety of courses. Choose a bank with a reasonable moratorium period, an attractive interest rate, and a reasonable repayment amount. Furthermore, ensure you’ll be able to pay the loan off early if you decide to do so. The best bank is the one that gives the best loan terms, not the one that offers the best financing. Moreover, you should also check if you can make part payments towards the loan or if you can pay EMIs in advance. It would be prudent to find out all the charges associated with the loan you intend to take out. There might be a fee associated with prepayments and part-payments. You need to find out about these things in advance before getting the loan amount in your account.

Make sure you know these essentials:

Irrespective of whether you study in India or abroad, you should know the details of your further studies and your loans. It is necessary to obtain a VISA to enter another country, but it does not give you access to everything in that country. There may be a need for you to undergo an airport interview. This interview will determine the purpose of your trip and how you intend to enter the country. Students should prepare to answer any questions officials may ask once they get to the host country. Questions may relate to the course, the institution, the professors, the cost of the course, the amount of the loan, the repayment schedule, the interest rates, etc. You should also know your own personal details and the details of your family, such as date of birth, residence, professional qualifications, employment, etc. Prepare yourself and answer the questions honestly and confidently.

Decide your loan duration wisely:

It can be tempting for some people to take out a loan for a longer duration, as this would mean a lower EMI. But the total cost of this loan and the amount paid in the form of interest will be much higher in this case. Taking a look at the below-given image, you can see that the loan taken for a longer period of time attracts a higher amount of interest, thus ultimately becoming more costly. On top of that, you can also check this calculation with the help of the EMI calculator on this website as well. As such, you may opt for a shorter loan tenure if you have a good chance of finding a well-paying job upon completing the course. Even though the EMI will be higher, your loan will still be cheaper, and you will also be able to repay it more rapidly.

Take advantage of the Moratorium period:

This is a period of time which is usually one year after the completion of the course, or six months after becoming employed, plus the course duration. We technically call this period the Moratorium period. You do not require to make any payments during this period on your loan. Your loan will accrue interest throughout this period. However, if you want can pay off the interest during this moratorium period. As a result of this, you will reduce the burden of the loan and the cost of the loan when it comes time to actually start paying your EMIs.

Get the loan amount at the time of paying the fees:

As a matter of fact, banks charge interest on the money they disburse. Generally, you have to pay for the course every semester or yearly, depending on the length of the course. As a wiser move, the bank should disburse the loan amount to you in installments. Make sure the bank will disburse the money when you will be paying your fees. If it happens this way, the accumulated interest will be drastically reduced. If you are applying for a loan, it is important to make it very clear to the bank that you will be taking the amount as per your requirement rather than one lump sum amount at the outset.

Planning for repaying the loan:

It is extremely important to make a sound financial plan when you have a loan in your name. It is important to strategize so that you are able to repay the loan once you start earning. Paying back your loan within a short duration means cutting back on the least essential things and focusing on repaying the loan as soon as you possibly can. In the long run, loans become burdensome, and therefore it would be best to settle your debts before it becomes too late for you. You need to make part of the loan payment from extra money or bonuses in order to put a dent in your loan. You will save a lot of money on interest by paying parts of the loan at times.

Tax advantage on interest:

According to Section 80E of the Income Tax Act of 1961, you can take advantage of tax benefits for the interest you pay on your educational loan. To receive a deduction under this category, you must obtain your loan from a scheduled bank or an authorized institution. Generally, you may claim tax deductions only for the first assessment year and the seven following years or until you have repaid all the interest components, whichever comes first. Consequently, the maximum tax deduction period will therefore be eight years. In view of this, the decision for a longer loan would mean that you will receive the tax benefit for only the first eight years of the loan.

Defaults due to genuine reasons are acceptable:

In the event that you are unable to land a job for genuine reasons, your bank will understand the situation. In an exceptional and true case, banks may extend your repayments or moratorium period, even if it is hard to convince them. If you are unable to complete your course on time for any reason outside of your control, the bank may extend your repayment period. Banking institutions will only consider alternative options in rare and exceptional circumstances. Always make sure you repay your educational loan on time. A failure to comply with this provision will prevent you and your co-borrower from receiving credit in the future. In the event you cannot repay the loan, the collateral you offered will also be at risk. Therefore, you need to research and plan properly before taking out a loan in order to be able to return it.

Concluding Thoughts:

As a final tip, if you are preparing to study further, make sure to have a clear plan in view, but with scope for some flexibility in your schedule. Having a fool-proof plan is not possible because the world can surprise us with many curveballs along the way. In order to make the right decision, you must first know the implications of taking out a loan to fund your education. You should also prepare yourself to cope with both the positive and negative consequences. In this way, you can manage your educational loan without much stress and pay it back without much trouble.

Key Takeaways:

1. The purpose of an education loan is to finance post-secondary education or higher education expenses.

2. The goal of education loans is to help the borrower pay for tuition, books, and supplies while pursuing a higher education degree.

3. Students often postpone payments while in college, and, depending on the lender, sometimes the deferment continues for six months after earning a degree.

4. Even though education loans come in many varieties, there are generally two basic types. Loans from public banks and loans from private banks or individuals.

Frequently Asked Questions (FAQ’s) – Education Loan

The eligibility for education loans is dependent on the academic excellence and achievements of the students since these loans are offered to brilliant students who cannot afford to pay for their higher education. As such, applicants' eligibility will be evaluated based on their academic success as reflected in their prior exam results.Listed below are the essential criteria for eligibility for an education loan that the applicants must meet in order to be approved for the loan:a.)A candidate applying for a loan must be an Indian citizen. b.)A student must have been admitted to a recognized educational institution in India or abroad.c.)The age of the applicant must fall within the range of 18 to 35 years at the time of loan application.d.)He/she must be enrolled in a graduate/postgraduate degree program or a PG diploma program.e.)The applicant must have been admitted into a college or university that is accredited by UGC/AICTE/Govt.f.)Student applicants who wish to take full-time courses must have a co-applicant who can be either a parent/guardian or a spouse/parent-in-law (in the case of married candidates).
The age of the applicant must fall within the range of 18 to 35 years at the time of loan application.
An educational loan application is evaluated by banks based on the following factors:Student's academic background: The bank studies the student's marks, credits, and achievements.Course: Banks examine the course that an applicant wishes to pursue as well. The bank checks whether the course applied for by the applicant is eligible for loan or not.Institution: Banks are also concerned with the institution to which the applicant has applied. The accreditation and reputation of these institutions are of great significance.Secured lending: The capability of the borrower to provide collateral for the loan. The type and value of collateral will both be taken into consideration by the bank.Co-borrowers: The co-borrower or guarantor of the loan is either a parent, guardian, or another party that is acceptable to the lender. In addition, they will review the work history and credibility of the co-borrower.
Domestic Education Loan: This type of loan is available to students who wish to study in India. In order to obtain the loan, the applicant must be accepted by an Indian educational institution and meet all other eligibility requirements.Overseas Education Loan: This type of loan assists students in realizing their dream of attending a foreign institution to pursue their course of study. Students who desire to study abroad may receive a loan for their airfare, accommodations, and tuition fees, provided that they meet the eligibility requirements.Undergraduate Loans: The purpose of these types of Education Loans is to provide financial assistance to students so that they can complete their undergraduate degrees. Undergraduate degree programs are typically three to four years in length and are usually divided into a number of specializations. Individuals with an undergraduate degree are more likely to find decent jobs and to begin earning.Postgraduate Loans: Students often wish to continue their education with a postgraduate program, usually a two-year program in India. A graduate degree in the field of interest will enable you to gain more in-depth knowledge.Career Development Loans: Several professionals who have worked in corporate jobs for a number of years prefer to pause their careers to pursue courses that will enhance their employment prospects. These individuals would strive hard to gain admission to reputed business and technical schools in order to develop their skills and achieve greater success in their lives.
This also depends on the Bank. When you receive your application form, the bank will provide you with the document checklist. Documents that are frequently requested are:a.)Proof of your admission to the course or scholarship.b.)Fees and expenses schedule.c.)Your last qualification certificate and mark sheet.d.)Photographs that are passport-size.e.)Bank statements from the last six to twelve months; income tax returns from previous years.f.)Documents relating to evidence of income, assets, and liabilities.g.)A proof of identity is required if you do not have a bank account.
The maximum amount of educational loans that can be obtained without collateral is 4 lakhs. A maximum of 15 lakhs can be obtained under the Education Loan scheme for studies in India, and up to 25 lakhs for studies abroad. Each of these higher amount loans is accompanied by a collateral or guarantor as security.
Repayment of the loan is the responsibility of the student. Most of the time, repayment begins after the student completes the course. A few banks even offer an extension of six months or one year after securing a job or completing studies for the purpose of repayment.Generally, repayment terms range between five and seven years, but they can be extended beyond that as well. During the course period, the bank charges a simple interest rate on the loan. By paying simple interest during the course duration, the student is less likely to have to make a large amount of equated monthly instalment payments (EMIs) in the future.
In the absence of a bank in your village, you may contact a bank in your nearest town or city to obtain a loan.
Yes, it is possible to find out. Whenever your application is denied by the bank, they will provide a valid reason for their decision. In the event that they do not provide any reason, you may petition the government for information under the Right to Information Act (RTI).
The majority of banks prefer not to give loans for part-time or correspondence studies, but it ultimately depends on the bank's discretion and your relationship with the bank. Considering that eligibility criteria are relaxed for these types of courses, the likelihood of finding a good job after completing such courses is generally low, and the applicant would already be employed, banks tend not to finance these types of courses. Although there are still some banks or financial institutions that offer loans for students enrolled in part-time and correspondence courses.
You should inform the bank immediately if you discontinue your studies for any reason. In this instance, the bank will cease funding and will withdraw the remaining amount that was disbursed for the purpose of Education Loan. The funds that you would have spent during your course must still be repaid to the bank. Otherwise, the bank will recover this from the collateral security that you would have pledged at the time of your loan application. If you cannot secure a job within the grace period, you should contact your bank. They may be able to assist you in extending the grace period.
Yes, you can get an Education Loan. Educational loans are granted based on your academic performance. It is your responsibility to ensure that the loan is repaid in a timely manner.An educational loan scheme aims to provide financial assistance on reasonable terms to poor and needy people in order to gain access to basic education. The scheme offers merit-based scholarships to students desiring to pursue higher education. The main objective is to ensure that no deserving student is prevented from pursuing higher education due to a lack of finances.
When you wish to repay the Education Loan in full, most of the banks do not charge you any prepayment penalties. To be certain you will not be charged a penalty in the future, it is best to check with your bank while applying for the loan. Depending on the bank, you may be able to repay after six to twelve months following completion of the course or upon finding employment.
Yes, you are welcome to do so. There may be a refinance fee of 1% for your outstanding balance with your current bank. If the second bank offers you 1% less than your current bank, you do not gain anything. Therefore, you ought to carefully calculate the benefits of transferring your loan.
If you wish, you can try for both. In the event that you are awarded a scholarship for your entire study program, it would be excellent. A scholarship can sometimes be a one-time payment of a small amount which may not be adequate to cover all of your course expenses. Nevertheless, you can still use the scholarship for your studies. Many institutions, charitable organizations, foundations, trusts, NGOs, as well as State and Central governments offer scholarships to students these days. You are not limited to applying for one scholarship at a time. You are free to apply for all the scholarships you are eligible for.
Consider your decision carefully before taking out an Education Loan. A loan is not a simple thing, and it does not come for free. If you are given a loan by the bank, they will make sure that they will recover their funds from you. Unless there is an underlying reason for your failure to pay, the bank will not leave you. Thus, you should ask yourself if you have a passion for the course and whether you wish to be employed in a field related to your chosen course. As a student, you should be confident in your ability to complete the course, to obtain a job related to your studies, and to repay the loan. Do not borrow if you are uncertain. This will create a burden for you, as well as for your family and property.
Education Loans are unsecured loans that may be used to pay for educational expenses, such as tuition fees, books, living expenses, and other expenses, such as transportation costs.
Generally, banks and non-bank financial institutions do not charge processing fees for Education Loans. Nevertheless, some lenders may charge 1% or an upfront fee depending on the type of loan obtained.
A simple interest rate is charged and held in a separate account until the course is completed. A student has the option of repaying the interest or not repaying it until the course is completed. Once the grace period has expired, the interest will be transferred and credited to the principal of the loan and from that point forward the interest will be compounded.
A number of banks maintain a list of institutions they work with. The loans will be easier to obtain for you if you join those institutions, and some institutions will have ties with banks. The details can be obtained from your organization or and the bank as well.
By taking out an Education Loan, you can reduce your family's financial burden without having to liquidate your fixed deposits, mutual funds or bonds. In addition, the interest on an Education Loan is eligible for a tax rebate under Section 80 E of the Income Tax Act 1961.
A deduction is provided under Section 80E for the interest paid on an Education Loan that has been taken and that is being repaid, but only for the interest portion of the EMI. No tax benefit is provided for the principal part of the EMI. The amount that may be deducted is the total interest part of the EMI paid during the existing financial year. There is no maximum limit to the amount that may be deducted. However, you must obtain a certificate from your financial institution or bank. Your certificate should present a breakdown of the principal and interest portion of the Education Loan you have paid during the financial year. The interest portion will be considered as a deduction. The principal repayment is not eligible for a tax benefit. The deduction for interest on a loan begins in the year in which the loan is repaid. You are only permitted to utilize it for 8 years beginning with the year in which you start repaying the loan or until all interest is repaid, whichever occurs first. As a result, if the loan has been repaid in 5 years only, then the tax deduction will only be available for 5 years and not 8. If you have a loan that lasts longer than eight years, you may not be able to deduct the interest paid beyond this period. Therefore, it is always advisable that an Education Loan be repaid within eight years from the date of borrowing.
An Education Loan will generally be approved based on factors such as the Parent's income, the candidate's educational history, and the occupation prospects of the course being pursued. In addition, collateral securities are also taken into account. Thus, one may borrow as many loans as there are eligible students in the family, but the amount borrowed and the repayment capacity of the co-borrower (usually one of the parents) are of primary importance.
Definitely. To ensure that your loan is covered, some banks require that you purchase a one-time payable insurance policy. In the event the bank is unable to recover the money from you or your family, the insurance company will cover the loan amount.
Payment of college fees is made directly to the college or institution. Students are required to submit a form with details of their expenses each year, and the funds will be sent to the college/institution based on the information provided in the form. The fees for foreign institutions are paid in the respective currencies, and the remittance charge is usually borne by the students themselves.
Bank

BANK

CAR LOAN

BUSINESS LOAN

PERSONAL LOAN

EDUCATION LOAN

GOLD LOAN

WEDDING LOAN

MEDICAL LOAN

TRAVEL LOAN

LOAN APPS

1.) You can explore more products related to various types of loans on my website:
https://loanofferhelp.com/

2.) You might also like to explore some other products related to bank and finance here:
https://bankmoneyguru.com/