Education is both an investment in one’s future job and a requirement for living a successful life. However, as a result of inflation, both in India and abroad, education has become more expensive. While studying overseas might cost as little as Rs 25 Lakhs, quality education in India can cost anything from Rs 5 Lakhs to 30 Lakhs.
Making the choice to use their funds or obtain an education loan for their children can be challenging for parents. It can be a simple decision for a minority of people to withdraw money from some of their investments. However, the majority of us must use our retirement accounts, sell assets like gold or real estate, take out loans from friends and family, and other measures. However, there is no better option than taking out an education loan if you want to keep leading a proud life and avoid making any lifestyle compromises.
What is an education loan?
- All costs associated with studying throughout a course are covered by an education loan. For instance, it typically covers expenses such as those for entrance, tuition, housing, libraries, books, laptops, and travel (if you’re studying abroad), among others.
- A parent, guardian, or guarantor may submit an application for an education loan to a bank or other financial institution on behalf of a student. The primary applicant is a student, while the co-applicant is a parent.
- After the course is over, the student must pay back the debt. Banks and other financial institutions typically give students six months after the course is over to begin making EMI payments. It is known as a moratorium period during this excused term of EMI payment.
- Banks and other financial institutions impose simple interest on students and parents/guardians during the study/course term. Additionally, a student is responsible for loan repayment once the six to twelve-month grace period has passed.
The cost involved in an education loan?
- Interest rates on school loans can range from 6% to 18% p.a. depending on the banks and financial institutions.
- Banks and other financial institutions can provide either a fixed or a floating interest rate. When applying for a loan, one must be extremely attentive because the type of interest can significantly affect their EMI.
- Additionally, the interest rate can change based on the loan amount and whether it is being used for domestic or international schooling.
- When applying for an educational loan, other fees such as processing fees, pre-payment fees, and fees for delayed EMI payments should also be taken into account. Typically, the processing fee ranges from 1% to 3% of the loan amount.
What are the eligibility criteria for an education loan?
Here are the education loan eligibility,
Nationality
The following individuals are eligible to apply for an education loan from Indian banks or financial institutions: Indian citizens, Non-Indian Residents (NRIs), Overseas Citizens of India (OCIs), Persons of Indian Origin (PIOs), and students born to Indian parents abroad who wish to pursue a degree in India.
Courses
An educational loan is available for courses that are job-oriented, whether they are offered in India or abroad, and that has been approved by banks or financial institutions. These courses include those that lead to a diploma, post-graduate degree, diploma, professional degree, vocational degree, doctorate, or certification course, and they must last at least six months. One may apply for a student loan for part-time courses in addition to regular/full-time ones. Typically, banks and other financial institutions have a predetermined list of courses that are taken into account when approving loans.
Application process
Walk-in
You can approach the Customer Service Officer in the branch of your selected bank or financial institution and ask about an education loan. He or she will either introduce you to the Loans Manager or provide you with all the information you need.
Online
Applying for a student loan can be done from the convenience of your own home. Apply for an education loan online through the lender’s official website, and a representative will contact you as soon as they can. Simply press the “Request a Call” button that most banks and financial institutions offer on their websites if you can’t find the area for education loans on the lender’s website. The customer service agent will then be able to hear about your needs.
Conclusion
Education loans have helped many students pursue their ideal academic and career goals. It is a practical solution to help students pay for expensive education without burdening their parents. We anticipate that the information in this article will assist you in selecting the best lender for your need for educational loans.
