All About Educational Loan
The Education loan is one of the most availed loans taken not only in our country, but in the entire world. Almost all banks and financial institutions have several schemes of educational loans for the ambitious students who want to pursue higher education but do not have the financial support of their family to run the high educational costs.
In India, several professional courses and higher educational courses have very high course fees which a common family cannot afford for their warden. So educational loans comes to rescue which provides the course fees and other educations costs to the students while they pursue their dream careers. A degree in a decent engineering college costs somewhere around Rs. 6 – 8 lakh where as studying MBA from the IIMs can cost up to Rs. 18 lakh.
Things to know for students before taking educational loan
Almost all colleges and universities where the total course fees are in lakhs, support educational loan facilities. In many cases the colleges may have tie ups with some bank and the students are approached for educational loan from that bank while taking admission and they do hassle free enrollment for education loan.
Every education loan has a credit limit, which is decided according the course fees of that particular course. Most of the banks provide a grace period of 1 year after completion of course or six months after being placed, for paying back the loaned amount.
Educational Loans for studying in India
Almost all colleges give loans to students studying in reputable educational institutions and this loan sometimes need guarantor or sometimes not, depending on the total amount of loan. Loans up to a sum of Rs. 4 lakh do not need any guarantor or security.
Indian students prefer these types of educational loans rather than loans which needs deposit of security. Loans, greater than Rs. 4 lakh needs a guarantor, who will be liable for non-payment of the loan. A family elder or a close friend may play the role of a guarantor.
Educational Loans for studying abroad
Many students opt for overseas study for which they need education loans. Several banks give loans to the students to get higher studies in foreign soil. Generally, the courses in the foreign colleges and universities have a hefty course fees apart from other fees like hostel fees, miscellaneous fees, etc. So banks provide high amount education loans to the students. However, educational loans for foreign studies require a lengthy background check by the bank and paper work. They provide these loans only to those students who have a good educational background and their guardians have good banking records. They mostly keep mortgage of some property or investment p[policies before sacntiooning these big loans. Also the rate of interest is higher than the normal loans.
Documents needed for educational loan
After the educational loan application is filled up, the banks need some important and necessary documents from the loaner. These documents include the copy of result / mark sheet of last school or college exam, certificate of admission to the new college / course, certificate of course fees from the college authority, bank statement, any assets and loans in the name of the borrower, etc. Most banks prefer the borrowers with savings accounts with their banks as they prefer their customers. In case of oversees courses, loans are given on the basis of the foreign exchange permit and passport.
Interest on Educational Loans
In India, the banks charge compound interest on the educational loans at the rate of anywhere between 12.5 – 14 % (floating). So this is a huge sum of interest that is charged. So students should not delay paying back the loan in order to minimize the amount spent on interest. The interest amount starts accumulation and gets added to the principal right from the first month. So it is a wise option to pay off the interest amount every month to keep the principal at its place.
|1||Type of loan||Educational loan|
Lab and Library Fees
Computer / laptop purchasing cost
|3||Deadline of starting educational loan repayment||1 year after completion of course / 6 months after getting job.|
|4||Limit of Educational loans without no guarantor||Rs. 4 lakh|
|5||Limit of loan amount for oversees courses||Rs. 20 lakh|
Paying back the educational loan
One can submit any amount at any point of time to the loan account and it is credited to the educational loan account. The best option is to make EMIs for a fixed period and pay it off. After the loan amount is cleared, the account will be closed by the bank and a NOC will be given to the applicant.