Education Loan – Empowering the Youth

Education is the base that works as a building block to create a strong structure for a complete and a successful life. A quality education is a right of every child. To get a quality education is really important for everyone. Nothing is compared to the successful career of the child. However, in India, the ‘Quality Education’ means the education perceived in influential institutions. It is very costly and not easy to afford for everyone.

Here the Education loan comes into existence. Education Loan is a chance provided these days by the Bank to fulfill their career goals. Its a great way to empower the Indian youth to get the higher education. It is a fund offered to the deserving students to pursue their basic or higher education in India or Abroad. Almost all Bank offer education loans and the demand for this loan is constant among the students.

Why Only Education Loan?

The question arises that why should we opt for an Education Loan only. However, our need of arranging a fund for the higher studies can be fulfilled by other means also (other loans – LAP, Personal Loan etc.). The flexibility and the advantages associated with this loan are listed below:

Easily Available Everywhere

Education loans falls in priority sector of lending for all the banks. To Avail a loan the basic conditions are only to confirm the basic details and the requirements and the confirmation of your ability to repay the loan in a stipulated time.

The Costly Affair

No doubt, these days education is highly expensive for everyone. A detailed or complete education loan frees an individual to arrange funds for the higher studies of his son/ daughter. During the complete education course the expenses cannot be predicted in a straight line. Their can be an invisible curve of sudden expenses. A good education loan estimates it accordingly and helps you to be safe with such surprise expenses.

Assistance on time

Its not necessary that every loan can support with the needs on time. Education Loan acts as a pillar that offers help on time and promises a successful career. It nullifies your worry to gather the required amount at one go. A good education loan puts you at ease.

Organized help

There can be many other deposits other than fees incurred during the course. A full fledged education loan can keep you away from the risk of running out of money. It is an organized and without any loopholes way of funding your education

An education loan is a safe and an efficient way to arrange funds for the child’s education without compromising on any available option. Its a long term secure investment. An education loan is an easy process and the amount also get disbursed as soon as the Bank receive the complete application form along with the required documents. A good education loan provides lot of convenience and offer featured benefits that makes it a great deal.

• Easy and universal availability. Anyone who wants to study further can avail an education loan.
• With an education loan any academic or technical qualification, in India or Abroad can be pursued. These courses can be a graduation, post- graduation , vocational or any other certificate course.
• A loan amount for education loan can vary from an organization to organization. Generally it starts minimum with 4 Lakhs to 15 Lakhs in India and a quantum of 50 Lakhs – 70 Lakhs for an education Abroad.
• This loan covers all the fee related to tution, hostel, mess, uniform and even books.
• The applicable loan amount completely depends on the annual income of the applicant’s family and the course to be pursued.
• Female students are always advantageous in terms of education loan. They are benefited with lower interest rates and other discounts.
• Central Scheme to provide Interest Subsidy (CSIS) is a scheme provided and sponsored by the Government to hep the students who fall in economically backward sections of the society.
• The repayment of the loan amount is stretched to 5-7 yrs after the completion of the course.
• An education loan amount below 3-4 Lakhs do not require a guarantor.
• The guardian will be treated as a co-applicant in the loan and he/she will be considered as a prime debtor.
• As a security Bank might ask for an additional security. It may be in the form of an insurance policy of the same amount as of education loan. The annual premium of the same will be include and computed as a loan requirement and the future requirement of the student.

city, they offer the benefits and features to an applicant. It is always better to look for other options available in the market before agreeing to the terms and condition of the lender at one go.

Advantages of Education Loan over Personal Loan

• Due to price inflation up and down one can be assured about money saving. A complete education loan liberates you from any kind of worry of collecting sufficient funds for the entire course of your child’s higher education. The regular increasing expenses keeps you and your child safe with the unexpected expenses that can obstruct the child’s future in any way.
• There can be many other expenses throughout the year apart from just studies. All these related aspects can be covered under the complete amount of education loan.
• Interest rates of personal loans are quite higher as compared to Education loans. Also their is no moratorium period (its a kind of interest holiday).

Eligibility Criteria – Education Loan

However, the eligibility criteria varies from lender to lender but some basic criteria are as follows:

• Applicant has to be an Indian resident
• If an applicant is a Non Indian Resident (NRI) – he should have a valid passport
• An applicant has to fall in the defined age bracket of the lender.
• A applicant should have a confirmed admission letter from the recognized college/ institution.
• For a complete education loan involve a co-applicant with a regular income for the better probability.
• A good credit history and credit score of the guardian or the parent is of great help for the quick approval.

Loan Guarantor

A co-applicant (Guarantor) plays a vital role in the education loan process. A co-applicant can be a spouse, parents, sibling or even in laws. For a smaller loan amount , like up to 3-4 Lakhs, banks do not ask for a guarantor or security. With some issues in the case a Bank might ask for a security like gold, fixed deposit, LIC policy or any real estate investment. Moreover, a Bank might ask for a third party guarantee who is not a part of a family or in blood relation. This is just to ensure that if the co-applicant is unable to pay the loan, the guarantor takes the responsibility to repay the amount.

The following table is being followed by most of the Banks/ financial institutions for education or student’s loan:

Along with the duly filled form of the Bank/ financial institution, the lender wants you to submit the following documents:

• A copy of the confirmation letter of admission from the college
• Fee breakdown along with the other expenses provided by the college/ institution
• Copies of all mark sheets. From 10^th to the latest qualified exam.
• An affidavit/ declaration for the confirmation that no other loan has been taken for the same or any other course
• Identity & Signature proof (passport, driving license, aadhaar card, Pan Card, Voter ID Card and in case of a Government employee – Employee Identity Card)
• Address Proof (Passport, Voter ID Card, Aadhaar card, utility bill, bank statement or a rent agreement)
• Age Proof (Schooling Certificate of 10^th Standard, Birth certificate, Voter ID Card, Passport or Aadhaar Card)
• Income proof (in case of salaried co-borrower, latest salary slip of last 3 months or salary bank statement of last 6 months) ( in case of self employed, Latest ITR, CA certified P&L Balance sheet and most importantly business continuity proof)
• The copy of highest professional degree acquired as a qualification proof.

Interest Rate on Education Loan

The interest rates vary from the lender to lender but still the certain factors effect the interest rates like

The loan amount

The tenure of the loan

N last but not the least the competitive rates being offered in the market.

Female students get an extra discount of 0.5% on the interest rates as compared to male students.

Interest rates can starts from as low as 11.25% and generally ranges between 12% to 16% with a repayment tenure of 10 years.

It is important to remember that interest rates in education loan are usually floating rates.

Studying abroad or higher studies gives a lot of load on our parent’s savings. Education loan is an easy access to help them. Students too become more responsible and independent in an enthusiastic way. Its a simple procedure to support and fulfill the aspirations. Education loan can prove to be a stepping stone in your career. Banks/ financial institutions believe to make you responsible by making you the primary applicant and the parents can be stress free. Its an old saying, as you sow as you reap. Investing in knowledge will always reap the benefits throughout the life. Education loan is an investment and Education is an investment in you.