Education loans are the right way to finance your higher studies

Higher education is quite expensive these days. As a parent, you want your children to have the best education possible, but that is often beyond your immediate means. In today’s inflating times, professional courses, such as engineering or medical, can set you back by Rs 5-10 lakh a year. More and more people are finding it difficult to fund the costs of the study expenses and therefore, opt for education loan. Many times student may get admission in their dream college/universities but struggle to get sufficient finances to pursue studies, afford living expense, accommodation and other expenses related to their studies.

Traditional finances hit upon with huge interest rates and stringent payment measures. The small savings with regular income source is insufficient to bridge up the financial needs. Therefore, opting for an Student Loans In India would be a secured and right way to finance higher studies. Before taking a loan it is important that you properly assess the various options available and take into account factors such as interest rates, eligible loan amount, repayment options and prepayment options available.

A student loan is the best way to fund your higher education that offers loan at attractive interest rates, low processing, flexible repayment options and a fair amount of repayment time. You can get an educational loan in India for a variety of courses, be it graduate, under-graduate, professional or vocational. So what do you need to keep in mind while seeking an education loan?

Students applying for education loan need to have a guarantor in the form of a parent, sibling or spouse. This because in future if they are unable to make payments the banks or private finance companies can approach guarantor for the loan repayments. In case of default, the student, and the guarantor is both held responsible, and their credit history will take a beating. Ideally, repayment of education loan starts six months to a year after the student has completed their studies. It’s repaid in equated monthly installments.

Education loan in Indiaare offered for studies in a recognized institution. For this, you will need to check with respective private finance company & bank for their empanelled list of college/institutes.  The quality of the institution, parent credit score, and student’s ability to land a job after completing studies also plays a part in successfully securing the loan.

While government banks demand margin money of around 15-20% of the loan amount to approve study loan, some private finance firms give education loan in India at no margin money costs. The interest rates offered are as low as 12.75% and the processing fee is mere 1-2% of the loan amount being calculated on a case-to-case basis. They design study loans without setting any cap on finance and provide 100% coverage of education costs, making such young talents of India free from unnecessary burdens.

Usually, for loans up to Rs. 4 lakh, no collateral security is required. For loans ranging from Rs. 4 lakh to Rs. 7.50 lakh, collateral in the form of satisfactory third party guarantee is required. For loans above Rs. 7-8 lakhs, collateral in any of the form of Residential property (house/flat/apartment), Fixed Deposits, Life Insurance with surrender value equivalent to the loan amount, Existing house mortgaged and Non-agricultural land can be considered.

While applying for an educational loan in India, banks or private firms will verify the tenure of the course, and determine the cost of the entire course, as applicable at that point of time.

Disbursement of the loan amount is done directly to the institute or college to which the student has applied for admission. In the case of mess and hostel charges, the relevant amounts are given to the concerned authorities. Once you take the admission after that each year, the applicant is required to submit a form available from the bank  or private finance firm that gives the details of the money required, and then the next installment is directly disbursed to the college/institute.  It is advisable; understand your study loan in terms of fund allocated, an expense covered, the interest rate applicable, discount or concession available, tenure for loan clearance, repayment options, strategy for repayments and other costs they’ll have to incur on their own.



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