A wise man once quoted “An investment in education pays the best interest.” So true! Education is imperative to thrive in today’s fiercely competitive world. But what if money becomes a stumbling block in your dreams? Let the Education Loans be your savior.
WHAT IS EDUCATION LOAN ?
Education Loan is the money, a student or his parent borrows from a loan issuing authority for financing an educational course in India or abroad. It is granted for a multitude of academic, professional, vocational and technical courses.
Education Loan Process
Education loans have made the pursuit of academic courses easier, without burdening parent or guardians with liabilities, that we should be bearing.
The education loan process may vary from bank to bank but there are some fundamental steps.
Step 1: Fill in the loan application form
Like in case of every loan, the applicant has to fill in an application form which may ask for details such as contact details, details relating to academics etc. it is important to fill in accurate information.
Step 2: Personal Discussion
Once the applicant, i.e. the student fills in the form, there is a round of personal discussion wherein he/she may be asked various question relating to the academic performance, the course one has selected, probably the institute etc. At this stage, it is very important to be lucid and clear about one’s selection of course and its future potential of generating income. While some banks are known to hold the academic record important, some may give it a slightly lesser attention. This does not go to say that one needs an excellent academic record. But, make sure that there are answers to those mishaps that could have occurred during the academic life.
Step 3: Provide validated supporting documents
Unlike other loans where the talk of documents relating to say property, might come in at a later stage and may cause delay-documents are a must. In case of education loans, documents relating to admissions are mandatory even before the bank considers the loan application. The bank will verify the enrollment of the student from the concerned institute. One may also require collateral security such as papers relating to property to be mortgaged if the loan amount is above Rs. 4 lakhs.
Step 4: Stage of loan approval or denial
When one takes some other kind of loan, there is a co-guarantor, especially in case of personal and home loans. For an education loan, a guarantor is mandatory. The guarantor could be an applicant’s parents or guardians. The bank will run a thorough check of the guarantor and his/her credit history before sanctioning the loan. After completion of the process, the loan may be sanctioned or denied.
Step 5: Borrower’s signature on a Promissory Note
While the parents/guardians are guarantors, the student is the actual borrower of the loan. Once the loan is sanctioned, the student has to sign a promissory note to the bank.
Step 6: Disbursal of the loan
Once the formalities are completed (additional documents and signed post-dated cheques may be required), the bank will disburse the loan. The bank may disburse the college/institute fee directly to the concerned institute.
In the current times, availing an education loan has been made even easier. Now, one can apply for an education loan online. The loan will be sanctioned only in principal and the applicant will have to contact the bank for actual approval and disbursement of the education loan.
What are the Features of Education Loan?
Education loan are available universally and can be applied easily. With good credit history, a person can get his or her education loan sanctioned in very less time. For all academic courses listed under the education loan of different banks, one can apply for the loan. Also the courses include graduation, post graduation as well as the vocational courses. Some of the features of the education loan are as follows.
- One can avail the education loan for studying in India as well as in foreign countries.
- Education loan can be obtained for minimum 10 lakhs to maximum 15 lakhs in case of higher studies in India, whereas for studying abroad the maximum limit is 20 lakhs.
- The type of course pursued and the family income of the applicant is considered while providing the educational loan.
- Female students who are applying avail discounts and lower interest rates.
- Education loan less than 4 lakhs does not require a guarantor.
- Government subsidy schemes of educational loans are provided for the students from economically backward people.
- Students need not repay the loan immediately. They can repay after completing their course and within the repayment tenure from the course completion date.
What are the Benefits of Education Loan ?
Education loan is very helpful to the students who wish to pursue higher studies. Students who wish to take up courses abroad are benefited by the bank education loans. With proper submission of the required documents and the repayment ability, the education loan for students are easily sanctioned. Some of the benefits of the education loan are as follows.
- Students get a financial support to achieve their dreams.
- It is not necessary to repay the loan immediately. The tenure can be extended up to 5 or 7 years after completing the course.
- Student can choose any course and apply for the educational loan.
- For small amount of loans, the collateral security is not required.
- All educational expenses like the library fees, building fund, accessories for education, etc can be utilized through the loan amount which is received on their savings account.
Who are Eligible for obtaining an Education Loan ?
The eligibility to obtain an education loan can be easily check online. Education loan eligibility calculators are available at the bank’s official website. It gives an idea of the possibility of obtaining an education loan. One who satisfies all the eligibility criteria will be sanctioned for the education loan amount. The eligibility criteria for applying for an education loan are as follows.
- Student must be an Indian. In case of NRI, he or she must have an Indian passport.
- Students must be under the age prescribed by the lending institutions.
- Student must hold the admission letter from the school or college.
- Education loan can be applied with the co-applicant who has regular income.
- Good academic records must be maintained.
- The credit history of the co-applicant must be good for easy sanction of loan.
What are the Documents Required to Apply for Education Loan ?
Proper documents with accurate information affords you chances to get your education loan sanctioned. Provide the proof documents with current and updated information. Take up necessary courses and scores in the TOEFL or IELTS or other test which are required for studying abroad. Good scores help you get an admission in the universities you wish to study and in turn help to avail education loan easily if good scores in academics are maintained. Provide admission letters or emails with recent date, so that it eliminates confusion when applying for the education loans. The following are the necessarily proof to be submitted along with the application form.
- Identity Proof
- Address Proof
- Age Proof
- Proof for Nationality
- Attested Mark sheets for 10th
- Admission letter from schools or universities
- Family Income Proof
- Passport size photographs
- For Studying Abroad, visa and passport are required