Getting an education loan in India can be a valuable option for students who want to pursue higher education but are faced with financial constraints. Here is what you need to know if you’re looking to take out an education loan in India:
- Eligibility: To be eligible for an education loan, you must be an Indian citizen and have secured admission to a recognized university or institution in India or abroad. Most banks and financial institutions require the student to be at least 16 years old and have a co-borrower, usually a parent or guardian.
- Required Documents: To apply for an education loan, you will need to provide various documents such as proof of admission, identity and age proof, mark sheets and certificates of the last qualifying examination, and income proof of the co-borrower.
- Loan Amount: The amount of loan that you can avail depends on various factors such as the course you’re pursuing, the institution you’re attending, and your family’s financial background. Most banks provide education loans up to Rs. 20 Lakhs.
- Interest Rates: Interest rates on education loans vary from bank to bank. Some banks offer interest subsidies under the Central Scheme of Interest Subsidy for Education Loans.
- Repayment Tenure: Repayment tenure for education loans can range from 5 to 15 years after the completion of the course or 6 months after obtaining employment, whichever is earlier.
- Collateral: Some banks may require collateral security in the form of a third-party guarantee or a tangible asset like a property.
- Processing Fees: Most banks charge a processing fee of 1-2% of the loan amount for education loans, which is usually non-refundable.
- Prepayment Charges: Some banks may charge a prepayment penalty if you choose to repay the loan before the end of the tenure.
In conclusion, an education loan can be a great option for students who are looking to finance their education but need some financial assistance. It is important to compare various options and choose the one that best suits your needs. Before availing an education loan, it is important to understand the terms and conditions, interest rates, repayment options, and other details.
Steps to remember before taking Education loan
As we know, getting an education loan in India is a common way to finance higher education for students who may not have the necessary funds to pay for their education. Here are some of the key steps involved in obtaining an education loan in India:
- Research different loan options: Before applying for a loan, it’s important to research different loan options to determine which one best suits your needs. This may include government-sponsored loans, private bank loans, and loans from non-banking financial institutions (NBFCs).
- Check eligibility criteria: Each loan option has different eligibility criteria, such as age, course of study, and income. Make sure you understand the criteria for each loan and that you meet them.
- Gather required documents: To apply for an education loan, you will need to provide various documents such as proof of identity, proof of income, and educational certificates. It’s important to check the list of required documents with your chosen loan provider.
- Choose a loan provider: Once you have researched the different loan options and gathered the required documents, you can select a loan provider that meets your needs.
- Fill out the loan application: Fill out the loan application form and provide the required documents. The loan provider will then assess your application and determine if you are eligible for the loan.
- Loan disbursal: If your loan application is approved, the loan provider will disburse the funds to you or directly to your college or university.
- Repayment: You will be required to repay the loan, typically with interest, once you have completed your studies. It’s important to understand the repayment terms and plan accordingly.
Remember to read the terms and conditions of the loan carefully, including the interest rate, repayment period, and any penalties or fees, to make an informed decision. It’s also important to compare different loan options to determine which one offers the best terms and conditions.