All You Need to Know About Education Loans: Funding Higher Studies in India
By admin_mutual | Jul 21, 2023
An education loan is a financial product specifically designed to support students in funding their higher education expenses. It covers various academic courses, including undergraduate, postgraduate, professional, and vocational studies, both in India and abroad. Education loans are provided by banks, financial institutions, and government schemes, easing the financial burden on students and enabling them to focus on their studies without worrying about immediate expenses.
Here is a comprehensive guide to education loans in India, helping students and parents understand the process, benefits, and key considerations involved in securing funding for higher studies.
Loan Coverage
Education loans typically cover various expenses related to higher studies, including tuition fees, hostel fees, examination fees, library charges, travel expenses, study materials, and even the purchase of a laptop if necessary. Some loans also offer coverage for additional expenses, such as study tours and project work, making them comprehensive financial solutions for students.
Eligibility Criteria
To qualify for an education loan in India, students must meet certain eligibility criteria set by lenders. These criteria typically include the student’s academic background, the course and institute selected, and the co-applicant’s (usually a parent or guardian) financial stability.
Students are required to provide relevant documents such as academic records, admission letters, and income proof of the co-applicant to support their loan application.
Interest Rates and Repayment
Education loans in India can have either fixed or floating interest rates. The interest rate may vary depending on the lender and the loan amount. During the study period, which usually includes the course duration plus a grace period, the borrower may only be required to pay the interest amount. Once the student completes their studies, they can opt for a moratorium period before commencing the loan repayment. The repayment tenure varies from bank to bank but generally ranges from 5 to 15 years.
Security and Collateral
Many education loans are provided without the need for collateral for loan amounts up to a certain limit. For larger loan amounts, lenders may require collateral or a co-signer as a guarantor. Collateral can be in the form of fixed deposits, property, or any other valuable asset, which serves as security for the loan.
By leveraging education loans responsibly, students can embark on a journey of academic excellence and unlock a world of opportunities in their chosen fields.