Important aspects to know before education loan applications
Posted on: 09/Mar/2020 11:51:21 AM
The educational loan enables the student and family to manage the expenses on education. Both public and private sector banks offer educational loans. This loan also goes by the name of ‘student loan’.
With the rising trend, especially in higher education expenses, the need for the same has also increased hugely. The important aspects:
For who?
An education loan is offered to students pursuing higher education. The applicants may be the parents, brothers/sisters or guardians.
In case the loan applied is for more than Rs. 4 Lakhs, a co-applicant is required. In case it is more than Rs. 7.5 Lakhs, the mortgage is required.
The loan offered includes expenses related to lodging, etc., as well. The loan will be sent directly to the concerned educational institutions.
An education loan is similar to other loans such as housing, etc. Once the student completes education, he or she has to start paying the EMIs (Equated Monthly Instalments).
The loan amount
Educational loans may be applied while pursuing higher education in India or abroad. The loan amount may vary from one bank to another. The maximum loan offered is up to Rs. 75 Lakhs.
A maximum period of 15 years will be given for repayment of the loan.
In the case of foreign education, the loan can be up to Rs. 1.5 Crores.
Interest rate
The banks may charge from 8.5% to 15% as the interest rate. Some banks may offer a concession on this interest rate. Processing charges will also be included. Even loan management expenses can be added.
Generally, the education loan may be from 80% to 90% of the proposed educational expense.
Prudent selection of institution
It is advisable to select a reputed educational institution of higher education while applying for an education loan. Further, care should also be taken on the course pursued from the aspect of immediate job opportunities.
As the education loan is the first loan obtained by the students, it facilitates the students to create their ‘credit score’!
