Even though taking a loan can make a great difference when you are studying, there are a few students who are sceptical about educational loans. If you have questions about the educational loans, it’s normal. In fact, it is good that you have questions. The following article includes a few frequently asked questions by students and parents about educational loans. Keep reading to understand educational loans better.
What do educational loans cover?
Banks and Non-banking Finance Companies (NBFC) provide finances for students mainly to cover for their tuitions. Now, lenders help you with more than just paying for your college tuition. You can get the expenses of college supplies like course-books, laptop, printer, etc. and miscellaneous fees like library charges covered in your education loan. If you will be living away from home, you can also get your accommodation expenses included in this. These loans are open to students planning to study both in India as well as abroad.
What are the main eligibilities for educational loans?
Usually, the selection process is strict, so, you should fit the eligibility criteria of having the suitable educational and financial background for the loan. These are different for different lenders.
However, there are a few main eligibilities that you have to satisfy. They are that:
- You must be between the ages of 18 years-37 years.
- You must have a co-borrower.
- Both you and the co-borrower have to be Indian citizens.
- Your co-borrower should have a checking account with a bank in India.
- The course you choose should be recognized by the UGC in case of India and all regular courses abroad.
What is the role of the co-borrower and should I have one?
The co-borrower is basically the primary earning borrower in the entire process. This is why at the beginning of your loan tenure; the co-borrower pays the early instalments. But if you want, you can always take up a job and help with paying this. If your co-borrower has a good credit score and a well-paying job, this can reflect well on your interest rate. There are a few students who have two co-borrowers instead of one to get a better interest rate.
The process of getting educational loans without any co-borrower is long and troublesome, which is why it is suggested that you have a co-borrower.
What is the moratorium period?
The moratorium period for education loan is a holiday period in your loan tenure when you don’t pay any instalments. The moratorium period lasts for 6 months after you finish your course or 3 months after you get a job. While this break is optional, it is suggested that you take in on as you can take your time with helping yourself figuring out a plan on how to manage the expenses.
Can I get an educational loan without collateral?
Indeed. If you approach a bank you can get collateral-free educational loans up to 7.5 lakhs. While with NBFCs, you can get a loan with no collaterals of up to 50 lakhs. So if you are studying abroad and the course is expensive, you could go to an NBFC.
These are among the main questions. To get better clarity about your loan, it is always better that you approach your lender.
niralipandey93
Education Loan Blogs 