All You Need to Know About Education Loans

Various students wish to pursue higher education but may not be able to do so because of the high cost of education these days. This is where education loans play an important part. An education loan provides those who wish to study further with financial help without them having to dip into their savings to pay for it.

Here is an overview of everything you need to know about an education loan:

What does an education loan cover?

Various lenders and NBFCs across India provide financial help to students looking to apply to a university either overseas or in India. Along with the tuition fees, financial institutions back up students with expenses for consultation fees, application fees, exam prep expenses, materials required to study like books, laptops, etc. With these expenses covered, you can apply to the university you wish to without worrying about financial setbacks.

Who can apply and what are the documents required?

Anyone over the age of 18 years can apply for Education Loans in India. Students who apply for an education loan need to be a citizen of India to get an education loan. The student is primarily the main borrower and the parents of the students can be co-borrowers. The maximum amount of loan offered to students varies from lender to lender.

Students must submit all their academic records to the lender they wish to take an education loan from. Along with that, you will need to submit the offer letter or enrolment letter from the university and PAN card or Aadhaar card as identification proof. In case you are taking a loan with a co-borrower, then they will need to submit their income documentations such as the salary slips or income tax returns.

You can also opt to take an education loan on collateral basis if you wish to. Various lenders offer full backing to their students without asking for collateral as well. The interest rate on the education loans are lower if the loan is taken on collateral.

Different types of Interest Rates:

Depending on the lender, the interest rates on education loans would either be fixed or floating. A fixed interest rate allows you to repay your loan in fixed monthly instalments whereas a floating interest rate can vary over the life of the loan. Interest rates have a direct bearing on the EMI; the higher the interest rate, the more EMI you will need to pay on the loan. You can compare lenders to see which lender is offering the best interest rate and choose the one that suits best to your needs.

Repayment Process:

Lenders offer you a 6 month moratorium/holiday period after the completion of your course. This holiday period is given to you so that you have enough time to collect the funds in order to start the process of repaying the education loan. It is generally advised that students should start the repayment process as soon as possible. It is important to keep in mind to keep a good credit history with your lender. A good credit score will help you in the future if you ever need to apply for another loan.

Education Loan make it possible for you to pursue your dream of applying for higher education at the university you wish to without having to worry about the financial burden that may fall on your shoulders.

We hope this article has been informative about what education loans are.

Thank You!