Education may not be included in the list of essential thing for any one, but the fact is “Education is an Essential Thing for Every One” just like all other things in their life, this too has been bitten by inflation and quality of education is almost out of bounds for many because of the cost factors.
The engineering and medical degrees, which used to cost you Rs 20-30 thousand per semester earlier, now cost Rs 4-5 lakh. MBA costs more than Rs 25 lakh in premium colleges.
If you are looking for an education loan, hre are five things you better keep in mind. But, before we start the process of getting the loan, We need to select the college which we are planning to join for pursuing our degree. Usually there will be representatives from banks who are tied up with the colleges for taking education loan so identify them when visiting the college for admission process. Feel free to ask the college officials for the same. Remember the rule, we wont get unless we ask. So, ask your questions without any hesitation.
Who can get an Education loan in INDIA: Only Indian citizens can avail an education loan. It can be availed by the student with parents/guardians as co-applicants, or by the parent for a child for studies in India or for studying abroad.
Education Loan options for courses and institutions: Almost all banks will give you an education loan if you meet certain criterias. Which means, you can get loan if you are planning to study in a recognized institute, especially for courses which are in demand like MBA, medical studies and engineering and other vocational courses. If you are planning for an admission in a less reputable college or an offbeat course, it makes sense to get a loan from a cooperative bank or from private financial services institutes. Private Institutes are more open to such courses compared to the public sector banks.
Education Loan Value: The loan amount (Loan Value) you can take depends on the course, institution and the place you plan to study. For most courses in India, you can get a bank loan of up to Rs 10 lakh. For a course in a university abroad, the loan amount could go up to Rs 20 lakh. Other financial institutes may offer much higher amount of education loan. While some lenders may offer you 100 percent finance. there are those who ask you to set aside 5-15 percent of the loan amount as margin money. Almost all banks ask for a collateral or co-application in case of a higher loan amount, which is between Rs 4 lakh to Rs 7.5 lakh, depending on the lender. Any immovable property like your house, fixed deposits, insurance policies, National Savings Certificates and alike are accepted as collateral.
Fees and Education Loan Interest: If you are a female candidate, one way to reduce the cost of your loan is to take it from a public sector bank. They usually give a 50- 100 basis point discount on interest rate. The rate of interest vary amongst lenders and is usually in the range of 11 to 16 percent per annum. The processing fee is around 2 percent, but if you have secured admission in a premium course at a premium college where your future earning potential is high, you can also bargain with the lender to decrease or waive off the processing fees.
Education Loan repayment period: Education loan comes with a moratorium, which means the period during which you don’t need to repay the loan. This starts while you are studying the course and extends up to a year after the course is completed. If you get a job immediately after this period, the moratorium ends within six months of being employed. Once the moratorium period is over, you get seven years to repay the loan. But, we suggest that instead of utilizing the moratorium period, it’s better to start making payments even during the duration of the course. Reason being, with some lenders if you payoff the interest component of the loan during the course, you can get an interest waiver of up to 1 percent for the moratorium period.
How to approach for Education Loan:
If you prefer you can go straight to the banks where your parents have an account already and talk with them about the possibilities of taking up the Education loan. Make sure you discuss everything in detail so that you are sure about what’s the interest rate, timeline for repaying money and other formal informations.
Thus, to get an education loan you need to Select the college, Meetup the bank representatives and finally Collect complete details before accepting the loan and signing the papers.