Education loan: Good Idea for Students
Increasing inflation day by day has increased the number of borrowers all over the country. Whether it is for car, for home or education, it is nearly impossible for people of lower middle class to afford to these amenities. In between all, education loan is a boon for those deserving and talented students who want to pursue higher professional or technical studies but severely lack money and resources.
In this article we will discuss about various aspects regarding, sanctioning and repayment of education loans.
Indian nationals of age between 16 to 35 years are eligible for applying these loans. Initially, lender will check whether the student has opted admission in UGC or AICTC recognised university. Further, it will judge the quality of course and college, and calculate scope of getting a job after the course. In case of collateral, lender would also consider the total value of the property and sanction amount according to that.
- Amount of Loan matters
Actually, the amount plays an important role in deciding the criteria of sanction. If the total amount is less than 4 lakhs, there would be no need of guarantor or security. Amount, between 4 to 7.5 lakhs need a third party guarantor other than co applicant and parents, while there would be need of collateral against the loan if the amount is above 7.5 lakhs. Total time tenure can be 15 years or more for larger amount
- Co-applicant and borrower
In case of education loan, it is mandatory to have a co applicant or borrower who can be your parents/guardians or spouse/parent in law, if married. A good credit score is must for the applicant. In case if student is unable to pay the amount, this co-applicant would pay on his behalf.
- Interest rates
Interest rates vary from bank to bank for educational loans, depending upon the total amount sanctioned. Total interest rate = base rate + mark up, which could range from 11.74% to 14.75%. Probably, public sector banks have lower rates as compare to private banks. Also the amount sanctioned varies in different banks, starting from minimum Rs. 50,000 to Rs.30 lakhs.
- Repayment Terms and Conditions
The moratorium period of repayment starts after the completion of course + 1 year or 6 months after getting job, whichever is earlier. There can be tax exempt for the borrower against the interest of amount paid for self or for spouse/children under section 80(e) of IT act.
There are several banks which offer higher amount of loans like SBI, PNB or HDFC bank loans to those aspirants who wish to pursue study abroad or top colleges of India.