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Education Loan: Application Process, Education Loan Scheme, Documents, and Important Factors | Education

Education Loan: Application Process, Education Loan Scheme, Documents, and Important Factors
Education Loan: Application Process, Education Loan Scheme, Documents, and Important Factors

How to apply for a Student or Education Loan?

For the student to want a successful life, he or she must have a good education. Therefore, with rising education costs year after year, a student's ability to obtain a decent education becomes increasingly challenging. Throughout India, education, particularly in reputable universities, is highly costly. Even when a student is eligible for admission solely based on merit, it is sometimes impossible for them to enroll in such schools owing to financial limitations. For undergraduate engineering degrees in India, the cost of education ranges from Rs.5 lakhs to Rs.12 lakhs. Throughout India, private universities can charge up to 50 lakhs for medical degrees. In India, management schools cost more than Rs.10 lakhs. University education is substantially more expensive in other countries. Similarly, private universities' fees are much more than government universities'. Children in such situations opt for college loans in India. As a result, several banks provide education loans to such kids, making it difficult for parents and students to pick the best one. Here is a basic overview of how to obtain the best education loan.

Personal Loan Vs. Education Loan

Some parents may believe that taking out a personal loan to pay for their children's higher education is advantageous. You take out a personal loan with a higher interest rate and pay more money. A type of loan, on the other hand, comes with a slew of advantages and perks and is specifically designed to be used for student education.

Government of India: Comprehensive Educational Loan Scheme

Through discussion with the Indian Bankers' Association (IBA) and the Reserve Bank of India, the Indian government has devised a Comprehensive Educational Loan Scheme (RBI). This plan applies to all types of courses offered in Indian and international institutions and universities.

Amount of Education Loan that can be taken out

An education loan includes the program tuition as well as any education-related expenses such as study materials, lodging, transportation, as well as equipment costs. This amount of the loan will be determined by the course tuition as well as the overall income of your household.

An Education Loan is available to everyone who qualifies

Every student having guardians or parents as co-applicants is eligible for an education loan. This education loan will be repaid one year after you finish your study as well as six months after you acquire a job after you finish your degree, whatever comes first.

The Documents You'll Need to Apply for a Student Loan

These are the documents required to apply for a student loan:

1. The necessary KYC papers, such as proof of address and identification.

2. Your acceptance letter to college.

3. Total cost of your study.

4. Financial records, such as pay stubs, bank statements, and tax returns

5. If you need to educate at a foreign university, you can get a pre-admission education loan.

Education Loan Margin Percentage

There is no need for a margin on an education loan up to Rs.4 lakh. Furthermore, there's also a 5% buffer for education loans above Rs.4 lakh that can be used for higher education in The country. For research outside of the United States, the margin is 15%.

The Most Important Factors to Consider When Taking Out a Student Loan

1. You are qualifying for tax advantage under section 80 after you have taken out the loan (E).

2. If you're a female student, you'll be eligible for a lower interest rate on a student loan.

Requirements for getting a Student Loan in India

When applying for a loan, you must meet a few fundamental standards. The agreement's conditions are as follows:

1. The expenses for the course to be taken as well as the applicant's yearly family income are the two most important factors.

2. A co-applicant, who might be a parent, a sibling, or maybe a spouse, is required.

3. There is no need for a guarantor as well as security for loans under Rs. 4 lakhs.

4. A third-party guarantee is required for loans over Rs.4 lakhs.

5. A collateral is required for any loan amount over Rs.7.5 lakh.

6. Because the loan amount is insufficient for studying overseas, students must hunt for part-time employment or sponsorship.

7. When studying abroad, insurance is required.

8. Loan repayments: This payback procedure should begin within 6 months under a year following the completion of the course, however, it can be prolonged for up to 7 years.

Throughout the event of non-payment, both the student's and his co-credit applicant's histories are harmed.

9. Education loan interest rates: Interest rates for education loans in India vary depending on the bank. This can, although, range anywhere from 12.00 percent to 16.00 percent, depending on the bank's base lending rate and other conditions. The Reserve Bank of India (RBI) has set a basic lending rate of about 9- 10% for banks in India.

Credit - Komal Sharma, Direct News 99