In India, we are used to the idea of our parents bearing the burden of our education. However, this may be problematic in most of the cases if you are opting for expensive professional studies. Of late, a new model has come up under which the student joins expensive colleges that help them in good job recruitment, making it easier to pay for the education loan when they finally get employed.
But, often such colleges/educational institutes come at a hefty price tag. When you don’t have the apt funds to take the education, the only option left is to take a loan. But, the road to acquiring an education loan in India is not smooth. The students have to come across various hurdles while applying; let us discuss some of them –
- Education cost in India has surged significantly in the past couple of years. If you want to pursue higher education for which you want to go abroad then the minimum tuition fee is Rs. 25 Lac while generally the available loan is for Rs. 20 Lac.
- Laborious documentation and a cumbrous process of education loan.
- Education loan is available in particular branches only. Owing to this, you will not able to acquire a loan from the branches outside your hometown if you have relocated for the studies. Moreover, you will have to travel numerous times for the processing of the education loan.
- You will have to arrange margin amount for the education loan, if you are planning to study abroad. The minimum margin amount for the education loan for abroad is 15%.
What Are The Smart Ways Of Having An Education Loan In India?
Let us discuss 7 smart ways to get education loan –
Following are some of the points that will help you understand education loans in a better way and will also help you along the way to face different challenges mentioned above. This will also help you to make the most of the schemes and make a smart choice from the wide array of options available.
1. Having Apt Funds
Before you opt for an education loan, the first thing you need to do is to determine the funds available to you. Funding via scholarships, for instance, will reduce your loan burden significantly.
2. Fulfilling Eligibility Criteria
The banks/financial entities do try and simplify the things and make the borrowing a hassle-free process. But, there are certain formalities that you as a student has to comply with such as submission of the required documents in order have quick disbursement of the loan. When it comes to eligibility criteria, it may vary from bank to bank or financial entity to financial entity, but the main requirements remain intact.
Each bank has a list of institutions and courses for which they offer an education loan. Some banks may require a co-applicant just to ensure that the sanctioned loan amount will be repaid on time. It also important for the co-applicant to fulfill certain eligibility criteria set by the bank/financial entity. The co-applicant can be parents, spouse, or a guardian. In the event, the co-applicant does not have a good CIBIL score, and then it can create a problem in getting an education loan.
3. Loan Amount
When you are applying for an education loan, knowing how much amount is required, as a loan, bears great significance. Be informed that the loan is not only required for the tuition fees only but to bear the living expenses as well. There is a possibility that you may be able to pay some amount as down payment or you may also need the whole amount as loan.
Living cost is also one of the key elements that need to be considered. Let us assume, if you opt for a hostel, then the expenditure will be less than if you choose to live on your own. Each bank has a cap amount that further extends as a loan; therefore this will vary for a course within India and for getting an education abroad. Therefore, it is important to strike a balance between your requirements and what the bank is capable of offering.
4. Acquire the Details
Spend extra time in acquiring details about the standing of the institution, its placement record, and most importantly earning potential following the completion of your course. Make sure you don’t just consider the overall ranking or the graduation rate; starting salaries tend to influence the tenure of the loan repayment.
5. Finalizing the Bank
When you have finalized the amount of loan you require, try and find a reputable bank/financial entity that not only fulfills your requirement as far as the loan amount is concerned but also agree to fund the program as per your choice.
6. Rate of Interest
Yes, comparing the rate of interest is an imperative part but in addition, the benefits in terms of making payments from abroad, prompt customer services and flexible repayment options should be verified from the bank/financial entity beforehand.
7. Repayment of the Education Loan
If you have taken an education loan, you don’t have to start making repayment immediately just like other loans. The bank understands that the repayment of the loan will be made once you have finished your course. There is also moratorium period and it varies from 6 months to one year, depending on the bank you have selected.
Hi, my name is Ankita Dixit. I started writing from young age and most of my writing skills and knowledge are self taught. Currently, I am working as a professional writer at Paisa.co. I have write on various topics including travel, motivation, finance, technology, credit cards, insurance and entrepreneurship etc.