Not only preparing to get in top colleges is a cumbersome task but also funding the course is equally difficult. Securing the offer letter is not all that is required for admissions but also the resources to fund the fees. The fees charged by many of the private institutions are extremely high. But money shouldn’t hamper the aspirants dream and therefore many institutions, through tie ups with banks offers educational loans at nominal interest rates for which repayment structure is also different than other loans.
Apart from tie ups, both government and private banks also provide loans on one to one basis for students wishing to pursue their higher studies. Before candidates opt for any of the education loan schemes, it is important that they know the terms and conditions of each and every scheme so the loan doesn’t haunt them once their education is complete.
Education loan will not only help you manage your finances for the course but also lets you save for the unforeseen expenses during the course duration, some of which include SBI, ICICI, HDFC and IDBI Bank education loan. Most of the aspirants are not familiar with the complete details about the same. Further, to reduce their burden of repayment, aspirants must choose the loan with least interest value and other concessions.
- Education Loans- a plain sailing
Most of the financial institutions (banks and NBFCs) provide education loans online also. Candidates will have to visit the respective website of the bank to apply for education loan. After the successful submissions of the loan application, bank will contact the students or the guardian for any of the additional information requirements. Candidates will also have to meet the bank representative at the guardian’s residence and submit all the necessary documents for the purpose. After all the formalities are complete, the bank will send the loan agreement to the student. Candidates must go through the agreement carefully after which the signed document must be submitted to the bank for further process.
- Loans at lower interest rates
Every bank offers education loan at different rate and the maximum limit also varies but are lower than that of personal loans. Most of these banks provide concessions in interest rates for female applicants. Given below are some of the most preferred loan providers in India:
|Bank Name||Interest Rate||Maximum Loan Amount||Repayment duration|
|State Bank of India||9.35% to 10.70%||Upto 30 lakhs for IIMs and other top B-Schools||7 to 12 years|
|Allahabad Bank||For IIMs is 8% and for other institutes is 10%||Upto 20 lakhs||7 years|
|Bank of Baroda||10.5% to 11.5%||20 lakhs/ 10 lakhs (depending up on the institute)||5 years|
|Punjab National Bank||8.15% to 8.75%||Upto 20 lakhs||10 to 15 years|
|IDBI Bank||9.7%||Upto 20 lakhs||10 o 15 years|
- Tax Benefits
What needs to be understood is to opt for a longer period repayment procedure as during the loan repayment, candidate will be exempted from the income tax. Under Section 80E, students can claim tax deduction for the repayment of education loan interest, once they start payment of loan. The benefit can not only be availed for the courses pursued in India but also abroad.
- A good credit score build up
Students can have the benefit of building up a good credit score from the beginning of their career. As most of the students start working within a year of graduating, they can devote a portion of their salary for loan repayment. Regular monthly instalments build their credit scores and will help them to avail better loans in future, if required.
- Repayment Process
The repayment usually begins after six months of job or after one year of course completion, whichever is earlier. Depending up on the amount to be repaid and other terms and conditions of the loan, repayment period can range from anywhere between 1 year to 9 years. Aspirants usually try to repay their loan as soon as possible so as to get over the debt. This will prove to be beneficial in the long run.
- Family Asset
Financing some of the professional courses in India and education abroad can be stressful for the family assets. Parents might want to save assets like land to finance their children’s education. Education loans are an easy way out of the situation. Students will have to start the repayment process once they get their job. Once the students start earning, considering the loan repayment duration, it becomes an easier task. Most of the students who opt for them find it economical in long run.
- No Collateral Requirement
Most of the banks will require a third party guarantee for loans ranging between 4 lakhs to 8 lakhs. Collateral will be required in case the loan requirements exceeds the limit of 8 lakhs.