Getting an educational loan? Here’s what you need.
Education is going expensive day by day. As more and more students are opting for higher education now, this expense is burning hole in the pockets of parents/guardians and to combat such heavy debt for acquisition of education, educational loans came into play.
Education loan can be easily applied for if it realizes the following course related eligibility:
- For any graduation, post-graduation, technical and professional course offered by the administration of colleges under UGC/AICTE/IMC/Govt.
- For courses conducted by institutions such as IIT,IIM,etc.
- Teacher/nursing course approved by central/state government.
- Any other regular degree course like aeronautics, pilot training, shipping etc. as approved by Director general of civil aviation/shipping.
The loan is subject to interest rate that varies depending on the institution you are taking the course from and the bank you are taking the loan from.
You first have to check if your institution has a tie-up with any specific bank for educational loans. If there is, you should take the loan from that bank only as it will ease you in submission of various documents required, flexibility in collateral and also, a decent interest rate as decided by the mutual understanding of your institution and the bank. In case your institution is not having any tie-up with banks, then it is better to approach the bank where at least one of your parents is having an account.
The term of re payment is simple! The loan is repayable from one year after the completion of the course or from 6 months after attaining employment whichever is earlier. The period of repayment is typically 5-7 years. For families with low income levels, interest until the beginning of repayment is borne by Government of India.
The loan offers the following expense cover- tuition fee, examination fee, books and computer, hostel fee, educational trips, library charges, passage money to travel abroad, two-wheeler up to Rs. 50,000/-. In india, a maximum amount of Rs. 10 lacs can be drawn while in abroad, a maximum of 20 lacs can be drawn. The collateral requirement for the loan varies depending on the amount of loan applied for. For amount less than 4.5 lacs, there is no need for collateral security, for amount between 4.5 lacs to 7 lacs, requires a parent to be obligated and for amounts beyond 7.5 lacs, a tangible security, usually a house is seized as collateral security.
Before getting an education loan, always check if interest rate is fixed or floating and if there is involvement of some processing fees and other hidden charges. Below mentioned is the list of documents that you require to submit in the process (which may vary bank to bank):
- Loan application form
- 2 passport size photographs
- Proof of residence
- Proof of admission in the institute
- Parent’s income proof
- Parent’s bank account statement
- Parent’s income tax assessment
- Marks statement of latest qualification
- 10th/12th certificates
- A detailed statement from the university/institution of expected expense
- A copy of satisfactory performance certificate after each semester.