Types, Rates, Features, and Eligibility of Education Loans

Every person places a high priority on receiving a quality education, thus students will do whatever it takes to educate themselves. However, because of the rising expense of education, borrowing money for education seems to be the only viable option for many. Students can apply for an education loan to get the money they need to finish their studies. To assist in educating the next generation of innovators and leaders, many banks and NBFCs in India provide education loans at affordable rates.

Loans for Education: Types

Considering Location

· Loans for Domestic Education Students can apply for this form of loan if they wish to pursue their education in India. Only if the borrower is accepted into an Indian educational institution and satisfies all other lending requirements will the loan application be granted.

· Loans for overseas education These loans assist students in realizing their dream of attending a foreign college to pursue their chosen course of study. Students who want to study abroad can apply for a loan that will pay for their airfare, lodging, and tuition as long as they meet the requirements.

Considering Course

· Loans for undergraduates This kind of student loan is offered to help students with their educational costs so they can finish their undergraduate degrees. Typically, an undergraduate degree is a 3- to 4-year program with a variety of specializations. An undergraduate degree makes it easier for people to find quality employment and start making money.

· Graduate Student Loans Many undergraduate students want to continue their studies with a postgraduate study, which in India is often a 2-year program. To gain a deeper understanding of the selected field, an advanced degree is desired.

· Loans for Career Development Many professionals who spend a few years working in corporate positions decide to take a career break and enroll in professional training programs to increase their employment prospects. Such people would work extremely hard to obtain accepted into reputable technical and business schools to hone their talents and advance their professions.

Using Collateral

· Loan Against Securities, Deposits, and Property To secure the funding you need to further your education, you can put up immovable assets like equity shares, bonds, debentures, fixed deposit certificates, residential or commercial real estate, flats, houses, and more. You can also put up gold deposits.

· Guarantee by Third Parties

A guarantee letter from an employee of the bank or a home bank can help the student get an education loan.

Benefits and Features

• The maximum loan amount for overseas students is Rs. 1 crore, while the maximum loan amount for domestic students is Rs. 50 lakhs.

• 100% financing is possible under specific circumstances.

• Other costs, including computers and travel costs for student exchanges, are covered by the finance.

• For overseas distributions, preferential exchange rates can be offered.

• After six months after the completion of the course, the loan repayment period may last up to 12 years.

• Parents ought to be co-borrowers on the student loan.

List of Costs Covered by Student Loans

• Payments owed to educational institutions.

• Exam, library, and lab fees.

• Travel and transportation costs for studying abroad.

• The cost of student loan borrowers' insurance, if applicable.

• Building fund, refundable deposit, and caution deposit backed by institution invoices and receipts (total expense should not exceed 10 percent of total loan).

• Purchasing of books, instruments, equipment, and uniforms (total expense should not exceed 20 percent of total loan).

• The purchase of a computer at a fair price, if necessary to finish the course (total expense should not exceed 20 percent of total loan).

• Any additional fees needed to complete the course, such as those for study abroad trips, projects, theses, etc (total expense should not exceed 20 percent of total loan).

• Any scholarships, fee waivers, etc. that the student borrower may be eligible for when calculating the amount of loan required.

Qualification for Student Loans

• Only citizens of India.

• Obtained acceptance or an invitation from a university to enroll in a degree-granting program there.

• Education: For an undergraduate program and a postgraduate course, you should have finished the 10+2 (12th standard).

• Recognized institutions and universities recognized by the UGC, Government, AICTE, AIBMS, and CMR offered approved programs leading to graduate and post-graduate degrees as well as post-graduate diplomas.

• Programs such as ICWA, CA, CFA, etc.

• Classes offered by the XLRI, NIFT, IISc, IIM, and IIT.

• Regular degree or diploma programs in fields like aviation, pilot training, and shipping

• If the course is taken in India, a degree or diploma in nursing or any other subject that has been approved by the Director General of Civil Aviation/Shipping/Indian Nursing Council or any other regulatory agency, as the case may be.

Documents Necessary

Mark papers from the 10th, 12th, graduation, and entrance tests; an admission letter; a fee schedule; and, in some situations, the KYC and income documentation of co-applicants. In some circumstances, more documentation can be needed.

Tax Benefits for Student Loans

When you begin repaying your school loan, you can use Section 80E of the tax code to deduct the interest you pay each month from your income. The deduction, however, cannot be used for principal repayments.

Additionally, there is no cap on how much you can claim as student loan interest payments. You must get a certificate from the bank to prove this. Only eight years from the year you begin repaying the loan or until the interest is paid in full, whichever comes first, is the facility available.

Calculator for Educational Loan EMIs

A clever tool for calculating your monthly EMI payment to the lender is the education loan EMI calculator. To calculate your EMI and plan financially, use the slider to enter the settings Principal amount (P), period (N), and Rate of interest.

How to Use

You can either apply online or visit the bank of your choosing to learn more about the loan application process. The bank will start the procedure after receiving your loan application by checking your documentation, assessing the course of study for which you want the loan, and assessing the collateral you can offer. Following that, the bank will inform you.

Look into the loan repayment system

After completing the course, some lenders give borrowers a grace period of six months to find a job they can handle and begin the payback procedure. The lender may have a different grace period. Once you find employment during this time, you can begin the EMI repayment process.

You can speak with the bank representatives, and they will recommend an EMI based on your monthly income. You can begin making the monthly payments if you accept this recommendation. If not, you can agree on a price. In any event, the longest permissible repayment period is often eight years.

ORIGINAL CONTENT:- Types, Rates, Features, and Eligibility of Education Loans