a comprehensive guide on education loan

8/6/2019 A Comprehensive Guide on Education Loan

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A Comprehensive Guide on Education Loan.

Earlier parents used to pay for their childs education, however, the trends have changed now because ofthe emergence of some super-expensive higher education zones, especially professional studies, and thenyou may find that your dads pocket is not that deep. The only option then is to take a loan to obtain

education, with the hope that you shall be in a position to pay it back when you graduate from yourearning.

Another reason might be this: You are now an adult and therefore you should learn to fend for yourself.

Well, to be straight not all the teenagers in India are fortunate enough to have parents who earn enough tofund the education they aspire and qualify for. Education has been commodified, and only education from

the top-notch B-school, or law school adds professional skills to your portfolio to get you a placement in

for a good desk job. Such education comes at a great price these days. Many people therefore are forcedto take an educational loan to study.

Though, an educational loan looks as much as a noble cause, banks cannot afford to grant you the loan for

free. Since you arent going to start repaying the loan for atleast 2 years or more from the issuance date,the bank is investing in something that isnt going to start repayment for quite some-time in future. So,

they will be cautious and extra careful when someone asks them for an education loan.

And still, getting an education loan should be a piece of cake compared to the effort you shall put into

getting through a good college, B-school or law school. Read on.

Yes, Education Loan. It can be a blessing for those who want to study and achieve their goals but do not

have the money to pay.

What is an Educational Loan?

An educational loan is a loan that banks offer to students who are taking up educational courses across thecountry and in some cases even planning to go abroad for studies. The bank will give a loan to cover the

tuition fee and a whole range of costs including living costs, cost of laptop and books etc. that one may

incur during their studies.

Do All Banks Offer Education Loans?

All banks in India do not offer Education Loans, although almost all PSU banks offer. Some banks haverestrictions like, the students parents must have a valid bank account for atleast 6 months or the residence

of the person asking the loan must be within 2 km from the bank branch and so on. So, it is our responsibility to perform the entire requisite due diligence to ensure that we know what the

bank will ask for when we go to them for the loan.

Loan Repayment:


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Well, banks are businesses and are run for a profit. Some banks give a moratorium of 6 months after your

education completion to begin repayment, while some give upto 1 year and in worst case, some give younothing. You need to start the repayment as soon as you finish your education.

So, make sure you read the repayment terms and conditions to ensure that you dont get a shock just afterfinishing your studies.

Cost of Education Loans

The cost of a loan is the rate of interest that you pay on the loan. Luckily the rate of interest offered isalmost constant across all banks that offer these loans with a probably a 0.5 to 1% difference at max.Remember that interest rate of 13% with no processing fee is obviously cheaper than a 12% rate of

interest loan with a 2% processing fee.

So, make sure that you check out the cost of the education loan and choose a bank that offers you a gooddeal.

SBI loans start from 11%Corporation Bank gives 1% off for disabled ladies.Axis doesnt have any prepayment charges.Federal bank has different rates for loyal customers and fly-in customers.Bank employees always have an edge over bank customers in some cases rates are lower as much as 1.5%

below normal.

Which courses are eligible for an education loan?

There are many educational courses that are eligible for an education loan. Some are:Courses in India:

1. Graduation courses like BA, B.Com, B.Sc etc2. Post Graduation courses like M.Sc, M.Com, PhD etc.

3. Professional Courses like Engineering, Medicine, Law, Veterinary, Management etc

4. Courses like ICWA, CA, CFA etcCourses Abroad:

1. Post Graduation Courses like MCA, MBA, MS etc

2. Graduation courses offered by reputed universities

Please note that, this is not an exhaustive list. It is just an indicative list that shows you the kind of courses

which are eligible to get an education loan.

Amount of Money you can Get

For most banks, the amount of money you can get as an educational loan varies between 7.5 lakhs and 15

lakhs for study within India (Private Banks offer a higher amount but at a higher interest rate)

The amount is between 15 to 20 lakhs for study abroad. (Again private banks offer a higher amount but

only at a higher interest rate)

What is the Repayment Period for the Loan?

The repayment period is between 5 to 7 years and it depends from bank to bank. You can even choose to

repay the loan earlier than the scheduled duration if you want.


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Are there any Tax Benefits?

Repayments for Educational Loans are eligible for tax rebate under the section 80E of the Indian IncomeTax Laws for the entire interest amount paid towards the education loan.Remember to get an interest paid statement from your bank and use it when you file your tax returns to get the tax

benefits.

What are the Documents Required for an Education Loan?

To be honest, the list below is only indicative and not exhaustive. The documents required may change

from bank to bank, time to time.1. Mark sheets of your last qualifying exam2. Proof of admission into the college

3. Schedule of expenses for the course

4. Photographs (Usually passport size)5. Bank Account Statement of the Borrower for the last six months (If Applicable)6. Income tax Assessment statement of the guardian (Parents or Guardians)

7. Statement of Assets & Liabilities of the co-borrower (Parents or Guardians)

8. Proof of Income of the Guardian9. Identity Proof like Driving License, Passport or Voters ID for both the student and the Guardian

10. Address Proof like Ration Card or Electricity Bill etc

I repeat, the list above is not exhaustive but it covers most of the documents that may be required to get an

education loan.

Important Dos and Donts for Education Loans

Getting an education loan is a long term commitment and requires a lot of thought before you apply for

one. Since its a long term financial commitment, certain things are important and you need to rememberthem. They are:

1. Do thorough research while applying for an education loan

2. See if your requirements match with the requirements of the bank3. Read all documents carefully, NEVER ASSUME ANYTHING4. Try to understand all the terms and conditions properly

5. Dont involve any middle agents or brokers. It is better to deal with the bank directly

6. Preferably opt for a bank that is near your home where you or your parents have a bank account for afew years and have a good reputation7. Make sure you submit all the relevant documents

8. Do not forge any documents in an attempt to fast-track your case9. Do not attempt to bribe anyone

10. Make sure you follow-up with bank officials regularly

So here we start applying for the loan:

Here is a collection of some banks web sites and customer care number who offer education loan.Call them up, suggest them your need, this should be the first step:

1. SBI Scholar Loan: http://sbi.co.in/user.htm?action=sbiEdulLoan 1800-345-3455


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2. Axis Study Power Loan:http://www.axisbank.com/webforms/applyonline.asp?ucode=Personal&ccode=Loans&pcode=StudyPower&Applytitle=Apply%20Online 1800 233 5577

3. HDFC Education: Kindly Visit your nearest branch.4. Corporation Bank Corp Vidya: http://www.corpbank.com/asp/0100text.asp?presentID=110 +91-

824-2426-416 to 420

5. Credila.com 1800-209-3636

These numbers and links are for information on their products, if youre really serious to get a loan, standup, and start walking towards your nearest bank. Dont be worried for any reason. Remember that youre buying a product from them and they should be more than happy to serve you, the

agents who normally do the paperwork get very much elated when they see customers for education loanapproaching them, they cant resist the thought of a bonus and or a promotion too.Yes its a fact that youre giving them a good business.