What is an education loan?
An education loan is a type of loan that is taken by students to pursue higher studies in an institution of their choice. Most students take education loans to undertake higher or professional education either in India or abroad. The loan is usually provide to students who have secured admission in a particular institute.
Eligibility for an educational loan –
1. Students of ages 16-35 years are eligible for these loans. The students should be pursuing graduate, post graduate or PhD programs.
2. In case the loan amount exceeds Rs 7.5 lakh, you will be required to submit a collateral security.
3. Admission certificates to courses in recognized college or universities.
What does an education loan cover?
An education loan generally covers the tuition fees, accommodation charges and exam charges. In case of a foreign institution, the travelling charges can also be included in the loan amount.
Advantages of taking an education loan –
1. Study loans are easily available
Education loans are easily available. Most private and nationalized banks offer a wide range of educational loans designed to cater to a large customer base. The procession time for the loan papers range from 15-30 days.
2. Easy access to quality education
Lack of funds can be a big deterrent if you want to pursue higher education. In today’s world, the world of education has undergone a sea change, courses have now become more specialized. With increasing specialization and improved infrastructure, education has become more expensive. An education loan thus can help an aspiring student to pursue their dreams.
3. Repayment moratorium
An education loan allows you to start paying back the loan amount only a year after you have completed the course or after six months if you get a job, whichever is earlier. The moratorium period gives you a much needed relief from having to start paying the loan immediately after you complete the course. However, you can get an interest concession of 1% if interest is paid during the moratorium period.
4. Low interest rates
Education loans usually have very low interest rates when compared to a personal loan. If a student has a good track record and is seeking out a premium institute then a lower interest rate can be negotiated. For amounts below Rs 4 lakh, there is no collateral required. The interest component of an education loan is eligible for tax benefits till the time you pay off the loan or eight years, whichever is earlier.