Stay smart with your education loan with these 5 factors

No individual should begin their earnings with a debt to repay right in the beginning. In fact, this is a primary fear that prevents students from applying for a loan, in order to achieve their potential. After all, to start one’s earning paying off a previous debt will not leave one with sufficient funds for any other crucial expenditures.

On the hand, the education loan offers plenty of benefits, especially since it elevates the burden of spending one’s saving to gain a high education degree. By opting for this loan, a student can easily get the financial boost to apply for an education degree, which will not only promise a potential return but also put one above the competition.

Furthermore, the loan will help the student to save funds for any unforeseen or additional expenditures without putting a financial burden on them.
But while the educational loan will seem like debt, it, in fact, takes a proper requirement and strategic planning to efficiently afford the loan and repay the borrowed funds back. In order to ensure that your savings are kept safe, here are a few factors to keep in mind before you begin the application process:

Factor #1 – Availability: The education loan is normally available to Indian nationals only. These individuals must have a secured admission to a professional or technical course in India or even abroad. The selection process must be done through a merit-based procedure.

Factor #2 – Loan amount: Most banks offers a loan amount of Rs. 10 lakhs for courses in Indian colleges. For courses abroad, the amount can go up to Rs. 20 lakhs for studies abroad. However, the amount that will be finally provided will be in line with the norms provided by the Indian Bank’s Association.

Factor #3 – Co-applicant requirement: For the application of the education loan, a co – applicant is a must. It can include either parent, spouse or sibling. This is a precautionary step for both the applicant and the bank so that the combined financial profiles will offer a higher loan amount, and the bank will receive an assurance that the funds will be repaid back eventually.

Factor #4 – Provision of collateral: If the educational loan is less than Rs. 4 lakh then no collateral is required. For any loan amount that is higher than this amount, a personal guarantee is required from an individual who has an acceptable income and repayment capacity. For loan amounts higher than Rs. 7.5 lakhs, the lender will require a collateral security

Factor #5 – Repayment commencement period: The repayment procedure is not initiated right in the beginning. The process will begin six months to a year after the completion of the course. This is to keep the simple interest charged during the moratorium period.


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