All about Education Loan

In this era of extremely high study expenses, it certainly must not imply that a person might not be able to proceed with the profession of his/her field due to a shortage of finances. In such circumstances, an education loan could be of great help. However, to know the depth of borrowing such a debt, let us read on!

What is an Education Loan?

An education loan fulfills the role of bridging the gap between the shortfalls and the required finances in pursuing any educational course. An education loan covers all the basic education expenditures of a student. All the expenses such as the tuition fee, the hostel fees, and exam fee are included. The student usually plays the role of the borrower while applying for such a loan. The parent or spouse can be documented <>as the co-applicant. The interest rate for such loans usually varies from 1.35-3%.

Education Loan Eligibility:

The education loan eligibility criteria might differ from bank to bank. However, the most basic eligibility criteria for applying for an education loan are as mentioned below:

One must be a permanent citizen of India.
One must have secured admission into government authorized university in India or abroad.
Some banks reserve the criteria for the upper age limit. However; as per RBI guidelines, there should be no restrictions as per the person’s age.
Admission Letter from the Institution.
Fee Structure.
Class X, XII and Graduation (if applicable) mark sheets.
Salary Slip and Income Tax Returns of the co-applicant.

How to Apply for an Education Loan?

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Applying for an education loan procedure might vary from bank to bank. The below-mentioned points are some of the most fundamental steps that one might have to follow while applying for an education loan:

Filling up the Application Form: One shall have to fill up the application form to enter the most basic accurate information.
Personal Discussions: The person might have to undergo several discussions. The topics might include the choice of the course, the institute, academic performances and other such aspects.
Verification of the required documents: You shall have to submit the prompted documents which shall be verified by the bank.
Approval/Denial of Loan: After running a check on the financial history of the applicant as well as the co-applicant, the bank shall approve or deny the loan.
Signing off the Promissory Note: If the loan gets approved, the student shall be prompted to sign off a promissory note
Distribution of the loan money: The money shall be disbursed by the bank thereafter.

Repayment:

The repayment process of education loans starts after the completion of the course. In several cases, banks allow a buffer period of 6 months to the student after securing a job. The repayment period usually lasts for 5-7 years. It could also be further extended as per requirement.

An education loan does not only fulfill the purpose of paying the educational fees, it also generates a good credit score for the student to easily procure loans in future.