Education Loan is the one service which has helped for years to aid aspiring students in achieving their academic pursuits. Many-a-times students stop from pursuing higher education because of financial limitations. But its a curious and enlightening fact that many eminent personalities like Barack Obama and Ted Cruz have studied with education loans and achieved great feats. Students who have more information about education loan norms and are ambitious enough to attain good education are always able to pay back their education loan. All information about knowing the education loan phenomenon is listed below so that you can asses if you can avail an education loan in India to attain the kind of worthy education you deserve.
What is education loan?
Loans are termed as money or assets shared with any demandant/applicant with a promise of repayment in future by a certain timeline. Although the financial system has turned this simple definition to a more twisted technical concept, the core idea remains the same. Students in need of huge consolidated funds for pursuing their education generally take the education loan in India, from banking institutions. Applicants with aspirations to pursue courses with outcomes of employability or business generally are able to secure these loans for their higher education.
What are the types of education loan? What is Study Abroad Education Loan?
Study loans can be of as many types as the education programs they fund. There are skill based student loans, student loans for study abroad programs, student loans for diploma courses etc. In a broader category, they are put together as:
- Domestic Education Loan
- study abroad Education Loan
These study loans can be further categorized based on the educational level of the applicant as well. They are also categorized based on secured loans and non-secured loans depending upon the necessity and availability of collateral/guarantee from the applicant. There are other categories as well described below:-
- Based on Education course type
- Higher Education Loan: for degree/graduation
- Diploma Student Loan: for diploma/professional courses for skill-based learning
- Professional Study Loan: for post-graduation/doctoral/post-doctoral education
- Based on the security of collaterals/guarantee
- Secure Loans: covered by collaterals, tangible or non-tangible guarantee, third-party guarantee
- Non-Secured Loan: not covered by any guarantee or collateral and thus liable to risk or forfeit
- Based on loan collateral type
- Loan against property: agricultural and non-agricultural land/flat/house etc.
- Loan against deposits: fixed deposits/recurring-deposits/gold-deposits
- Loan against securities: equity shares/debentures/bonds etc.
- Loan against third-party guarantee: certificate of guarantee from the home bank (for study loan application to another bank), certificate of guarantee from employer (in some cases)
How does education loan work?
Education loan help students pay not only academic fees but also non-academic expenses during their studies. The provision of student loan, like any other loan, comes on the payment terms of an interest amount over the originally borrowed money. Commonly known as Study Loan EMIs, the monthly installments paid against the student loan allow applicants to repay the loan amount borrowed step-by-step.
Who can avail education loans?
Education loans in India are only limited to higher education, albeit scholastic education in India being equally expensive. Study loans are provided to students who’re at least pursuing a professional course approved by government bodies after completing their SSC (10th class or equivalent) and HSC (12th class or equivalent).
Who can provide education loans?
Banking institutions in India which are allowed to provide education loan have to be approved by Indian Banking Association (IBA). These banking institutions are obligated to follow the CSIS (Central Sector Interest Subsidy Scheme) and other regulatory norms to provide the services which are in the best interest of student loan applicants. The two common types of institutions which are allowed to provide study loans in India are:-
- Registered banking institutions
- Non-Banking Financial Institutions (NBFCs)
Education loan from registered banks (features/benefits/conditions)
- Accountability of transactions
- Study Loan insurance facility available
- Lower rate of interest for loan
- Higher education loan tenure
- Extra features like part-payment, health cover, etc.
- Interest Rate subsidies and tax rebates
Education loan from non-registered banks/NBFCs (features/benefits/conditions)
- Higher education loan amount availability
- Low processing time
- Low or no need of collateral (even for high student loan amount)
- Higher interest rates
- Tough repayment timeline
- Extra features like loan against movable property/bullion (gold/diamond deposit loans)
- Wider course and institution eligibility options for applicants
- Higher processing fees
- Lower moratorium period (holiday period when applicants can choose to not pay the EMIs)
It is strongly suggested that students should apply for study loan at a banking institution regulated by IBA and RBI. Only these institutions provide loans which are considered safe in terms of financial security and anti-theft norms.
generally fall in the category of registered banks but there are other NBFCs too, which are becoming more popular with their quick service and easier norms. There is another method by which students can find the best possible blend of services provided by both NBFCs and registered banks. They can opt for Student Loan Experts or Student Financing Institutions. Education loan experts like Buddy4Study EduLoans provide the best of what NBFCs and ‘Registered Banks’ have to offer.
Features of student financing institutions like Buddy4Study EduLoans
- Provide customized education loan (high loan amount, low-interest rate and maximum expense coverage, etc.)
- Can help provide student loan from foreign banking institutions as well
- Can help get extra additional services which do not come packaged with standard loans
- Study loan for scholastic education available
- Relaxed eligibility norms of age, course, and economic background
What are the education loan features? What are the education loan benefits?
What are the expenses covered by the Education Loan?
Education loans cover all sorts of academic expenses of any student. Almost all banking institutions provide loans that cover not only tuition fees but other institutional expenses as well. Students should still check if the bank of their choice covers all expenses they are meant to incur. Higher education especially abroad includes following vivid academic expenses that student loans cover:-
- Tuition Fees
- Capitation Fess
- Registration Fees
- Counselling Fees
- Examination Fees
- Study visits and educational tour fees
- Laboratory Fees
- Library Fees
- Hostel fees/transport fees
- Mess-Food expenses
- Building Fees
- Fixed/Student welfare contribution
- Refundable caution money
- Transport and commute expenses
- Equipment and project expenses
- Laptop, 2-wheeler, transport-pass, wheelchair expenses (necessary)
- Student insurance
- In-flight expenses, outward remittances (study abroad)
- Entrance exam fees SAT Exams, LSATS, GRE, GMAT, TOEFL, MCAT, etc.
What are the qualities of a good education loan?
Education loans are mostly identified by their core terms and conditions, as these decide the extra amount that students have to pay while repaying the loan. These terms and conditions are laid out in the form of:
- Study loan interest rates
- Study loan eligibility criteria
- Collateral requirements
- Loan repayment conditions
A detailed account of what a study loan comprises is listed below:-
EDUCATION LOAN ALL DETAIL IN PDF IN GUJARATI LANGUAGE…MUST READ
A student loan is only provided to students who show a possible surety of repaying the loan back to the bank. To confirm this possibility, banks cite eligibility norms for applicants. These eligibility norms are not only meant for loan sanction but also the student loan tax benefits and subsidies, which are discussed in a later section.
General student loan eligibility criteria for Indian banks is:
- Applicants must be a resident of India
- Students pursuing full-time courses need to have a co-applicant who can be either parent/guardian or spouse/parent-in-law (in case of married candidates)
Eligibility conditions for education loans in India
||Details of loan eligibility
- Undergraduate loans: 18-27 years
- Post-graduate loans: 21-35 years
- Doctoral courses: 27-55 years
- Post-doctoral courses: 27-65 years
- Undergraduate degrees/diplomas and special courses
- Postgraduate degrees/diplomas and special courses
- PhDs and Doctoral Programmes
- Certificate courses (minimum duration 6 months and above)
- Other technical and job-oriented courses
- Government Universities/Colleges/Institutions (Delhi University/BHU/etc.)
- Government aided/private reputed institutions (IIM/MDI/Xavier’s/IIT etc.)
- International Institutions (depending on bank’s individual approved college list)
- Professional institutions (ICAI/CFA/etc.)