Many of us are used to the idea that our parents are going
to pay for our education. However, this may be difficult in many cases if you
are opting for super expensive professional studies. A model has emerged now
under which students go to expensive colleges that lead to good recruitment,
making it easy to pay for the educational loan when the student is finally
employed.
Education has been commoditized and studying from the
top-notch B-school or law school adds to the professional skills in your
portfolio and gets you a placement for a good desk job. But often such
placement-guaranteed education comes at a great price. The only option when you
don’t have the moolah then is to take an education loan, with the hope that you
shall be in a position to pay it back from your earnings after graduation.
Understanding Education Loan
An education loan is a form of credit advanced to scholars
and students; it is designed to help students pay for college tuition, books,
laptops, hostel fees and other living expenses. It differs from other types of
loans in that the interest rate is often substantially lower than most other
loans and the repayment schedule is deferred while the student is still in
school. It is priority sector lending for bank and also often relatively
profitable – so most banks offer educational loans in large numbers.
An educational loan looks like a noble endeavour, but banks
cannot afford to grant you the loan without assessing risks involved. Since you
aren’t going to start repaying the loan for at least 3 years (5-6 years in case
of law students) from the issuance date, the bank is investing in something
that isn’t going to start repayment for quite some-time in the 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. It can be a blessing for those who want to study and
achieve their goals but do not have the money to pay.
Where does it come from?
Good question indeed.
Not everyone can offer a credit which you are going to
return after n number of years. Here in India almost all the Public Sector
banks offer Education Loan.
Some of the nationalized banks such as SBI group have
special programmers, some of them are:
Lower interest rates for girls, SC, ST, disabled.
Lower interest rates for toppers, etc.
Taking education loan in India
from government bans like SBI, Corporation Bank or UCO Bank is advisable
because private banks impose stricter and more difficult conditions for educational
loans.
Requirements:
Some banks have restrictions like:
The student or the guarantor should have a valid bank
account for at least 6 months,
or the residence must be within 2 km from the bank branch,
and so on.
The documents required may change from bank to bank, time to
time. Usually the following will be asked for:
Mark sheets of your last qualifying exam
Proof of admission into the college
Schedule of expenses for the course
Photographs (Usually passport size)
Bank Account Statement of the Borrower for the last six
months (If Applicable)
Income tax Assessment statement of the guardian (Parents or
Guardians)
Statement of Assets & Liabilities of the co-borrower
(Parents or Guardians)
Proof of Income of the Guardian
Identity Proof like Driving License, Passport or Voters ID
for both the student and the Guardian
Address Proof like Ration Card or Electricity Bill etc.
The list above is not exhaustive but it covers most of the
documents that may be required to get an education loan. So, it is your
responsibility to perform the entire requisite due diligence to ensure that you
know what the bank will ask for when you go to them for the loan.
Important Do’s and Don’ts for Education Loans
An education loan is a long term financial commitment,
certain things are important and you need to remember them. They are:
Do thorough research while applying for an education loan.
See if your requirements match with the requirements of the
bank.
[Source: http://blog.ipleaders.in/how-to-get-an-education-loan-in-india/]
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