A Concise Guid
A Concise Guide for a Education Loan for Students in India
December 1, 2014 | 0
Higher education in India is getting very expensive. If you want to do medical or engineering from a decent college then you need a huge amount of money.
For example a five years MBBS course could cost you over Rs 1 Crore, similarly engineering for one semester it is around Rs 70,000 or more.
It is quite possible that many parents in India cannot afford this luxury. They simply do not have money to pay for. Hence, they have no choice but go for an education loan.
In this article we shall look at how you can get education loan to complete your higher education.
What is an Education Loan and Why You Need Them?
Education loan is a special purpose loan that covers special charges related to funding your higher education by a bank.
Education Loan India
Following things an education loan can cover for your higher education.
A Payable Fees to College and Hostel
Caution and Refundable Deposits
Books, Uniforms, Instruments and other Equipments
Computers and other Gadgets
Study Tour, Project Work etc
So these were few expenses that an education loan can pay for. Although there are many others but we mentioned important one.
Eligibility Criteria for Getting a Loan in India
Here in this section we shall debate about basic eligibility criteria for getting an education loan.
Age Criteria: If you are over 16 years and less than 30 years old then you could be eligible for educational loan in India.
Loan Amount: Loan amount could differ because of various factors like kind of courses you choose and you are studying in India or abroad.
Kinds of Courses: If you are going for management courses like MBA, engineering, medical etc then you need higher amount because cost of the course is high and chance of employability is greater. Other hand courses like MA, BA, or B.Sc cost less.
India or Abroad: If you want to study in India then loan amount is less but if you want to study abroad the expenditure is higher.
Loan Amount in India could be Rs 10 to 12 lakhs and the loan Amount for studying abroad can be Rs 20 to Rs 50 lakhs depending upon course.
What You Need to Get Education Loans?
In this section we will see what all you need to get an education loan. We look at things like courses, Institutes, documents, assets and other things.
Let us see them one by one.
Courses: You must go for certain courses if you want a loan.
Graduation Courses: BA, B.Com, B.SC, M.SC, MA etc
Post Graduation Courses: Masters and PhD
Professional Courses: Medical, Management, Engineering, Agriculture, Law, Dental, Computers etc.
Institutes: You must be studying in following institutes.
Courses offered in Institutes must be certified or approved by UGC university grants commission, AICTE, AIMBS and ICMR
Courses must be offered in Institutes like IIT, IIM, IISc, NIFT, Regional Institutes etc.
Documents Required for Getting an Education Loan: Now you know about the courses and institutes that you need to study in it is time to collect all the documents required for getting a quick loan. You need to submit these documents in the bank.
1. Mark Sheet of the last examination you qualified like 10+2. For proof of age you need matriculation certificate.
2. Admission letter from the University or Institute you want to study
3. Now you need a letter from your university mentioning the tuition fees, semester or year wise, cost of living like hostel and number of years you want to study.
4. You need two passport size photos
5. Bank Account statement for at least 6 months.
6. Income Tax Record for last 2 years
So these were some documents you need. For security you need other documents related to your assets. We discuss this in next paragraph.
For Security Tell Your Assets: Now for loan you need to submit liabilities and assets as security. For statement of liabilities and assets you need.
1. Land Agreement of the House, valuation report of the house
2. Legal Opinion to show that your property has no legal issues
3. Any other asset equal to loan amount, documents must be submitted to banks.
4. Up To 4 Lakhs – No Security, Above 4 Lakhs and Less than 7.5 Lakhs – Collateral in the form of third party, Above 7.5 Lakhs – Obligation of parents, third party guarantee.
So for collateral or security you need to have documents mentioned above.
Transferring Amount to the University: After submitting your security and other statements bank may approve the loan amount.
You can ask your bank to transfer the money to your university account or ask the bank to give a Demand Draft in favor of your college.
You need to ask for two demand drafts.
1. First one is for the college fees in favor of your university.
2. Second is for your personal expenses like hostel fees etc
If they give one Demand Draft then it becomes very difficult for students because they do not get their part of money other than college fees. Hence always ask for two separate DDs or traveller check.
How do you Repay Your Loans to the Bank?
Now your loan amount is sanctioned by the bank and you have also deposited to your college. Now you need to complete the college and repay your entire amount with the interest rates.
Usually repayment of loans starts after 1 year or six months of your course completion once you are employed.
The time period for repaying your college amount can be 6 to 7 years and in some cases banks are generous to increase the tenure.
The repayment tenure also comes with a moratorium period.
You need to get a good job in case you want to pay your college debt or loan.
So this was a concise guide for educational loan in India.