Nitty- Gritties of Education Loan in India
Education finances are boon for people who want to do higher
studies but could not afford it. Education Loan in India is provided by
banks and financial institutions and covers fee for all years, which is
normally disbursed to the college/institute directly by the bank. The
finance amount also covers most of the boarding and lodging expenses.
Here are answers to questions that boggle one’s mind before taking an
education loan:
What are the eligibility criteria?
The person taking the loan should have secured admission in the
institute. The institute or course of study must be recognized by
UGC/AICTE/AIBMS/ICMR, etc. The person needs to be an Indian citizen and
should be 17 years old or above.
What are the courses covered?
Education Loan in India is available for all approved courses leading
to Graduate/Post Graduate Degree and PG Diploma conducted by recognized
colleges/universities recognized by UGC/AICTE/AIBMS/ICMR, etc. Education
Loan is also available for part time courses and job oriented courses
subject to employability and earning potential. An education loan for
study abroad is also available for job oriented professional/technical
courses offered by reputed universities.
What are the expenses covered?
The amount is provided to meet all type of expenses which are necessary
for completion of course that includes purchase of books, equipments,
computer, travelling, study tours, boarding, lodging besides all types
of fees.
What are Documents required?
Documents like age proof, address proof, proof of clearing last
qualification, prospectus of course, letter of admission, income proof
of parents or guardians, etc are mandatory to be submitted even before
the bank considers the loan application. The bank will verify the
enrollment of the student from the concerned institute. One may also
require collateral security such as papers relating to property to be
mortgaged if the loan amount is above Rs. 4 lakh.
Some banks or financial institutions require all or any of the following documents as pre sanction documents:
What is moratorium period or holiday period?
It is the maximum time given to the student after finishing studies
that go without catering any payments for your loan. Mostly, it range
from 6 to 12 months.
What is the repayment tenure?
The repayment tenure depends on the amount of loan taken and type of
course. The minimum time given to repay the loan is 1 years and maximum
is 10 years.
Why guarantor is mandatory?
The guarantor could be an applicant’s parents or guardians who take the
responsibility for the repayment of loan in case of any mishap. The
bank will go through the guarantor’s credit history and also verify the
same before sanctioning the loan.
Is there any tax benefit?
The moment a person start repaying the education loan, he/she can
deduct the interest amount from the total income while calculating tax.
This means the effective interest rate on the loan works out to a lower
amount.