Educational expenses are increasing by leaps and bounds and many people cant afford good education these days. If cash is your hurdle when it comes to education then education loans have come to your rescue. These education loans cover all the tuition expenses and other expenses incurred during academics. All you need to do is complete few formalities and give your documents.
Education loan is a great financial assistance that can shape the future of your child. Usually banks or financial institutions provide loans for courses like medical degrees, engineering or management studies.
Eligibility:
- The applicant should be an Indian national
- The applicant needs to show a secured offer letter especially if studying overseas
- Those applicants applying for colleges or Indian universities should have an admission through proper selection process.
There are several private banks, foreign bank, nationalized banks and private lending institutions that offer student loans. Some of the most popular banks are:
- Axis Bank Study Loan
- Bank of India Loan
- Bank of Baroda Loan
- Bank of Maharashtra Loan
- HDFC Education Loan
- ICICI Bank Education Loan
- IDBI Bank Education Loan
- Indian Overseas Bank Loan
- Oriental Bank of Commerce
- State Bank of India Loan
There are various terms and schemes offered by banks. At present they can offer up to Rs 20 lakh for studying overseas.
Following expenses are usually covered.
- Travel expenses
- Cost of two wheelers
- Examination and hostel charges or accommodation
- Cost of books, uniform and other equipment required
Education Loan Repayment
- The repayment needs to be done usually one year after the course is completed or after six months of the course when a graduate gets a job. It is in the form of equated monthly installments.
Security
- For the loans of up to Rs 4 lakhs no security is required.
- If the loans are in the range of Rs 4 lakhs to Rs. 7.50 lakhs then there is an involvement of third party guarantee.
- If the loans are above Rs Rs. 7.50 lakhs then collateral security or guardian/parents/third party guarantee is required .
The security can in various forms like land/building, public sector bonds, units of NSC, KVP, UTI, gold, shares or LIC policy. It can be bank deposit in the name of parent/guardian or student.
Tax Benefit
- One can also avail tax benefit. The repayment of loan is deductible under Section 80C according to the Income Tax Act. This is usually for the loans taken for higher education like post graduate courses or masters. It is deductible for usually eight years starting from the day of repayment.
Following is some of the factors one should compare before applying for any education loan.
- Interest rates
- How the interest rate is charged?
- The waiver period
- Fees and other costs like administrative fees, processing fees or documentation costs.
- Collateral, guarantee required.
- The down payment which has to be made with every loan. It ranges from 5 percent to 20 percent of the amount.
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