With many higher education opportunities both inside and outside, the number of people pursuing degrees has also risen. A rise in the income levels has also led to many students opting for education outside the country after their graduate education. However, these courses’ cost is quite expensive, making it beyond the affordability of many students.
To fill in the gap, many banks and financial institutions offer education loan for students who want to avail higher education both in the country and outside the country. These student loans cover the following costs:
- Tuition fee
- Library fees
- Exam fees
- Caution deposit
- Purchase of any equipment
- Cost of study tours etc.
- Activity fees
- Coursebooks
- Computer lab fees
- Dorm charges
The actual extent of costs and charges covered by the education loan depends on the lender. Some lenders do not cover dorm charges or any other accommodation charges. The information on the charges covered can be found on the lender’s websites.
How does education loan work?
The education loan works like a traditional loan except for its repayment. The instalments of an education loan do not immediately fall due. It is because the student loan is paid out before the student starts their course of study. The repayment begins between six months to 12 months after the graduation of the student. It is called the moratorium period. However, the principal amount continues to build simple interest which must be paid once the loan repayments begin.
Most student loan in India does not ask for security for loans. However, if the loan amount is very high, they may ask for some security.
An education loan must be repaid in the form of instalments every month. Before you apply for an education loan, you can find out the monthly instalment amount by using an education loan EMI calculator, which is available on lender websites.
The Ministry of Human Resources has started a Vidya Lakshmi website, where people who want education loans can create an account and access education loan offers from different banks and financial institutions. Here, a student can make loan applications and track the applications.
Before you apply for an education loan, it is essential to check the eligibility criteria. The first eligibility criteria are that the student must have confirmed admission into the educational institution, and the student must have accepted the entry. Lenders also check the income of the student to assess the repayment capability. That is why it is better to make a joint loan application along with parents or the spouse to increase the income level under the student loan application.