Education is the fundamental right of every citizen of India, alongside food and shelter. So, do you think gaining quality education is that easy? Moreover, if you are looking to avail education from premier institutions in the country, it could be a costly affair.
And what is the benefit of opting for a premier institute over a standard educational institution? You get exposed to the best professional courses, immense knowledge, and numerous opportunities for personal growth and development.
Education is not easy to come by. Not everyone is born with a silver spoon, and paying off lakhs of rupees at one go is not feasible. Thus, to ensure that people get the learning they deserve, there are education loans that come in handy and offer some exciting benefits. How is it possible? You can gather useful details as given below.
Conditions of Seeking Education Loans
Seeking education loans does not mean walking into a bank and grabbing the desired amount. Things don’t work like that! There are specific ground rules and conditions for seeking education loans. Few of them are:
- The primary conditions for anyone to have an education loan are the fees of the university/college and the income that a family generates per month for the repayment process. For the same, the loan amount is determined.
- You will need a co-applicant to guarantee the loan will be repaid by the person seeking the education loan.
- For loans that are below four lakh rupees, there is no need for any guarantor.
- However, for loans that are above four lakh rupees, you will need a co-guarantor.
- Collateral is required if the amount exceeds 7.5 lakh rupees.
Since we are strictly discussing educational loans within the country, we haven’t included loans for studying abroad.
Interest Rates for Educational Loans
The interest rates can vary broadly depending upon the amount taken, repayment structure, and credit score. However, through the RBI guidelines, the base interest to be charged on educational loans is 9%-10%. Thus, every nominal bank would charge you somewhere in the region of 12%-16% or even higher.
To clarify this matter, we have given some interest rates charged by some popular banks in the country below:
- State Bank of India: 9.30% per annum.
- HDFC Bank: 9.55% per annum.
- Axis Bank: 9.45% per annum.
The above-given interest rates are tentative. These may vary based on the loan amount, duration, and other factors. Females may get education loans for cheaper interest rates when compared to males.
Process of Taking an Educational Loan in India
The entire process of getting an educational loan is like another interview. If you pass it, you get it; if not, try another bank. However, all the necessary steps in availing of a loan are as follows.
- Firstly, you will need to decide on the banks that offer educational loans depending on the course you have chosen, repayment time, collateral, the amount for the loan, and so on.
- Once finalized, you will have to fill a form and have a lengthy discussion with the bank manager about the loan to be given and discuss the interest rates and the amount given.
- The bank will ask for an offer letter or admission letter from the university/college for securing the deal.
- However, the bank might ask for collateral if the amount exceeds a threshold.
- Next, you need a guarantor to ensure the payback.
- Once everything checks out, you should get the loan amount in 2-3 days, and paying off will start either six months to one year after the completion of the course.
The banks may not look into the age (some do). However, they are keen on the course you have taken, the duration of the loan, and the guarantor credit history.
Educational loans are outstanding as they let students pay for their dream course at one go without any burden. So, enjoy achieving your career goals, may it be an undergraduate course or a professional qualification like an MBA, or a CFA certification.
Yes, the stress comes later when you have to repay your dues. However, if possible, try to avoid any unnecessary loans as it would not be healthy for you to give away money as soon as you start earning. And, if you have decided of availing education loan, then choose the right bank with a suitable guarantor to avail of the loan.
It is a calculated risk but pays off beautifully if all the puzzle pieces fall into place at the right time. Do you think so?