To get a successful career in life quality education is a must. However, the cost of education is rapidly increasing. In fact, the cost of studying at reputed institutions is already quite high. Keeping this in mind, this article has been prepared by our expert team to acknowledge you about Education Loan.

In this phase of result declaration by various board, students must have planned for graduation from a top institution or universities. But they are also hesitant to go in top reputed institutions because of higher cost to study.

To get rid over the high cost and shortage of money students have another option i.e., education loan. Various financial institutions provide students education loan to covers the basic course fee and other related expenses such as (college) accommodation, exam and other miscellaneous charges. According to a study, the cost of education is increasing at an average of 15% per annum.


What is Education Loan?

Education loan provided to a student to fulfill his educational commitments. It is a long term loan and the payments are deferred till the time the education is completed and After that for a period of extra 6-months or when the borrower finds a job, whichever is earlier.


Who is eligible for the Education loan?

Generally Student is the main borrower of Education Loan. However, A parent, spouse or sibling can be the co applicant. The applicant for the loan should be an Indian citizen. Parent’s background does not matter for the education loan. Even if the father's income is low, the bank approves the education loan if the child has scored good marks.


How to apply for the Education loan?

Students will have to submit additional documents such as admission letter of the institution, fee structure, Class X, XII and graduation (if applicable) marksheets in front of the bank official. Also the bank required income documents such as salary slips or income-tax returns (ITR) of the co-applicant.
Once the loan application passed, the banks disburse the amount directly to the college/university as per the given fees structure.The banks can finance up to 100% of the loan depending on the amount of fee chargeable by the institution.


How to Repay the Education Loan?

Student is liable for the loan repayment. Generally the liability to repay the loan starts when the course is completed. While some banks provide a extra relaxation period of 6 months after securing a job or a year after the completion of studies for the repayment of education loan.

The period of repaying the loan is generally between 5 to 7 years, but can be extended beyond that as well.

Bank charges simple rate of interest on the education loan during the course of period. This help in lessen the burden of equated monthly instalment (EMI) on the student for future repayments.

The person repaying loan can also avail the deduction under Income Tax for the interest paid on the repayment of the loan under section 80E of the I-T Act.


Note: Before applying for the loan, one should properly check the terms and conditions of the loan like bank charges such as those related to processing, pre-payment, late payment of EMIs, etc.

 

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