Education Loan – Education is the most powerful weapon which you can use to change the world. It is a famous saying by Nelson Mandela. We all understand the importance of education hence we always wish that our children go for best school, colleges and opt for the highest level of education. However, main challenge is availability of funds. Education is becoming costly day by day. Be it engineering study or MBA or medical you need to spend money for the higher education.
To fund this education many parents, make investments such as fixed deposit, mutual funds, shares etc. However, if you have not provision money for higher education of children, education loan is one of the best option.
Education Loan & Student Loan for Higher Education
Education Loan or student loan covers the basic course fee and other related expenses such as college accommodation, exam fees etc. Student loan is given to the student, hence it is known as a student loan. The student act as main borrower. A parent or sibling can act as co-applicant.
Key Features of Education Loan
- This loan is given to student who want to study in India or pursue higher education abroad.
- This type of loan can be taken for full-time, part-time, or vocational course, engineering, management or medical studies.
- The maximum amount of loan offered for study in India is 7.5 Lakh, while for study in abroad the limit is 20 Lakh.
- For higher loan amount you need to submit the collateral such as property, FD, LIC policy etc.
- The applicable interest rate is in the range of 11.25% to 13.5%. The interest rate varies from bank to bank.
- Once the loan application is accepted, disbursal take place directly into account of school or universities.
- There is no upper age limit, but many banks impose age restriction to avail this loan.
- Repayment starts immediately after completion of course. Most of the bank give relaxation up to 6 months to start repayment.
- Student loan covers 80-90% of the total cost.
- The interest paid on the loan is eligible for tax rebate under section 80E.
Documents required for education loan
The list of documents required for education loan is Proof of Identify, Income proof of parent, address proof, bank statement for 6 months, a copy of admission letter from the institute, a copy of previous academic records. The requirement of documents may change from bank to bank.
Things to consider before taking Education Loan
- The first thing to consider before taking an education loan is interest rate applicable on the loan amount.
- Another thing to check is the maximum loan amount offered by the bank. This point is applicable only if you are planning for a higher amount of loan.
- You should also consider loan processing charges, prepayment charges and late payment charges applicable on the loan.
- The only interest amount is eligible for tax dedication under section 80E.
- One should also check the requirement of collateral on the loan amount.
- You should do proper research before finalizing the loan.
I hope the information given above will help you in making a selection of right loan for education.
If you have any queries about getting education loan, please feel free to post it in the comment section given below.