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I can understand a lot of students who go for graduation after passing high school or go for post-graduation after graduation, a lot of time we don’t have sufficient funds available to us Our parents sometimes are not capable of paying our fees in full. Courses that were there 15 years ago, if I take an example of MBA so the courses which we could complete in 3-4 lakh now costs more than 20-25 lakh in some institutes, in facts in popular institutes too.
So it is very normal that you don’t have sufficient funds available
so in today’s date, many loan options are available
we will understand the whole process.
- What are the eligibility requirements, what are the documents required ?
- how much interest rate is charged, what is the moratorium period, etc?
But before starting let me discuss one more thing with you.
Whenever you go to get an education loan then don’t do any degree or course blindly you first research, how are the course and its prospects. Are there any placements or not and you also see if there are any tie-ups for a loan with the institute or not. And how is its brand value? If you let say go to a tier 3, tier 4 college college and let’s say you even take a loan for 4-5 lakh, 10 lakh. And by chance, you don’t get placed. So your parents could get a huge financial burden.
You could also get a lot of financial tension, by chance, if you don’t get a job from there. Yes definitely if you got admission to a good institute and their placements are great, then you can take an education loan. So lets under the whole process in this that what is the process of education loan. so let’s head straight to the blackboard.
First of all, let’s talk about the eligibility for an education loan that who all can get this education loan. Any Indian nation having age between 16 to 35 can get this loan. Generally, there could be different criteria set by bank too, some bank considers from 15 to 35,36 I am telling you an average age here, which is generally considered by all the banks.
Your admission should be confirmed in any college or university which is UGC government or AICTE approved. If you are going to abroad for studying, you should get a confirmed admission letter then only Indian bank will give you a loan. You could get this loan for graduate and postgraduate courses
(Degree and Diploma courses)
Some banks could also give loans for vocational training courses like Aviation pilot, air hostess training courses for that also some banks give loan. Co-applicant is compulsory in case of education loan, I will start marking it here. Keep this in mind. Bank insists co- applicant basically to improve their security by-chance as a student you do a course and couldn’t find a job, hence won’t be able to do the repayment of the loan.
So for this reason it becomes a responsibility for the co-applicant to repay the loan. Now who can be co-applicant your parents or guardian or your wife/ husband. Or they could be your parents-in-law, mother in law and father-in-law.
So what does all education loan covers?
The First 100% of the college tuition fee is covered, accommodation charges, your hostel expenditure, and mess fee is covered, exam and library fee is covered, if you need any books, equipment or uniforms all of that gets covered like a laptop or if you are doing any technical courses and there is a need for equipment it is also covered. Traveling expenses, suppose you travel to other cities for study that is also covered. And any other expenses towards study are also generally covered by the bank. Now see let’s talk about how much loan amount can you get. So basically if you are going to study in India then you can get a loan of up to 15 lakh very easily.
If you are going abroad for study then PSU bank give up to 20-25 lakh as a loan
but some private banks could also give up to 75 lakh. If we talk about collateral or security, if you take a loan up to 4 lakh then no collateral or security is required, this is a kind of unsecured loan. But your parents are joint borrowers, co-applicant as we talk earlier. So basically bank reduces their risk by making them co-applicant. For Rs 4-7 lakh, a joint borrower is required, your parents your parent or guardian will be joining the borrower. plus most of the bank asks for a third party guarantor, any of your relative which can give a guarantor that by-chance if you were unable to repay the loan then they will. If you take a loan of more than 7.5 lakh then along with a joint borrower you need to give collateral security as well. Collateral security means you need to mortgage something with the bank. Now this could be a property, fixed deposit, or any life insurance policy or it could be any non-agricultural bank. Now let’s understand the moratorium period.
So until when you finish your course whatever is your course period at that time maybe you don’t have the capacity for loan payment plus it could happen that you don’t get a job immediately. So bank gives you a relaxation period of 1 year after completion of your course that you don’t need to pay interest or principal in that time. But yes keep in the interest will keep on accruing that you need to pay later when you will start your loan repayment. So course period + 1 year or 6 months after getting a job whichever happens first, you get that much moratorium period. See here, I’ll explain it in the timeline a little bit. Suppose your course is of 4 years, 0-4 years this is your course period, right? So at this time neither you will have a job nor repayment capacity at that time maybe your parents have loan repayment capacity, then you can repay the loan but you get this flexibility. Suppose after 4 years, you get your job after 3 months, so minimum you get 6 months at that time also if you want you can stop your loan repayment.
By chance you don’t get a job then also bank gives one year let’s say you will not do any payments for up to 5 years. But suppose you don’t get a job after 5 years, then you need to startyour loan repayment,
