Education Loan
While the progressively increasing demand of better education and higher education, it is seemingly not possible for each and every individual to afford the cost of it. Parents or the students who are self-financing their education dream, often find it difficult to finance their studies and at that time, Education loan works wonder. A classic example of unsecured loan with lower rate of interest is Education loan. It does not require any security against the money borrowed up-to certain loan amount, mostly up-to 7.5 lakh as per respective lenders policy. Education loan between 4 to 7.5 lakh are extended without collateral and only the guarantor details are required, the requirement will vary as per respective lender policy. Compared to usual loans, Education Loan usually has interest rates low and tenure higher. The repayments doesn’t start immediately, it starts after 6 to 12 months; when the course that student has enrolled for is completed. The moratorium period up-to 12 months is the time given for searching the job and assisting students to earn to repay the loan. However, never to miss the fact, that if the student who is applying for the course is just going to study, they always would need the co-applicant for their loan.
With various banks and NBFC i.e. all the financial institutions, the loan procedure is pretty much similar. Starting from the last major education qualification marks to the new course what student wants to peruse, actual tuition cost of the course, living expense in not in home city, extra expenses that are to be encored with the studies, if any entrance exam required for that course, Study with-in the country or overseas, job guarantee or possibility after the course completion etc is checked. According to that, the loan amount is decided.
Indian government has started an initiative and launched a website on 15th August 2015 called “Vidyalakshmi” for Student Education Loan. Three Major banks that are providing loans are SBI, IDBI Bank, and Bank of India with their integrated systems. It has been developed under Department of Financial Services, Department of Higher Education and Indian Bank Associations (IBA). “Vidyasaarthi” is a portal that has been started to help the student who seek scholarship for studies across the country and abroad.
Education loan interest rates may range from 9.33% - 14.00% p.a. per annum, depending on the lender, course, educational institution, loan amount, repayment tenure and applicant eligibility. The Annual Percentage Rate (APR) may differ from the stated interest rate because it can include applicable fees and other charges.
Illustrative Example: For an education loan of Rs. 100,000 at an illustrative annual interest rate of 9.33% for 10 years, the estimated monthly EMI would be Rs. 1,285. The total repayment would be approximately Rs. 154,162, including estimated interest of Rs. 54,162. This example assumes repayment begins immediately and does not account for any moratorium period, capitalised interest, processing fees, taxes or other charges. Actual loan terms depend on lender approval.
