How Much Education Loan Can I Get?

by Sunny Dhawan Banking Professional

It is no longer a secret that the education costs are skyrocketing every year. Whether you go to IVY League Schools or top institutes in India, the cost of education is high. According to a report by NSSO average expenditure for a general student has increased by 175%. The figures for higher education are much higher. By 2025, a good MBA degree is going to cost around Rs.50-60 Lakh. In such a scenario, it becomes necessary to take out an education loan. If you are planning to apply for an education loan online, here is what you need to know.

The student is the main applicant: It is important to know that the student pursuing the course is the main applicant for the loan. The student let alone will be responsible for repaying the loan. The co-guarantors, parents, spouse, or siblings, are held responsible in case the student themselves is incapable of repaying the loan.

Loan amount and eligibility

Creditors want to ensure that the applicant has a good employment prospect after completing the course. Therefore, they pay special attention to the course you are planning to study. The choice of college also plays an important role in loan approval. The course should be accredited but also should be pursued from a reputed college. Completing education from top-ranked institutes increases the chances of employment. The brand of the college also affects the amount of the loan. The better the college the more is the loan amount. Creditors classify colleges into 4-5 categories. It starts from A+ or AA and goes till C. A+ or AA category consists of the few top institutes in the country. The interest rates for these colleges are the lowest. The rates increase with every change in category.

Collateral or Not

If you are seeking a loan for a smaller amount, then you will not need collateral. Generally, this applies to a loan amount of Rs.7-8 Lakh. Any student loan beyond this amount may or may not warrant collateral. If you are going to pursue the course from a good college, the amount of loan can go up as high as Rs.20-25 Lakh.

Know About Other Charges

Another thing to remember while taking out a student loan is the cost of other charges. For instance, banks can charge processing fees, pre-payment charges, penalties on late payment of EMIs. These costs can vary from bank to bank. To get a rough idea of how much your EMIs are going to cost, you can use an education loan calculator.

Tax Benefits: Education loan give you the benefit of deductions on the interest you have paid for the repayment of the loan.