Are you in search of better education finance resources?

Education is vital part of individual’s success. A well educated person can develop his or her career very well in business or job verticals of their choice. They can achieve great heights in career path and live a successful life. Beyond this it’s the overall growth of the nation that is highly dependent on quality education of the youth. However, education prices are escalating with each year passing by and the costs is shooting sky high. Many parents are often into tensed situations on how they can bridge up the finance of creeping educational fees with little savings they have in hand.  There are options like scholarships for Indian students, traditional finances, property mortgages, or alternative subsidizations. But these options have to be thought and worked upon beforehand, as it can be time consuming process. Secondly, these finances medium have extremely high rate of interest, limited time to repayment and no flexible options to makes repayments.

Thus, education loan come as the best helping hand for millions of needy students who wish to achieve great height in their career. Parents have been exploring the educational loan tool to make sure their children get the best and their financial status does not bring any hindrance to their goals. The article discusses some tips along with some of the finer points that one needs to consider before applying for an education loan:

Educational loans are available to any Indian citizen between the age group of 16 to 35 years of age and willing to pursue higher education. They are usually approved for students who have either secured an admission in any designated college or educational institute approved by the bank or the private finance firms.

Many times while taking admission in foreign university students have to show sufficient proof of funds. Every student has its own set of problems such as getting a visa clearance, fund approvals, slow loan processing, incomplete finances etc. Some of the leading private finance firms have come up with unique and friendly solution for customers such as Pre-Visa Disbursement Loan, Pre-Admission Loan, Certificate of Availability of Funds, GRE score based loan, Bridge loan, fast track loan etc. which cater exclusively to students’ particular requirements and set them free from any form of obstacle in their road for career development.

Let’s understand these factors to be considered while applying for student loan:

Interest Rates:

It is the first and the foremost part on any format of loan. Although, there are some banks who charge very high interest rate but due to growing competition it is the customer who gets the end benefit. Some private finance firms offer loans with interest rates as low as 12.75% and the processing fee is mere 1-2% of the loan amount being calculated on a case-to-case basis.

Interest Charged

Banks or firms start charging the interest immediately after the disbursal of the loan. The interest charged will determine the amount of interest you will pay. You should enquire with the bank or firm whether its charge on a daily reducing balances, or quarterly reducing balance. The interest rates charged on loans thus keep accumulating until you start the repayments.

Waiver Period

Usually, a waiver for payments after the completion of loan is offered. It is six months if student receives the job or one year incase they are trying to get a job. The period of waiver is termed as “Moratorium Period”. Check what options your company is offering so that you get comfortable financially before they ask you for a repayment.

Fees & Costs:

Education loan takes complete care of your expenses incurred towards the tuition and other fees, library charges, hostel and mess charges, cost of books and equipment, maintenance, caution fund/building fund/refundable deposit and cost of passage (for studies abroad if applicable), etc.

Collateral, guarantee or security

Usually for loans up to Rs. 4 lakh, no collateral security is required. For loans ranging from Rs. 4 lakh to Rs. 7.50 lakh, collateral in the form of a satisfactory third party guarantee is required. For loans above Rs. 7.50 lakhs, collateral in any of the form of Residential property (house/flat/apartment), Fixed Deposits, Life Insurance with surrender value equivalent to loan amount, Existing house mortgaged and Non-agricultural land can be considered.

Down payment

While government banks demand for margin money of around 15-20% of the loan amount to approve the loans, some private finance firms give loans at no margin money costs. They design study loans without setting any cap on finance and provide 100% coverage of education costs, making such young talents of India free from unnecessary burdens.

Students should understand their education loan in terms of fund allocated, expense covered, interest rate applicable, discount or concession available, tenure for loan clearance, repayment options, strategy for repayments and other costs they’ll have to incur on their own.