Every
student wants to do higher education. Many of the students also dream to study
abroad.
They have knowledge, talent and each and everything that they require to get admission for higher studies, but the problem is they do not have the financial resources.
Students
generally depend on parents, but sometimes a parent's income is not enough to
get their child admitted to a good college or institutions.
So,
they need to get an education loan from the bank, but the problem is they
do not know how to get an education loan easily from the bank.
In
the following, we explain to you how to get an education loan easily.
First
of all, you need to get complete knowledge about the education loan eligibility
and procedure for getting an education loan and its repayment.
Which expenses are included in education loans?
An
education loan is a financial assistance given by banks for students who want
to pursue higher study whether in India or abroad.
An
education loan covers the tuition fees, books expenses, clothes
expenses and all other expenses related to studies.
What is the procedure of getting an education loan?
For
getting education loan easily you should take the following step in mind:-
Step 1:
Student
must be eligible for applying loan, generally eligibility criteria is:
- Students must be citizens of India.
- If a student wants to take a loan for higher studies then he must provide academic results i.e. of 10th and 12th and any other study which results are completed.
- Before applying for loan, student must have taken secured admission i.e. That College or institution must give the consent regarding the student for taking admission in their college for the institute.
Step 2:
If
you are fulfilling the conditions of eligibility criteria then you need to go
to a branch of the bank for taking out a loan. The branch will pursue the
procedural part.
Education
loan procedure and term and condition may vary from bank to bank. You can take
out an education loan from a public or private bank.
Step 3
After
checking your documents and loan repayment capability, they may grant you the
Loan on such terms and conditions which may vary from bank to bank.
What are the documents required for getting an education loan?
The
following are some common documents which are required by the bank before
lending you an education loan.
- Proof of Identity of student: Pan / Voter ID / Driving license
- Proof of Identity of Joint Borrower/ Co-borrower / Guarantor
- Proof for residence
- 10th and 12th results of student and result of further study if any completed.
- Offer letter or admission letter from the institution in which you are taking loan for studies
- Passport size photograph of student
- Passport size photograph of Joint Borrower/ Co-borrower / Guarantor.
- CIBIL report is also checking for loans to students by the bank.
- CIBIL report of Joint Borrower/ Co-borrower / Guarantor.
- ITR of the last three financial years of Joint Borrower/ Co-borrower / Guarantor.
- If any property is mortgage then approve the map of that property.
- Bank account statement of last 6 months.
- Results of the course for which you are getting an education loan should be provided to bank when results come for year wise / semester wise ( as applicable)
- Entrance exam results
- Prospectus of the college for institutions.
- Detailed expenditure schedule of students in such colleges or institutions.
How does the bank make education loan disbursement?
Bank
take the confirmation from the said institution in which student want to study
and Bank discuss the required loan amount directly to Institution like first on
request of borrower Bank disburse the fees of first year or first
semester, and for the next semester you have to provide the result of
first semester for taking disbursement of fees of 2nd semester.
So
in this way the bank directly disburses the amount to said college or
Institution.
What is the procedure of repayment of education loan?
Repayment
of education loan starts:
- After one year of completion of course or
- Six months after securing a job of student, whichever is earlier.
So
it means during the course of study you need not to make any payment, but
certain banks are there which demand only interest payment during the course of
study.
Generally
private banks do this, so you need to consult with your bank.
What are the advantages of getting an education loan?
Good opportunity for students
Education
loans provide a good opportunity for students to pursue higher studies, even if
they are not financially capable.
Low interest rate and other benefits
Education
loans have lower interest rates than other loans. The government also gives
many benefits to taking loans.
Note: Don’t
take personal loans for education. You should get an education loan.
Tax benefit
Under
section 80c of Income Tax Act, 1961 you can get deduction of interest paid on
education loan.
This
deduction is available for a maximum of eight year or till the interest is
repaid, whichever is earlier.
Moratorium period
This
is the most important benefit that you need not to pay your EMI during your
course of study.
You
have to start payment of loan after one year of completion of course for six
month after securing a job whichever is earlier.
What are the disadvantages of taking an education loan?
Academic records
Banks
demand good academic records before granting you a loan. If banks feel that
academic results are not good then the Bank may refuse to give loan.
Credit evaluation
Banks before granting loan check the creditworthiness of parents. CIBIL score is checked and if the Bank is not satisfied or they feel that the borrowers will not be able to pay the loan then your loan application may be rejected.
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