Education is an integral part of people’s success. The better the education is, the higher the income and life style becomes and better returns in terms of remuneration and recognition is obtained. So, the primary focus these days is on obtaining the best possible education be it any sector or faculty and this involves a focus and a lot of money to prepare for the future right from the cardinal.
Everyone wants to get admission to the best of the courses and best of the institutions and this incurs a lot of money not just for the education but also the stay and logistics. There are number of options available to seek fund when in need in the open market apart from the personal savings. Personal Loans, Mortgage Loans, Departmental loans and Educational loans are the widely sought options. Indians prefer going abroad for a higher education as foreign education not only grooms the individual but also promises a higher return in terms of remuneration and a far better lifestyle as compared to that in India.
Earlier the people sold out assets comprising of Gold and land for getting their children educated better at bigger cities and abroad which was a disguised loss in the long run because of the appreciation of the assets was slow as compared to the returns. With time there were many options available to choose from offered by the banking sector like personal loan, mortgage loans, Gold loans and even loan against bonds. But of the most lucrative and fast to process loans Personal loans, Mortgage loans and education loans are most sought after.
From the wide range of the Loan options available why should one prefer to go for Education loan?
1. Personal Loans have high rate of Interest and the tenure for the pay back of loans starts immediately. It is not granted on the name of students and hence it requires an earning family member to acquire the loan which causes an added liability on the other members of the family.
2. Collateral or mortgage loans require something as a security making the borrower tied up for the specific tenure here also the formalities are not easy as it requires the other members of the family to be involved.
3. Educational Loan is granted on the name of the student along with a guarantor to the loan and thus eases the documentation parts. Also it is cheaper as compared to the personal loan and the liability of the repayment lies on the one for whom it is taken and not the other members in the family only in case of default , which is very rare, is the guarantor responsible.
Education is expensive and the growing demand cannot be predicted as every day the expenses keep increasing and varying depending upon the changes in course structure and equipment costs. Education loan enables the scaling be proportionate to the course and increase in the fee.
A specialized help by the experts is provided and an organized way to tackle the changes according to the running risks is calculated on basis the records from the past trend.
Education loan is easy to obtain and is available widely as a product sold by most of the financial institutions. RBI lists them as a priority product in the lending sector, thus making education loan hassle free and available timely as it serves as a pillar for a successful future.
The prominent features & Benefits of Education Loans :
Educational loan are widely available and cover mostly all courses in domestic sector and abroad. People with a will to study can apply with minimal paperwork, mostly all the approved and recognized academic courses are covered including certificate and vocational courses.
The salient features of Educational Loans include :
- Minimum Loan Amount= 50000/- (preferred, there isn’t any minimum amount but banks start from lending amount of 50000)
- Maximum Loan Amount for studying in India = 10 lakhs
- Maximum Loan Amount for studying Abroad = 15 – 20 Lakhs. (Thirty in special case approvals for studying abroad only from SBI)
- The loan amount is proportionate to the annual family income of the applicant. There are many schemes run by the Government like CSIS which provides subsidy on interest to help the students from the financially weaker sections opt for educational loans at subsidized rates.
- Different Banks provide different Rates of Interests on different loan slabs. The Interest rates slab varies between 9.7 – 18 percent depending upon the loan amount and tenure.
- The Repayment tenure varies between 5 to 7 years after getting on board. Under specially approved cases for foreign education the tenure can be extended upto 10- 15 years as well.
Educational Loans requires a Guarantor on amounts above four lakhs, below that guarantor is not usually required.
How to compare the education loans and choose the best?
Most of the career counselors have the details handy and they can suggest the best option depending upon the requirement and capacity to which the repayments can be served by the borrower. There are also online portals and websites of the banks that provide the complete details about the loan.
But the final call is borrower’s, one should keep in mind the following the three F’s while choosing the best option:
- Formality : the ease of documentation.
- Flexibility : the tenure and interest changes if want to pay back in portions.
- Foreclosure : prepayment of loan before the end of the tenure.
The basic formalities and documentation required
Mostly the documents that should be handy while applying for the education loan with any of the financial institution are as follows:
- Marksheets – attested and self – attested.
- KYC documents: Address poof, Age proof and Identity Proof
- Domicile certificate.
- Admission Papers.
- Fee details and bifurcations.
- Parent/ Guardians / guarantors documents.
- Relationship proofs and affidavits.
- Valid Passport and visa formalities.
- If earlier employed then resignation/ clearance or study sabbatical details.
Top Banks Offering Education Loans in India with minimum documentation and proven track records are:
SBI Education Loan : India’s favorite name in Banking, with all products at reasonable rates and a recognized Bank with customer friendly environment, this is a nationalized bank preferred over all private sector banks. Its vintage and reliability is earned in due course of time.
Axis Bank Education Loan : India’s third largest private sector bank, erstwhile Unit Trust of India. Customer service oriented user friendly Bank entrusted by millions.
HDFC Education Loan : India’s fifth largest bank with competitive interest rates and one of the first to be student centric Private bank.
Punjab National Bank Education Loan: Preferred bank in the northern parts of the country with proven track of customer satisfaction.
Note : Don’t forget to visit Banks or their official websites to know more about the education loans , formalities and current rate of interests.