April 4, 2018

Sreekanth B

Important Things To Know Before Applying For Education Loan

These days, graduation courses like B Com, BA etc. typically cost between Rs 10,000 to Rs 30,000 per year. An engineering degree costs between Rs 75,000 to Rs 2 lakhs per year. And a MBA course will cost you anywhere between Rs 1.5 lakhs to Rs 10 lakhs per year.

Even though as a society, we value education very highly, the rising cost of higher education has become prohibitive and many are not able to afford it. And that is where education loans can help students and their parents. These loans cover most expenses one can have as a student, like tuition fee, hostel fee, refundable deposits, laptops, etc.

Given below are 10 points that will help you understand education loans better and help you when you apply for one: 

1. Before opting for an education loan, the first thing you should do is to assess your current finances at hand. Funding through scholarships, for example, can reduce your upfront loan burden considerably. Once you have shortlisted your choice of course and institute, make sure you speak to the Institute about the available scholarship options.

Important Things To Know Before Applying For Education Loan

2. The next point is to check whether you are even eligible for an education Loan or not? This can be easily checked online through education loan eligibility calculators, which also help you determine the approximate eligibility value.

3. You should check if the Institute you are applying has any association with banks or NBFCs for education loans. This affiliation can help speed-up the loan processing procedure.

4. Make it a point to look up for information about your institution’s placement history, average remuneration for campus placements and earning potential after completion of the course. Lenders take the expected future income into consideration to arrive at the loan eligibility.

5. Check the expenses covered within the loan amount i.e. whether it covers complete tuition fees and living expenses for the entire duration of the programme or not. Also check whether expenses like cost of books, insurance, travelling expenses are included or not.

6. Explore whether your parent’s income will sufficient to meet the eligibility criteria or an additional co-borrower would be required. Do you have sufficient collateral security like House, Flat, non-agricultural land or Fixed Deposit, to support the loan? It is important to remember that collateral security is always preferable since it also ensures a comparatively better rate of interest.

7. Compare not only the rate of interest but also other benefits in terms of easy repayment options, flexibility to pay from abroad, online customer services etc. from your loan provider.

8. Obtain a checklist from the lender beforehand and prepare all the necessary documents to ensure smooth loan processing.

9. Decide the repayment option in consultation with your parents. That is, if you want to start an EMI, or simple interest or want to go for moratorium. If you start simple interest payment or Monthly Installments, it will reduce the burden once you graduate.

10. Know the terms of your loan what is the interest rate, what is the repayment period, and when precisely will the payment begin. More importantly, find out what your expected monthly payment will be upon graduation.

Ensure that you remember these points before & while applying for education loans, as these will help you choose from the best available options in the market.

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December 13, 2016 at 4:20 PM delete

Thank you for sharing such great information. It has help me in finding out more detail about Educational Loans!