As the cost of higher education keeps increasing, people are now turning to taking an education loan that covers their tuition and other expenses while studying in a university/college.
As the cost of higher education keeps increasing, people are now turning to taking an education loan that covers their tuition and other expenses while studying in a university/college. Different banks and financial institutions offer such an education loan to students that helps them to pursue their degrees without the immediate financial burden. In this blog, get to know about what exactly an education loan is, what are the various types of education loan, how it works and the process for application for student loan.
What is an Education Loan?
An education loan, also known as student loan, is an amount of money offered by banks, financial bodies or even governmental organisations to students who need assistance to fund their education. This loan is intended to cover the cost of tuition, books and other living or academic expenses while the student is enrolled in an academic program in a university. You can repay it along with the education loan interest rate after your studies.
Types of education loans
The different types of an education loan are:
Based on Location
a. Domestic education loan: If you’re looking to study at a college in India.b. Overseas education loan: If you’re about to pursue education overseas (abroad).
Based on Collateral
a. Loan against property/securities: Loan can be availed of against recurring deposits/fixed deposits/residential properties/shares/bondsb. Third party guarantee: A third party person promises to repay your loan.
Based on Course
a. Undergraduate education loan: For bachelor’s degree courses of 3-5 years.b. Postgraduate education loan: For 1-2 year long master’s level courses.
Application for student loan
Here is the process for application for student loan:
Check whether you are eligible
First check which student loan you require from the bank or financial body and whether you are eligible for it.
Keep all documents handy
Some of the important documents that you will require are:
Completed application form (ensure that all the details are correct)
Identify proof (Aadhar/passport/Pan/Photographs) as per required
Residence proof (Voter Id/aadhar)
Letter of acceptance from the university/college
Proof of income of the borrower (salary slips/bank statements)
Tuition fees structure of the course from the institution
Choose your desired lender
Many financial bodies offer such loans, so make sure you compare the education loan interest rate, repayment terms and other matters of agreement before you proceed with the application for student loan.
Submit your application
Fill up the application with all correct and relevant details as asked.
Wait for the loan to be approved
The bank will review your eligibility and decide whether they should grant you one. They will inform you once it is approved.
Sign the loan agreement
Once your loan is approved, you will have to sign the agreement with the bank or financial institution lending you the money. This will include all the terms and conditions, the education loan interest rate and repayment terms. Read all points carefully and make sure you have understood them before you sign.
Disbursement of the loan
After you have signed the agreement, the bank or institution will disburse the loan amount into your bank account as per the loan terms and conditions. You can now use this to cover your academic expenses.
Tips for choosing the right education loan
Here are some tips that can help you select the right education loan for yourself:
Compare different loan offers, terms and conditions, their interest rates and repayment options before you settle down on one.
Look for loans that offer lower interest rates
Ensure that the repayment option is flexible enough
The bottom line
An education loan can really help you pursue your higher education in your preferred college and course without any financial constraints. It can considerably help you cover the tuition fees, living expenses and other costs associated while you are studying. When you fill out the application for student loan, ensure that you know your loan requirements and compare different offers to know which one fits best for you. Also keep in mind that you will have to repay the loan amount with added interest after a certain time period. Failure in repaying the loan may lead to legal actions. Thus, be informed of your decisions and take time to research the different loan offers in advance. If you’re about to start your journey of studying abroad, reach out to Immimart and we’ll be helping you match with the right consultants who will assist you in all application and visa related steps.
