Student loans are a boon for people who want to study but struggle with financial constraints. The concept of banks paying for your education while you study and then repaying when you start earning is a great boost for banks, as well as for your career. Almost all major banks in India offer loans to students. The quantum of loan depends on the collage and the course. The most significant advantage of a student loan is that it can be repaid a year after completion of the course or after securing a job, whichever is earlier.
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To get a student loan from a bank or a financial institution, the applicant needs to fulfil some basic eligibility criteria. Listed below are the general eligibility criteria for a student loan:
To avail an education loan, the applicant must submit a specific set of documents. The documents required for the loan are same for all banks. The list below shows the documents that need to be submitted for a student loan:
The rates of interest on student loans are slightly higher than home loans. Though the rates of interest vary across banks, they generally belong to a range of 11.75% to 14.75% per annum. The students who secure admission in prestigious institutes like IIT or IIM can avail the student loan at a relaxed interest rate. Certain public sector banks provide a lower interest rate for female applicants.
Listed below are some of the features of student loans in India:
Education loan can not only be availed by students studying in India but can also be taken by the students who wish to pursue education from a college or university abroad. The money required for pursuing education in a foreign institution is much more than that required for completing the course in India.
For example a post graduation course in India is much more expensive than that in the U.S which can cost up to Rs 30 lakhs each year. An applicant who wishes to study abroad has to manage the money required to continue and complete the course. As education abroad is expensive and banks have a specified limit up to which the education loan can be sanctioned, the students require to either look for scholarships or take up part time jobs to manage the expenditure. The applicant requires insurance as it is compulsory for education loan for study overseas.
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In India, almost all financial institutions offer education loans to students. These loans can be availed for various professional courses, post graduation courses in the field of engineering, management or medicine. The loans can also be availed for vocational and part time courses as well. The interest rates are lowered for students securing admission in premier institutes like IIT, IIM or NIT.
The banks can finance up to 100% of the loan depending on the amount. Currently, for loan up to Rs 4 Lakh, there is no margin money required. For studies in India, 5% of the money has to be financed by the applicant. On the other hand, for studies overseas, the margin money increases to 15%.
The education loan covers the below mentioned expenses:
The applicant must belong to the age group of 16-35 years to avail a student loan.
Yes, a co-applicant is mandatory. The co-applicant executes the loan as co-borrower who can either be a parent or sibling of the applicant.
Yes. Pre-closure of student loan is possible; however some banks levy a prepayment fee on pre-closure of loan.
The amount of loan that can be taken depends on the cost of the course. It also depends on the country where the applicant is doing the course.
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