An education loan is loan offered by banks to students to pursue their higher education. It helps students to pay off education related expenses. One important thing to be noted is the education loans are offered at low interest rates and the students are required to pay the education loan only after their completion of the course. This article shows how to approach a bank for education loan and what are the pros and cons of the education loans.
- The eligible criteria which will be considered when providing education loan are:
- Admission for any professional/technical course in an institution either in India or abroad
- Some banks may also have an age limit.
- Good academic records.
A student can approach for education loan by directly visiting the bank or by visiting the bank’s website online. A student can visit various bank’s website and can go through the norms of the bank for providing education loans. Some of the factors that can be considered while looking for a loan are the maximum loan amount sanctioned by a particular bank, the security criteria which you are required to provide to the bank, the next thing is the interest rates and the repayment period. The loans provided for education in India and overseas vary from bank to bank. So one can search for the education loan provided by various bank and select the bank which suits his needs.
One you are done with the selection of bank in which you opt to ask for loan you should approach the bank with the following documents:
- Proof of admission for professional/technical course in an institution.
- Proof of residence.
- Proof of age.
- Financial documents like salary statements of parents/guardian.
- Resume of the student, clearly showing his past academic performances.
- Some banks may also ask for collateral security in the form of third party guarantee or 100% collateral in any of the form of Immovable property / NSC / Units of UTI / LIC policy / RBI Bonds or any transferable Government securities.
Pros and Cons of Education Loans
The advantages of education loans are as follows:
- Education loans are really a boon for Indian students which bring education into the reach of even poor and needy students. So a good education can change a person’s life.
- The education loans are given at less interest rate for students which are also a great advantage for students.
- Repayment of the education loan can be done after getting a job within the grace period, once after completion of the course.
However education loans have few disadvantages too. They are
- Lack of proper understanding: A student should be very well aware of the terms and conditions of a bank. Some bank’s disclosures are very difficult for a student to understand. So one must carefully analyze it getting loan. Else the student might face difficulty at the time of repayment.
- A student must analyze whether he/she will be able to repay the loan within the stipulated time. Else the student may come under the pressure for bank which asks for repayment.
- Some banks may not disclose the processing charge or the amount charged for delay in payments. If the students are not aware of it, this may increase the overall loan amount.
Related: Case study on Education Loan
A good future comes from a good education. As the cost of education is getting higher and higher undoubtedly education loan is lending a helpful hand for students and help in bringing the lights of knowledge in to their life.