What are education loans?

There are many students who may wish to pursue higher education but may not be able to do so due to the high cost of education nowadays. This is where a student loan plays an important role. An education loan provides financial help to those who wish to study further without them having to dip into their savings and pay for it.

Here is an overview of everything you need to know about an education loan:

What does a student loan cover?

Various lenders and NBFCs across India provide financial help to students looking to apply at a university whether in India or overseas. Along with your tuition fees, an education loan will also provide you with financial assistance with living expenses, exam fees, etc. With these expenses covered you can apply for your degree, masters, etc. at the university of your choice without worrying about the financial setbacks.

Who can apply?

The most important factor that lenders look into for an education loan eligibility is that the person applying for the student loan needs to be a citizen of India. Those who have completed their grade 10 education will also be eligible for a student loan. For you to be eligible for the loan you will also need to have proof confirming that you have a seat at the institute you plan to study at. Those who wish to study at a boarding school can also apply for a student loan.

Student loan on the collateral basis:

You can opt for an education loan on a collateral basis, although there are many lenders who offer full financial backing even if you take a loan without collateral. However, those who apply for a student loan on a collateral basis can enjoy the perk of having a lower interest rate.

Interest rates:

Depending on your lender the interest rates on the education loan will either be fixed or floating. A fixed interest rate allows you to repay your student loan in fixed monthly instalments. Whereas a floating interest rate can vary over the life of the loan. Interest rates have a direct bearing on the EMI, the higher the interest rate is the more EMI you will need to pay on the loan. You can use an EMI calculator which will provide you with an estimate of the EMI amount you will need in order to repay your loan for better financial planning.

Repayment process:

Lenders offer you a 6 month to a year moratorium/holiday period after the completion of your university course. This period is offered to you so that you have enough time to start collecting the funds in order to start the repayment process of your education loan. It is generally advised that you start the repayment process as soon as possible. Making timely repayments will ensure a good credit history with your lender which can be useful if you wish to apply for another loan in the future.

With an education loan, you can now pursue higher education at your desired university without worrying about dipping into your savings or facing financial setbacks. Whether you are applying for a loan on a secured or unsecured basis, lenders will make sure you have the financial backing you need so that you can study without worry.

We hope this article has given you the right information about education loans.

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