To finance higher studies, the general public refers to banks for financial aid in the form of education loans. However, banks do not freely give out loans since they have to maintain their security too. The banks follow certain criteria for education loans so that there is a systematic procedure followed throughout. The following blog discusses things about education loans along with the application criteria for a loan.
Why Do People Apply For An Education Loan?
Education is of paramount importance in today’s day and age however, education can be a pricy venture. Colleges and universities in India and abroad have fees that can go over tens of lakhs and not everyone is capable of paying such a big amount. Ergo, education loans have been a reassuring alternative for aspiring students. In addition, the eligibility criteria for education loan is manageable which also increases their attractability.
Another overlooked fact about education loans is that they are great tax deductors. The interest amount of the education loan can be used under Section 80E Income Tax Deduction.
Criteria For Education Loan
There are factors that determine eligibility for a quick and seamless education loan. These factors are listed below.
- If the student is applying for an education loan in India then the student must be of Indian nationality and this should be backed by proof.
- The student should be enrolled or have proof that is going to be enrolled in a recognized college or university.
- Co-borrowers are an essential part of the criteria for education loans. This can be parents, guardians, siblings or spouse with a good credit history.
- The collateral should be of equal or higher value than the loan provided. This assessment will be needed while applying for a higher loan amount, smaller loans don’t generally require collateral.
- The student should have a good academic background, which primarily in India would be the 10th, and 12th grades for an undergraduate programme and undergraduate grades for postgraduate programmes.
- If the individual is working then a good credit score is also considered one of the criteria for education loan.
Repayment Process For Education Loans
An education loan will be a lump sum amount that is provided at the start of the course duration which will have to be paid back after graduation. There is a 12-month grace period after graduation or a 6-month grace period if employed after graduation to start repaying the loan. The loan will have to be paid monthly in convenient amounts along with the interest. The student can also pay larger amounts or foreclose it before graduating with a processing fee.
Courses That Are Eligible For Education Loan
There are plenty of courses in India and abroad that students can pursue, but not all of them come under the eligibility criteria for student loan. Here is a list of courses that are recognized by major banks.
- Undergraduate degrees and diploma courses
- Postgraduate degrees and diploma courses
- PhD and doctoral programmes
- Certificate courses
Tools To Check Eligibility For An Education Loan
Understanding education loan eligibility criteria is crucial before actually applying for one. Banks can provide this information but you can achieve this online too. There are plenty of tools offered by websites online that help in assessing your eligibility criteria for education loan with just a few simple steps. These tools would require certain information like personal details, income details if employed, college details, etc. The tool would then assess this information and output if you are eligible to apply for an education loan and would also calculate the EMI amounts. Simply searching ‘eligibility criteria for education loan tool’ can direct you to one of these tools and further clarifications can be enquired from their support teams.
1.Is it easy to get an education loan?
Educational loans are widely available in many government and private banks nationwide. These loans can be acquired for any type of higher study be it in India or abroad.
2.Can anybody apply for an education loan?
An education loan can be availed by anybody who is preparing to pursue graduation or post-graduation courses. Albeit, there are certain eligibility criteria for a student loan that has to be cleared.
3.What are the interest rates on education loans?
The interest rates for education loans are comparatively lower than any other type of loan. Nationalised banks have lower interest rates while private banks will have higher rates. The rates can range from 6% to 15%.
4.Which is the best bank to apply for an education loan?
Banks like SBI, Canara, etc have lower interest rates while private banks like HDFC, ICICI, etc have higher rates. On the contrary, private banks have a quicker process compared to national banks.
If you liked reading this blog on ‘Things To Know About The Criteria For Education Loan’ then make sure you check out our other articles below
- Top Education Loan Providers In India For Abroad Study
- Know More About Demand Letter For Education Loan
- Most Googled Questions About Student Loans
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