In this article, we’ll discuss about one of the most important banking services for students: Education Loans.
How many times have you liked something a LOT but the price tag came in the way? We bet even as you’re reading this you have THAT ONE dress, kicks, piece of jewelry, watch, or gaming console going round in circles, almost making you shed a tear. These are relatively minor things and may not bother you as much. But let’s ask you something else. Do you have a dream of pursuing studies at a specific university? Maybe at a foreign university in your dream destination? London, USA, Germany, or more? If you’re nodding yes to this, you must already be aware of how brutally tough it can be, financially, especially when coming from a regular middle-class background. And this one, this unfinished lingering dream, it bothers, for the rest of life.
But how about we tell you a way to make it happen? A legit, no-bluff way around. It is, not much to your surprise since you’re here from maybe a google search and have read the title already, Education Loans. Read ahead to know all about–
- What is an Education Loan?
- All the Expenses under the Umbrella of an Education Loan
- The Types of Education Loans
- Why take an Education Loan?: Features & Benefits
- How do Education Loans work, really?
- Vidya Lakshmi
- What makes YOU eligible for getting an Education Loan?
- The <Ultimate> Checklist of Essential Documents
Curiosity at peak? Let’s begin!
What is an Education Loan?
Popular by various variations of its name – Education or Educational Loan or Student Loan or Study loan, this is what can eliminate the big question mark on finances that stands between you and your education.
An aid or helping hand for students around the globe, Education Loan helps one to be able to pursue education, be it Indian students in local or foreign universities or any, by evening slash removing the financial breakers coming in the way. These are peculiar to provide assistance and cover costs for finances related to higher education i.e. college/university level such as undergraduate or postgraduate degree courses, professional courses, diploma courses, and other career-oriented courses.
Making note of the entire educational journey, every and overall needs, the costs or expenses under the umbrella of education loan are—
- Tuition Fee: These are simply the basic fees that educational institutions charge students for offering classes, and lectures and primarily obtaining a degree towards the culmination. Institution type, course, level of study, and more –all influence this fee.
- Books, and Other Supplies: Provides for the purchase of books, and other stationary-related supplies, as well as uniforms, equipment/instruments, etc. These may also take into the list library and other subscriptions etc.
- Accommodation and Living Expenses: These include housing or accommodation, which is the place of stay that the student opts for, and related basic day-to-day expenses.
- Travel & Transportation Expenses: These are the charges involved in everyday commutes to longer travels such as flying abroad, or more.
- Computer and Technology: Consists of the gadget and tech appliances that may be part of the course. A basic laptop is an example.
- Health insurance: Having health insurance is often a mandatory requirement by many institutes.
Other Personal Expenses are there of course, which we do not need to mention and it depends on your personal preference and choice.
Types of Education Loan
The items on the list above are more or less common among all education loans. Looking further into this, education loans are distinguished in types on various basis—
- Nature: Federal & Private Loans
- Level of Study: Undergraduate & Post-Graduate
- Location: Domestic & Abroad
- Security/Collateral: Property, Deposit, 3rd-party
Sister to the other thing called Student Grant, both exist to facilitate a student’s cost of education and financial needs. What basically does set one apart from the other is the requirement of repayment. Educational Loans, share the fundamental characteristic of any loan, as their repayment is mandatory. Student Grants on the opposite end, aren’t required to be paid off, which hence reasons their other name ’Gift Aid’.
Why take an Education Loan?: Features & Benefits
Though just a loan, howbeit it has a bunch of distinctive traits and benefits that make it the most appropriate choice for students:
- Burden-Free Family: The top benefit and very purpose of the education loan are that it relieves your family from a bigger burden and strain. It allows self-dependency and eliminates the family having to resort to other measures for raising money such as liquidating assets like gold, land, property, etc. So you do your quality education, all by yourself, how cool!
- For All: An education loan isn’t conditional to a certain section of people, say the meritorious students, and is readily and rather easily available to all. In fact, RBI guidelines ensure absolute correct functioning and availability.
- Well-Covered: The loan covers a whole bunch of necessary and possible education expenses, from smaller stuff like the cost of books to bigger such as the cost of overseas education, housing, and more.
- Low & Attractive Interest Rates: In contrast to the other unsecured loans, the interest rates are lower.
- Moratorium Period: Another great plus here is that you’re not stressed to repay as immediately as you’d be needed to in case of other loans. While at the very least the repayment period lasts up until the culmination of the course, a lot often there’s a good extension or grace period, named Moratorium Period granted 6 to 12 months, additionally allowing room for future income, like the student starting a job.
- A Good Credit History: Students repaying the education loan gain the opportunity to work towards a good credit history enabling obtaining a home or car loan in the future easy.
Tax Benefits: Section 80E of the Income Tax Act, 1961 narrates that you can claim a complete tax rebate of the interest amount paid on this student education loan.
How do Education Loans work, really?
So how to get your hands on an education loan? You’d readily get the idea of it yourself as you make it through to the end of this read, but to give you a quick brief—
The lender, could be government or private, and would require you to fill out the application. While the forms may be readily available on the website, visiting a bank branch for an in-person meeting with a representative can bring a better understanding and enhanced clarity of what’s best suited for you and can help make a more apt decision. With the application, would the necessary documents, required by them, follow.
In India, for the special purpose of making education loans more accessible to students, and turning their dream to reality, the Indian government, on the Independence Day of 2015, launched ‘Vidya Lakshmi Portal’. It’s a unique, tailor-made portal for all students looking for education loans. It settles their curiosity by allowing them to access information and details on the numerous loan options, and further even submit applications and track the progress of their education loan application, at several banks, all at this one-stop destination.
Ran by The Department of Financial Services, Ministry of Finance, Government of India, and registered with about 40 banks, some being —HDFC, Axis Bank, SBI, IDBI Bank, Bank of India, J&K Bank, etc., this portal for students seeking education loan, is simply an effort to streamline the entire process of applying.
What makes YOU eligible for getting an Education Loan?
The eligibility criteria for an education loan approval varies from country to country and maybe even institution to institution. Some basis one eligibility factors are listed below though:
- Citizenship of the country where the loan is being issued at.
- Registration at an Institute for higher education, preferably at a deemed institution.
- The ability of repayment of the loan must be You must be able to repay the loan must be proved.
- Presence of security/collateral or co-signer in case the loan amount is high.
The <Ultimate> Checklist of Essential Documents
Following are a bunch of relatively generic entire documentation requirements that are usually demanded in the process of obtaining education loan services:
- Identity Proof: PAN card, Aadhar Card, Driving License
- Age Proof: Birth certificate, Aadhar card, Voter ID card, PAN card
- Residence Proof: Voter ID card/Aadhar Card/Electricity bill/Passport
- Educational Documents: School Mark Sheets and Passing certificates of 10+2 and/or UG or PG Courses, plus the Admission letter of the Institute one’s applying for as well as the Fees receipts/structure
- KYC Documents
- Income Proofs: Bank account statements/Salary slips/Income Tax Returns (ITR)
While this list of documents remains to be a constant mandatory throughout financial institutions, some additional documents may be required based on the lenders.
Overall, this covers all the basics of the education loan. It is an extremely facilitative instrument that can remove the biggest bump that can come in your path towards your dream career and life – finance.