Introduction
Last updated
Last updated
What is an education loan, and how does it work?
The cost of education is rising everywhere each day. With skyrocketing costs, higher education is beginning to seem like a far-fetched dream for many aspiring students It became more difficult for students to afford quality education because of the ever-increasing college and school fees. The only way to cope with the rising cost is by applying for an Education Loan or student loan that has added benefits other than just paying the college fees. Note: Referring educational loan same as student loan.
An is a loan that students apply for, in order to fund their education in the respective country or abroad. Different banks and financial institutions offer Education Loans to aspirants at competitive rates, to help them make quality education affordable.
What Are the Benefits of Taking an Education Loan?
The loan amount can vary from minimum $500/- up to $50,000/- per year depending upon your area of study. Most of the Financial Institutions and Bank offers loan up to $50,000 for education abroad. Some bank offer education loans for both Undergraduate & Postgraduate courses. In certain cases, even 100% financing is available. Education loans also include all other expenses, such as library fees, hostel fees, cost of books, laboratory fees etc., And in some cases laptop or travel expenses if studying abroad. Thus, assuring that the student does not have to pay any expenses from their pocket. The bank offers a flexible repayment option. The tenure can exceed up to 12 years, after the completion of the course. Parents and siblings need to be co-applicant(s) in an Education Loan. The interest rate varies as per the banks and the amount borrowed.
Documents generally required for Applying for Education Loan
To be eligible for an Education Loan, students need to submit the following documents:
Marksheet and passing certificate of 10th & 12th exams and Degree certificate.
Admission Letter from the respective College/University and Fee structure.
Income proof & KYC of the applicant, the co-applicant & guarantor.
It’s very rare that education loans are offered without any collateral and in most cases a third-party guarantor is required for loans above $5000/- and at times both collateral and guarantor become mandatory. When it comes to a loan for studying abroad insurance is also mandatory.
Higher education is necessary for this day and age for better opportunities in life, developing essential skills, and increasing earning potential. Educational loans come packed with quite a few challenges and hurdles that the prospective borrowers need to cross before they avail any of these loans.