Pursuing higher education is now a priority for many, but it comes at a high cost. The tuition fees for both national and international institutes range into several lakhs of rupees, and it doesn’t account for any ancillary expenses involved. This high cost is now pushing parents to opt for alternate funding options such as the Education Loan.
A very common obstacle faced by students in achieving this goal is affordability. Scholarship schemes, grants, work-study programs do provide financial assistance, but in recent years, the cost of education has skyrocketed. It is even more expensive if one wants to study abroad due to additional expenses.
WHAT IS A STUDENT LOAN ?
A student loan is a sum of money borrowed from the government or a private lender to finance graduation or post-graduation courses or other higher studies.
Government loans tend to have lower interest rates and can be paid back until after a certain period of time or after the student starts earning a certain amount. This waiting period is termed the moratorium period. Such loans are intended to cover tuition fees, accommodation fees, books, and supplies, examination fees, travel expenses, and other miscellaneous charges.
Most Indian banks offer students loans for studying in India and abroad. Some banks also provide credit cards to their education loan customers.
BEST BANKS FOR STUDENT LOANS ARE:
WHAT ARE THE DOCUMENTS REQUIRED ?
Following documents are generally required by the loan lenders:
- Duly filled loan application form
- Recent Photograph of the applicant and the co-applicant
- Age Proof
- Photo ID (PAN/Aadhar/Driving License/Voter ID)
- Address Proof
- Signature Proof
- Admission Proof (Admission letter with fee-break up)
- Marksheet (10th/12th/graduation/GRE/TOEFL/IELTS, whichever is applicable)
- Income proof (of co-applicant)
- Last 6 months bank statements
- Income Tax return of the last 2 years with the income computation
- Last 2 years audited balance sheet
- Proof of turnover (service tax return/sales receipt)
What are the fees payable / expenses covered under Education Loan?
- Fee payable to College / School, Hostel, Tuition, Examination, Library, Lab
- Cost of books, equipment, instruments, Uniform, Travel expenses, Computer (if essential for the course)
- Expenses for study tours / project work / thesis etc
- Caution deposit, Amount payable towards building fund, refundable deposit etc. supported by bills / receipts but cannot exceed 10% of the tuition fee.
- Moratorium period+ 15 years is the repayment period (Moratorium period will be course period + one year)
- HDFC Bank is one of the largest private banks offering education loans abroad. The maximum loan amount offered by the bank it up to INR 20 lakhs. In order to avoid the last-minute rush, the bank offers study loans abroad even before the student has secured admission at the university.
- SBI offers a maximum amount of INR 30 lakhs as an education loan for studying abroad with a loan margin of 15%. The Interest rate charged on the loan amount is up to 2% on the current base rate of SBI. Further, the loan repayment tenure can be 1 year to 15 years.
- Axis bank offers study loans abroad at competitive interest rates. A margin of 15% has to be arranged by the borrower if the loan amount exceeds INR 4 lakhs. The bank offers a maximum of INR 20 lakhs and covers different costs like tuition, accommodation, and books.
- PNB Udaan is the education loan scheme offered by the Punjab National Bank to students going to study abroad. The bank offers foreign education loans for students going to pursue graduate, post-graduate, job-oriented professional and technical courses. The borrower needs to show a loan margin of 15% for the loan amount of above INR 4 lakhs. Also, the bank offers the base rate as the interest rate on loans taken for pursuing an education at the top 200 universities across the world.
- Apart from the nationalized banks, student loans can also be availed from non-banking financial companies/institutions (NBFCs). Non-banking institutions offer complete tuition fees to the students.
Borrowers need to provide collateral as security to the banks as the loan amount is generally more than INR 7.5 Lacs. Students looking for education loan for abroad studies can now have the option to secure a loan from NBFCs.
Some of the NBFCs options are: - Credila : Credila is part of the renowned HDFC bank and provides loans to Indian students wishing to study abroad. The loans are given at a competitive floating rate of interest and can be repaid within a period of 10 years.
- Avanse: Part of the DHFL group, it is considered as one of the most popular non-banking financial institutions in India. Student loans from Avanse cover tuition fees up to 100% and other expenses. Apart from this, the interest rates are floating and the processing fee can go up to 1 to 2 percent of the loan amount.
- International Student Loan Program (ISLP): This program is specially designed for international students who want to study in the US. Through this program, students can borrow an amount as little as $1500 and can extend the repayment period up to 25 years. The loan disbursed under this program covers tuition fees and other expenses.
- Global Student Loan Corporation (GSLC): The GSLC offers loans to international students to pursue their higher studies in the US without the requirement of any co-signer.
