When it comes to parenthood, there’s nothing as gratifying as providing your children with the best education. Sadly, the cost of education has sky-rocketed within the last few years. Higher education, both in India and overseas, at premium institutions, now come with a hefty price tag, irrespective of the merits secured by the student.
This is where “Education Loans” come into the picture.
Why opt for Education Loans in India?
- Moratorium Period
Unlike other loans, where the repayment starts as soon as the loan amount is disbursed, education loans come with a moratorium (or waiting) period, only after which EMI repayments start. This helps students complete their studies, land a job before they can begin repaying their education loan.
- Easy to Avail
Education loans are now provided by all banks and several NBFCs. Additionally, unlike other loans that go through a lot of scrutinies, before being sanctioned, education loans are easy to avail.
- Collateral-free
For an education loan, lesser than 4lakhs, there is no need to submit any collateral or security. This is highly favourable for students and parents as the tuition fees of most colleges are within this range.
- No need to dip into Family’s Savings
Instead of selling assets or dipping into the retirement savings, parents can avail an education loan for their children. Since interest rates are low, and EMI payments begin only after the completion of the course, it works in favour of both the children and parents.
- Tax benefits
The repayment of interest for an education loan is eligible for tax deduction under Section 80E. This tax rebate is available for all students, irrespective of whether they pursue their higher education in India or overseas.
Features of Education Loans
- There is no restriction on the type of academic courses. Any student who is enrolled or about to join graduation, post-graduation, certificate or vocational course in India or overseas can apply for education loans.
- The loan amount depends on various factors like the student’s academic record, occupation and income levels of the parents; course applied, educational institution and much more.
- Female students are eligible for lower interest rates and other subsidies when applying for higher education loans.
- Students from backward sections of the society can apply for subsidy schemes like the CSIS (Central Scheme to provide Interest Subsidy) to avail education loans at lowered interest rates.
- Loans below 4lakhs do not require a guarantor or collateral.
- The tenure of the loan is usually from five to seven years but can be extended by the lender, if required.
Apart from the features listed here, different banks offer exclusive benefits and other features. Make sure to compare them, before zeroing in on a lender who meets your specific requirements.
Eligibility Criteria for Education Loans
- The applicant must be an Indian citizen. If an NRI, he/she must possess a valid Indian passport.
- Must fall within the age bracket, specified by the lender.
- Must have an offer of admission from a recognized educational institution or college, in India or overseas.
- The student applicant applies for the loan along with a co-applicant, who is an adult and has a regular source of income.
While these are the default criteria, different lenders may have a different set of eligibility criteria. An excellent academic record by the student applicant and a good credit history by the co-applicant (the parent or guardian) help in quickening the approval process of your student education loan.
Are you ready to let your Child Soar high?
Compare and choose the best Education Loan and let them fly!