As the name suggests, education loans are a great help for people to meet their education-related expenses. Money for pursuing their studies. Traditionally, education loans were meant for people who were faced with financial constraints. However, with more and more Indian students aspiring to study overseas, the ambit of education loans has gone beyond its traditional nature. Today education loans are also availed by many aspirants from well-to-do families. These loans usually cover tuition fees, hostel fees, as also costs of infrastructure like books, computers as well as travel expenses for overseas studies.
Eligibility criteria for securing education loan
The applicant must be an Indian national and must be aged between 16 and 35 years. Once granted, the loan may be repaid by the borrower upon the completion of the education course. The repayment tenure usually spans over a period of five to seven years.
Interest rates on education loans
Interest rates on education loans vary from bank to bank and depend on the loan amount and the course type opted for. At current rates, banks and financial institutes usually charge interests between 8% and 15%, while the processing charges range from 0.5% to 2.5%.
Loan guarantor and documents needed: All education loans require a third party guarantor or security amount depending on the loan amount. The third party guarantor is the co-applicant and can be the student’s parent, spouse, siblings, in-laws or any close relative. For loans exceeding Rs 4 lakh, a borrower may be required to provide a security token in the form of property papers.
An applicant is also required to provide identification documents such as proofs of age and residence. The co-applicant is also required to submit documents such as relationship proof, residence proof and income or salary statement. Students seeking loans for overseas studies are required to submit visa approval papers and travel documents along with their educational documents.