Welcome readers! Have you been searching for study loan but you didn’t find any? Search no further because in this post “How to get the appropriate study loan” is discussed extensively.
Be it that one wants to buy a house, a car or even pursuing higher studies, loans are commonly obtained these days. With the rapid increase in college fees on a yearly basis, a large proportion of people seeking higher education are left with no better option than to sign up for education loans.
Take for example, undergraduate engineering courses in many higher institutions of learning across the globe could pay Rs 5-10 lakh fees, wherein a five-year medical course offered at a private college, could increase up to Rs 50 lakh. As for post-graduate courses like those of management, the fees in most cases could be more than Rs 10 lakh, that’s a whole lot of money! Higher fees are paid at private colleges when compared to government colleges.
WHAT YOU NEED FOR AN EDUCATION LOAN
- Application partner or better translated as a guarantor is a must have; the person can be your parents, spouse or siblings but;
- When the loan amount goes between Rs 4 to 7.5 lakh, then third-party guarantor is required; can be your friend or coworker if you are working.
- Let’s say the loan goes up above Rs 7.5 lakh lender will demand for collateral, yes you have to give him something of value to fallback on invade of any thing, remember it is money we are talking about here.
- Repayment of the loan starts between a period of six months to one year after the course is completed
- Failure to pay will adversely affect credit history of student and application partner
- In a case where student goes abroad, creditor will hold application partner responsible, that is, parents, spouse or sibling
- As for international studies, it is possible that only the alone might not be enough; you are advised to take part-time job or or look for sponsor(s)
- Again, Insurance is inescapable i.e compulsory for applicants going for foreign courses
The Chief executive, Credila Financial Services, an HDFC Ltd company, says, they have over the time noticed an increase in the number of students going abroad to take undergraduate studies. And that reasonable number of the students have started to apply to the US for undergraduate studies.
Financial institutions like Banks offer loans of up to Rs 10 lakh for students taking courses in Indian colleges and above Rs 10 lakh for studies abroad. But for studied in post-graduate courses in premier management colleges within India, in the likes of the “Indian Institutes of Management”, banks can offer loans of amount up to Rs 20 lakh. Although the size of a loan is based on the course and the college, the size of ticket of student loans within India sticks around Rs 2 lakh and Rs 22 lakh, the average size of ticket could be about Rs 5 lakh.
These loans covers for every fees to be paid such as; tuition, examination, library, laboratory and hostel. Others include: money for purchase of books, equipment, instruments as well as uniform. Travel expenses for studies abroad are also covered; refundable deposit, etc. In rare occasions, there could be limits limits on some of these mentioned items. These loans also pays for expenses on study adventures and project work.
Conditions for giving a Study loan
Before a loan is given, the creditor will check to be sure a a student has actually gained admission to a course, the quality of the course and the host college (Is the college recognised by the University Grants Commission or the All India Council for Technical Education?), in a case where the student is capable securing an appropriate job after the course and the credit history of the credit partner or guarantor. Where the loan is backed up by collateral such as property (in condition of high-ticket loans), the value of the property is put into consideration.
In education loans, the tuition, examinations, library and other fees, are paid directly to the host colleges.
Study loan Borrowing partners and guarantors
All study loans must have a borrowing partner, normally a parent. In other cases, a sibling or spouse is acceptable.
When the loan amount is less than Rs 4 lakh
For example, loans for nursing courses, the borrower doesn’t seek a guarantor, collateral or security. As for loans worth Rs 4 to Rs 7.5 lakh, a third-party or guarantor is required, whereas loans above Rs 7.5 lakh, borrowers always insist on having a collateral, mostly property. Failure to comply with the terms in education loans could adversely affect the credit histories of both the borrower and the borrowing partner.
It is common sensual to know that the guarantor has to be someone other than the parent, or siblings with a sound financial record. The bank official have did that they insist on this because they are not sure of the student’s ability to pay back. In their observations there are cases where students on study loan wilful default in which a student travels abroad after studies and does not pay back the loan. In cases of this kind, the money is recovered from the parents. In cases where there is collateral like property that has been mortgaged, we can used.
At present, interest on education loans ranges between 11.75 percent and 14.75 percent, that depends on the loan amount and the college involved. For premier institutions, borrowers give a discount of 25 basic points. Public banks offer a discount of 25 basic points only to female students.
When the course is completed, the people taking education loans get a six month to a year moratorium, before they start to pay back. If it is an engineering course, students are allowed to get four years ( which is the course duration), along with additional one year, to start paying back. The repayment of the loan to start a year following the end of the course, not minding if the student manages to secure a job or not. Immediately the repayment begins, the borrower can exercise the benefits under Section 80-E of the Indian Income-Tax Act.
Why should you take a Study loan?
As a loan might not be enough to meet the total cost of an educational course, it could be of a great assistance. Nowadays, a good number of parents make the decision to let their children take education loans just to avail them chance to learn financial discipline. In some other cases, some Parents like to retain their savings for the future should there be emergencies or unplanned expenses.
In most cases, it is the initial loan a student avails of and, so, by back on time, students can build good credit histories; and this will be of great help to them when they seek to avail of automobile loans, home loans, credit cards and others in the future. Students with timely education loan pay back history have built a great credit score for themselves. Most times, they get loan approvals for other requirements because of their impressive credit score in the past.
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