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Types of Educational Loans

There are too many questions and too many answers to this question. The simplest way is to deal with one question at a time. You need to decide which course you want to enroll for and then apply to the institutes, where you might need some funding. Here is where you can invest in a loan to further your career.

Educational loans are termed as a type of a monetary assistance such as funding, rewards, financing and scholarships, which when borrowed in cash, have to be returned with some added interest.  It is always advisable to borrow according to the need.

The repayment periods for such loans mostly depend from lender to lender as well as on the overall amount that the student goes for. Majority of the student loans have low rate of interests (although rates are dynamic and change periodically) and the students don’t have to make a payment for the interest till a specific time period, although there are certain exemptions to this rule too.

The various types of Student Loans in the market are as follows –

  • Undergraduate student loans
  • Graduate/ professional students – Graduate/ professional student loans are suitable for students going for higher or advanced degrees at countrywide colleges.
  • Career education loans – Career education loans are for students attending the undergraduate career oriented programs at countrywide colleges and technical and trading schools.

Uses/Eligibility/Repayments:

  • Unsecured loan are used for education-related expenses (like Tuition, previous school fee, living expenses, books and other expenses like transportation costs).
  • In case you are not currently earning while studying then you may need a suitable co-signer, like a parent, friend or any relative or eligible adult.
  • Some loans offer the option of repayment post-graduation and other flexible repayment terms.
  • College parents loans – These are also unsecured loans to cover education related expenses like Tuition, previous school fee, living expenses, books and other expenses like transportation costs. Parents can be a co-signer for loan if the student is working as well as studying. Moreover no collateral is needed.
  • Loans for Parents – These are unsecured loans to meet education related expenses like child’s tuition fee, uniforms, previous school fee, living expenses, books and other expenses namely transportation costs. This loan is for parents and other adult relatives for their children who are attending non-public, private, religious, military elementary and secondary schools countrywide.

Students can seek education loans for pay graduation, post-graduation and professional courses from government approved institutes. The educational loan not only covers college, school fees, hostel fee, books charges, library charges, purchase of computers but also covers travels expenses for international education.

Determining a loan amount:

The maximum amount of educational loan provided for studying in India is around 10lacs to 15lacs and for education through foreign universities, banks provide up to Rs 20lakh.The loan amount is decided according to the student’s course type and the family’s annual income. Many banks provide loans with lower interest rate to female students.

Eligibility

The eligibility criteria include Indian nationality, age, course period etc. The age limit for students is between 16 to 35 years.

Repayment:

Repayment of the loan does not have to be made immediately. Students can begin repaying their loan after course completion. The repayment period could be anywhere between 5 – 7 years post completion of course. In case of failure to complete the course, he can seek a 2 years extension to complete the course.

Interest & Fees:

Interest rates vary based on the loan amount and the type of course. It is generally somewhere between 8 % and 15 %. Banks and financial institutes charge a processing fee which can be 0.5 % to 2.5 % for processing the loan.

Guarantor or Security:

A third party guarantor or security amount is required depending on the loan amount. A co-applicant is the third party guarantor such as parent, spouse, siblings, in-laws or any other close relative. Loans below Rs 4 lakh do not require a security token, but for a loan amount more than Rs. 4 lakh, a bank would require a security token to the effect of the house property, deposits etc.

Documents required:

Student will be required to provide identity proof, age proof and address proof. He/she is also required to submit co applicant’s document which includes relationship proof, address proof, income document. He/she is also required to submit an admission letter with a fee structure. In case of foreign bound student, they need to submit Visa approval papers, Travel papers, GMAT / GRE Score etc.

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