What is Student Loan?; Who and Under what circumstances you can avail Student Loan?

What is a student loan?

Student loans are known as educational loans that are provided by some of the topmost money lenders in the country. These loans are mainly provided by financial institutions and banks to the students who wish to pursue higher studies. The maximum loan amount that can be provided by these institutions is Rs. 1.5 crore. The lowest interest rate at which the loan can be availed is 6.85%, and the maximum period of educational loans is 15 years.

Students are not required to pay back the loan when they are in the process of completing their studies. They can pay back the loan after their studies get over, and they find suitable employment. Almost all the banks, including private as well as public sector, provides educational loan to the students. The size of the loan depends on factors like which university are you planning to enroll in, and what course you are planning to study. These educational loans are available in India as well as abroad. There are a lot of courses for which you can take an education loan like architecture, management, engineering, etc. Other expenses are covered through these educational loans like your tuition fees, exam fees, library fees, accommodation, purchasing of books, uniforms, etc.

Interest rates on student loan

Student loans are a little bit more expensive, as the interest rate applied on student loans is a little bit higher in comparison to the interest rate applied to home loans. The interest rates vary on a lot of factors as it differs from tender to tender what is the tenure, the size of your loan, and so on. The student loans are approximately available for the interest rates ranging between 6.85% to 15% p.a. Students who get admission in institutes like IITs and IIMs get some relaxation on rates. The interest rates are also reduced for female applicants who get a loan from public sector banks.

Eligibility criteria for getting a student loan

• The person should be a resident of India.
• There is a requirement of collateral security by most of the banks if the loan taken is higher than the usual amount.
• The age of the applicant should be from 16-35 years of age.
• There is a need for a co-applicant while availing of educational loans. A co-applicant can be a spouse or parent.
• The salary of the co-applicant should at least meet the minimum salary criteria laid by the lending bank.
• There is a bonus for the banks who are giving educational loans if there is a sound academic career.
• If the applicant is taking an educational loan, then his/her admission should be secured to the college course.

What all documents are required for a student loan?

There is a specific list of documents required by the bank if you are applying for a student loan. The list of documents required is the same for all the lending entities. The list of documents required are:

• Permanent address proof
• Proof of your identity, driving license, passport, etc.
• The income proof of your co-applicant/guarantor
• Proof of age, school certificates
• Copy of admission letter to education course
• Optional guarantor form, duly filled
• Co-applicant’s bank account statements if needed by the bank.

Benefits and features of student loans

Many students want to do something in their lives, but they are not able to do so because of financial obstacles for these students, educational loans are a great boon. There is a major advantage for both banks as well as the educational sector when the banks provide the educational loans needed by the students and then get repaid when the students start earning. Some of the major advantages of the student loans in India are:

• It is very easy to obtain a student loan as there are not a lot of formalities required to be completed.
• There is not just the financial ease that is provided by the educational loans, but tax benefits are also provided. The interest rate that is paid towards educational loans can be claimed under section 80E of the Income Tax Act for tax exemption.
• You can realize your dreams with the help of educational loans by taking care of your expenses.
• One of the most significant advantages of the student loan is the deferment of repayment, as the student isn’t required to pay back the loan immediately.
• A lot of banks require collateral if the amount required for the loan is greater than the usual amount. So, these collaterals can be anything like LIC policies, house papershttps://studycafe.in/tag/income-tax-exemptions/, fixed deposits, etc.
• There is a top-up feature provided by the banks, in case the student wishes to continue his/her studies during the moratorium period. The repayment of the loan is then deferred by the bank until the student completed his/her final studies.

Student Loan for Studying Abroad

Educational loans are available not just for the students who wish to study in India, but also for the students who wish to study abroad. Studying abroad is very expensive in comparison to studying in India, so the students who wish to take admitted abroad need to have a lot of cash to get admission to the desired college or institution.

For eg, in the U.S., a postgraduate course costs up to Rs. 30 lakh p.a. The educational loans provided to the students have a fixed limit over them, so the students are required to take up part-time jobs to manage their other expenses. For studying abroad, insurance is a compulsory cost associated with the educational loan.

Student Loan for Studying in India

Educational loans are offered by both public and private sector banks to the students who wish to study in India. Loans can be taken for any professional course like engineering, medical, MBA, etc. Students who get admission in institutes like IITs and IIMs get some relaxation on interest rates.

Because of globalization, increased competition, technological changes, etc., more students aspire to have a great future ahead of themselves. Courses that were once considered expensive for the students are now easily available with the help of educational loans.

This Article is shared by Aanchal Maheshwari.