It’s possible that we don’t always have the necessary funds to carry out specific tasks or make particular purchases. People/companies/agencies choose to borrow money from lenders in these circumstances.
The process is known as lending or accepting a loan when a lender extends funds to a person or organization with a specific promise or based on faith that the borrower will return the loaned funds along with certain additional benefits, such as an interest rate.
A loan consists of three parts:
- principal, which is the quantity obtained,
- interest rate and
- tenure, which refers to the length of time the loan remains available.
Every person prioritises receiving a quality education, so pupils will do whatever it takes to get it. However, due to rising education expenses, borrowing money for school appears to be the only viable option.
Students can apply for an education loan to get the money they need to finish their degree. To support the education of the next generation of inventors and leaders, many banks and non-banking financial companies (NBFCs) in India offer education loans at affordable rates.
Loans for Education: Types
Considering Location
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Loan for Domestic Education
Students can apply for this form of financing if they wish to continue their schooling in India. Only if the borrower is accepted into an Indian educational school and satisfies all other lending requirements will the loan application be authorized.
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International Education Loan
These loans help students achieve their dream of attending an overseas school to pursue their chosen field of study. Students who want to study overseas can apply for a loan that will pay for their:
- airfare,
- lodging, and
- fees as long as they meet the requirements.
Considering Course
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Graduate Student Loans
This type of student credit is designed to assist students with their educational expenses, enabling them to complete their college degrees. A bachelor’s degree is typically a 3- to 4-year program with various specializations. A college degree makes it easier for individuals to secure respectable employment and earn a living.
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Graduate Postgraduate
Many college students aspire to pursue a postgraduate degree, which is typically a 2-year program in India. An advanced degree is desired to gain a deeper understanding of the chosen field.
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Loans for Career Development
Many professionals who spend a few years working in company positions prefer to take a career break and enrol in professional training programs to increase their chances of employment. Such individuals would strive to gain admission to reputable technological and business institutions to refine their skills and advance their careers.
Using Collateral
-
Loan secured by securities / real estate property/deposits
To secure the funding you need to further your education, you can put up immovable assets like:
- stock shares,
- bonds,
- debentures,
- fixed deposit certificates,
- domestic,
- commercial, and
- other types of real estate, and
- Also, a gold deposit.
- Independent Guarantee
The learner may obtain an education credit with a guarantee document from a bank staff member or their home bank.
Features of Loans
- The maximum credit amount for international students is Rs. 1 crore, while for domestic students, the maximum loan amount is Rs. 50 lakhs.
- 100% funding is possible under certain circumstances.
- The funding covers additional costs, including notebooks and transportation expenses for student exchanges.
- Foreign payments may be eligible for preferential exchange rates.
- After six months from the course completion date, the loan payback period can last up to 12 years.
- Joint borrowers for the school financing should be the parents.
List of Costs Covered by Student Loans
- Fees are payable to training institutions.
- Examination, library, and lab fees.
- Travel and/or transit costs for international study.
- Premium for student loan debtors’ insurance, if appropriate.
- Refundable security deposits/building funds/caution deposits backed by institution invoices and receipts (total cost cannot surpass 10% of the loan amount).
- Purchase textbooks/machinery / musical instruments/outfits (total cost cannot surpass 20% of the credit amount).
- If a computer is necessary to complete the course, the cost shouldn’t exceed 20% of the total loan amount.
- Any additional costs associated with finishing the course, such as study abroad trips, project work, theses, and other fees. The overall cost cannot surpass 20% of the loan amount, a basic requirement.
- Scholarships, price waivers, or anything else should be considered when calculating the necessary loan amount for the student applicant.
Qualification for Student Loans
- Only citizens of India.
- Gotten a university’s approval for admittance or an invitation to enrol in a degree- or diploma-granting course there.
- Education: You should have finished a postgraduate degre.) for an undergraduate or a postgraduate programme.
- Graduate and postgraduate degree programs, as well as PG certificate programs, were offered by accredited institutions and universities recognized by the UGC, the government, the AICTE, the AIBMS, and the CMR.
- Courses such as ICMA, CA, or CFA, or other professional certifications.
- IIM / IIT / IISc / XLRI / NIFT / NID courses are offered.
- Regular degree/diploma programs, such as aviation, pilot training, nursing, or any other field, if the program is followed in India, that has been approved by the Director General of Civil Aviation / Shipping / Indian Nursing Council or any other regulatory authority, as the case may be.
What are the benefits of an Education Loan?
1. Financial advantages: By choosing an education loan, you can avoid depleting your family’s assets and not having to sell stocks, mutual funds, or fixed-income investments. In addition, Section 80E of the Income Tax Act of 1961 allows for a tax credit for interest paid on student loans.
2. Various costs are covered: Study abroad loans pay for fees, housing, transit costs, textbooks, a laptop for the student, and other expenses. As a result, these non-fee expenditures won’t add to your financial strain.
3. Help you build a financial planning strategy: An excellent way for students to finance their education independently of their families is to take out an education credit. Additionally, when your kid pays back a loan, they develop their credit history. Future debts will be more affordable if they have a solid credit history.
4. Arrangement to pay after education: You don’t need to stress about making an instant repayment because EMIs are only due when students finish their study program. Additionally, you can plan your family’s finances in the long run using the repayment timetable as a guide.
5. Easy payment conditions: For education financing, HDFC Bank provides fair interest rates, with special rates available to institutions with a high ranking. Additionally, we offer flexible conditions for co-borrowers and collateral, allowing you to repay your debt with confidence.
Documents Necessary
- KYC records,
- Certificates of grades for the 10th, 12th, graduation, and entry examinations,
- Acceptance notes,
- Fee schedule,
- In some instances, co-applicant KYC, revenue documentation, and
- In some circumstances, more papers might be needed.
Tax Benefits for Student Loans
When you begin paying back your education debt, you can use Section 80E of the tax code to offset the interest you pay each month. The refund, however, cannot be used for debt repayments.
Additionally, there is no cap on how much you can claim as school debt interest repayment. You must get a document from the bank to prove this. Only eight years from the year you begin repaying the debt or until the interest is paid in full, whichever comes first, is the facility accessible.
Calculator for Educational Loan EMIs
The education loan EMI converter is a clever instrument for calculating your monthly EMI payment to the lender. To calculate your EMI and plan your finances, use the slider to input the numbers for principal amount (P), time length (N), and interest rate.
How to Apply for a Loan?
You can either apply online or visit your chosen bank to learn more about the loan application procedure. After you file your loan application, the bank will start by checking your papers, assessing the course of study you want the loan for, and determining what kind of security you can offer. Following that, the bank will inform you.
Research the loan repayment system.
After completing the course, some lenders allow borrowers six months to find employment they can handle and begin the repayment process. The financier may have a different grace period. You can start the EMI payback procedure once you find employment during this time.
You can speak with the bank representatives, and they will recommend an EMI based on your weekly salary. You can begin paying the monthly instalments if you accept this recommendation. If not, you can haggle over the price. In any event, the most extended permitted repayment period is typically eight years.
Conclusion
Typically, student loans pay the entire course cost to the institution. Additionally, they cover the costs of the exam, library, lab, dorm, and transportation for studying abroad. The cost of buying textbooks, clothes, and tools is also covered.
Educational and professional competencies in today’s economy and world.
Critical abilities, such as decision-making, cognitive flexibility, problem-solving, and logical reasoning, are developed through education. People often experience difficulties in both their personal and professional lives. Their level of education and self-awareness determines their capacity to make logical and informed choices in such circumstances.
The advancement of civilization is entirely dependent on sensible individuals. The growth of civilization is greatly influenced by the value placed on education. An individual with education will make the decisions required for civilization to expand.
Education isn’t about how diligently you can read and write, but how well you can interact with and comprehend the outside world. A quality education not only imparts knowledge but also broadens your views, improves your viewpoint, and empowers you to make your own decisions. People are increasingly aware of societal inequities today and feel more comfortable discussing them. This can be attributed to the global expansion of educational opportunities, which has led to a more welcoming and tolerant society. Education is thus a component of human development. Creativity and innovation are other areas where schooling is crucial. Education fosters creative problem-solving and encourages experimentation with novel concepts.
A quality education aids in self-awareness and talent identification. You come across things that interest you as you disidentify with the rest and yourself. You contribute to your world’s development by adding to the world’s development.
Education enables you to comprehend the world’s ways and provides the means to investigate who you are and your environment. You have the liberty to live the existence you want.
New paths are made possible by education. You can widen your view on a topic by investing in your education. As a result, you have chances to put your abilities to the test and improve them. You can meet the proper individuals when you enrol in college or join an organization. Along with taking part in a group, you also get educated about new things about yourself.
Additionally, you unknowingly learn something new daily as you inform yourself. Your accomplishments in education and elsewhere are a testament to your skills and may lead to new opportunities.
Financial security is yet another advantage of having a solid educational foundation. Graduates from elite universities are more likely to find rewarding and worthwhile employment. As your skill level increases, more chances become available due to increased information. You can be confident that you will receive a decent salary if you are skilled at something and are familiar with it.
Building a contemporary community requires education above all else. People can approach problems from a highly informed viewpoint when they learn about society, history, and science. Education instills moral principles and aids in the growth of civilization. People have the opportunity to shape themselves into more accountable citizens of society.
Additionally, educated individuals are more likely to secure well-paying employment and engage in efficient trade and business activities. These, in turn, help the business receive more money. As a result, education promotes national growth and helps a community evolve.
