The education of their children is a critical goal for almost all Indian parents. An education loan offers several benefits. The most obvious one is that loans are an easy financing option that covers almost 100% of the expenses incurred during the span of education. The quantum of finances that students can borrow exceeds the amount they or their parents could have saved.

Kid’s Education is not easy; with the tuition, the gadgets and the fees, expenses are constantly on the rise. Oh and no, we are not talking about college education. We are just talking about nursery and basic school education fees. Have you checked the recent fees standards? Skyrocketing, to say the least! There is not only an immense pressure to get into top schools, but also the burden of paying the ginormous fees.

How Education Loan is helpful for Indian Students?

Earlier, students would have to give up on their aspirations due to lack of funds. What a person must pursue was decided on the basis of one’s affordability rather than based on their interests. Now they are carving their own destinies because finance is not an obstacle anymore.

With an education loan, they come one step closer to their dreams. Young students can freely choose courses of their interests because they know they have an education loan at their disposal. With such financial aid, students are coming forward & achieving greater heights in every discipline. Therefore education loans have an edge over other loans as it is securing future of the country.

The government is clear that no student should be denied his right to education, especially due to financial limitations. It has worked on ways to improve accessibility to loans & extending education loan subsidy. In 2015, it launched Pradhan Mantri Vidya Lakshmi Karyakram wherein any aspiring candidate can register through a common online application form and apply to several banks for an education loan in a single shot.

With the financial loan, comes the freedom to pursue courses that would otherwise be out of their reach. Students have increasingly benefitted from education loans. One important thing that makes Education loans so attractive is the “moratorium period”. This period of “repayment holiday” states that the borrower does not have to pay a single penny until the student is studying in a regular course.

Benefits of Education Loans

Besides providing you with affordable access to top-class education in premier institutes, education loans in India offer tons of perks. You can comfortably borrow a higher loan amount along with swift and hassle-free loan sanctions at minimal fast-track documentation. Further advantages include:

Legalities Involved in Education or Coaching Loans

Education loan eligibility criteria are generally also applied for coaching loans. If you have ever checked the details of education loan, the process of coaching loan would sound so much similar. Here are the process technicalities you will have to keep in mind:

What to Look For in Education Loan

1. Interest

This is the most important factor when it comes to choosing any loan and an education loan is no exception. Education loans in India don’t come cheap. Since the aggregate NPA of educational loan is very high—9.5-10%—banks charge a higher interest. However, banks reduce the interest by 1% if the interest is paid while the child is studying and the loan is repaid without any default thereafter.

The institute of choice also has a bearing on interest rates. Banks readily give loans for those opting for premier institutes at low interest rates, because the employment opportunities for pass outs from these institutes are many.

Students getting into prestigious foreign universities also have the option of loans from foreign institutions. Since the interest on loan given by foreign institutions will be lower, students should consider this option.

2. Collateral

Since defaults are common, public sector banks usually insist on collateral for loans above Rs 7.5 lakh. Though several financial institutions provide education loans without collateral or mortgage, it is better to provide one to reduce interest costs. Accepted collaterals include a house, a plot or fixed deposits. It makes sense to use money lying in FDs with 6% interest, rather than take education loans at 11% using it as collateral

3. Duration

This is one area of an education loan that has seen a sea change over the years. The maximum duration institutions used to give loans for was 7 years, which has now been extended to 15 years. This has meant a reduced EMI. In other words, the child will be able to service the loan it even if the initial salary is low. Since there is no prepayment penalty, it is better to opt for the longest possible duration. However, some prefer to close the loan as quickly as possible.  

4. Margin Money

Check how much the financial institution will fund and how much you need to put in. Your contribution is known as the margin money. This requirement varies depending on the lending institution, amount of loan and place of study. For example, PSU banks usually charge 5% margin for loans above Rs 4 lakh for students studying at Indian institutes and 15% for studies abroad. Private players, on the other hand, are ready to fund without any margin requirements. However, make sure that you don’t pay higher interest just to avoid paying the margin.

5. Moratorium

Unlike other loans, EMIs don’t start immediately for educational loans. In addition to the course period, there will another moratorium period for looking for a job. This moratorium period usually varies between 6 and 12 months. If the parent pays interest during the course period and moratorium period, the EMI will be based on principal only. If the borrower decides not to pay interest, the same will be accumulated and EMI will be based on loan plus accumulated interest. Most Indian parents prefer to pay interest during the course time.

Why FundsTiger?

FundsTiger is a popular online loan platform. Our consumers come to us for their money requirements, whether they are short-term or long-term, small-ticket or large-ticket, personal, family, or business. FundsTiger team brings a wealth of international financial knowledge to the table and tailors it to your specific needs. Money advice, credit advice, wealth planning, and, of course, credit are all available to our clients.

Faster Funding – We are over 80% faster than most traditional banks and lenders

Total Focus on Your Wins – We leverage our technology and business expertise for your financial success.

Customized Loans – We can structure and customize loans for your unique needs

Customer needs in Forefront – Your needs are our priority. We promise to deliver you with services that are best on our capabilities. By handpicking the personal loan offers based on customer profile, we try to give you the most personalised experience.

Support you can rely upon – Monitor your loans 24/7 and reach out to a super-responsive support service

Relationships, not Borrowers – We believe in building relationships, not just lending to borrowers.

More Value for Money – We offer the best value for money loans when compared to all our competitors

Real-time Customer Support – Our customer support team is fast and efficient to clear all your doubts regarding personal loan eligibility, procedures, offers, documentation and repayment options. We even contact with the respective lender on behalf of you.

Cutomised Tailor Options – Depending on your demands, we may provide quick financing of varying quantities at affordable interest rates.

Courses eligible for Education Loans in India

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