Education loan is a type of service that is provided to aid students to complete their education and pursue their academic goals. Many students in India have a lot of abilities but are unable to pursue higher education due to financial constraints. An education loan is an answer to all such problems. This article provides a brief knowledge about the various types of education loans in India which can clear the perspective of the students thinking of availing it.
What is an education loan?
An education loan is the provision of money to an applicant who promises to return it within a certain period with a certain rate of interest. It is generally provided by banks that have the capital to fund the education of a student within all legal bindings. It is acquired by certain students conveniently who take up higher education which has more certain chances of employment. The concept of education loans in India is pretty simple and can be availed by all.
What are the different types of education loans in India?
The classification of education loans or study loans is mainly based on the type of study program that it is looking to fund. It can be broadly classified into domestic and abroad education loans based on where the student looks to pursue his or her education. Another classification is based on the level of education that a student wants to engage in. It is divided into higher education loans for graduates, professional loans for postgraduates, and diploma loans for students involved in skill-based professions. Another important classification is based on the security that is sought in return for the loans. Secured loans are the ones that have fixed collateral and are guaranteed by a third-party while unsecured loans do not have any such tangible securities. As a student, you can apply for any such education loan based on your requirement and eligibility.
How does it work?
The sequence of events of education loans is quite similar to the general loans itself. A student generally applies for it with a proper justification to a bank and is provided with a loan to cover the fees as well as other non-academic needs. An interest is levied upon the loan amount and the Easy Monthly Instalments are generated. The repayment of the loan is done in parts by paying a certain amount every month.
Who is provided with education loans?
In India, education loans are usually provided to pursue higher education which is generically expensive. A student pursuing a professional course that is legal and approved by the government after completing the 10th and 12th standards in schools is generally eligible for education loans.
Education loans are provided by whom?
While it is clear that the facility of availing education loans is for the students of India, another question that arises here is who exactly provides it and what are the best education loans available in India. There are generally two bodies who are entitled to do so. They are the Banking Institutions and the Non-Banking Financial Institutions. The former is bound to follow the Interest Subsidy Scheme framed by the Central Government. The advantages of the Banking Institution include regulations by the Reserve Bank of India which increases its accountability, insurance of loans, longer tenure, and lower interest amounts. Similarly, a Non-Banking Financial Institution has certain perks like higher amount availability, faster processing, lesser provision of security, and certain unique features. However, they have a higher rate of interes as well as processing fees and a smaller timeline for repayment which can become important issues later on. If you are looking to get education loans, look for options related to banks first.
What expenses are covered by education loans?
As mentioned before, education loans cover a wide variety of academic and non-academic expenses. The academic expenses generally include the tuition fees along with the examination, counselling, registration, educational tours, hostel, and mess fees. The non-academic expenses generally involve the costs of buying study materials and laptops, contribution towards student welfare, travelling expenses, etc. However, the perks can vary depending on the bank from which the educational loan is taken. Therefore, if you are looking to utilize the facilities, make sure you are aware of what the particular bank provides.
How do you define a good education loan?
Certain key features define a good education loan. It should have wider eligibility, lower interest rate, low processing charge, less number of conditions for repayment, and finally, it should not ask for a lot of collateral as security.
Who is eligible for education loans?
The education loan eligibility in India is determined by two criteria majorly. A student should be an Indian citizen and should be pursuing a professional course for higher education that is approved by the Government.
A consolidated description is provided which should be of immense help for Indian students looking to take an education loan for their studies from banking and non-banking financial institutions.
