One of the major problems faced by students while going abroad is to manage finances. Since studying abroad is very costly and the competition for scholarships very high, many students rely on education loan to fund their studies. Here are the major frequently asked questions about student loan.
Q: Who can avail an education loan?A: Educational loan is available to students who pursue higher studies (full time graduate or post graduate courses). Each bank has different policy for providing loans to students who pursue various courses. Banks provide education loans for management, engineering, law, architecture, medicine, applied and pure sciences and nursing. The candidates going abroad for higher studies mostly get education loan irrespective of their subject of study. The loans are provided only if the student has secured a place in a recognized university/institute for higher studies. Some of the other criteria include the academic record of the student and the income stability of the parents.
Q: Whom can I approach for education loan?A: Most of the banks and financial institutions provide student loan. Banks such as HDFC, Bank of India, SBI, Punjab National Bank etc are in the forefront in providing education loan for study abroad.
Q: What costs are covered under an education loan?A: The educational loan covers the tuition fee, examination fee and hostel/accommodation fee. Some banks also provide one-way air fare for the students. However, it varies from bank to bank. The disbursement of the education loan is directly to the educational institution.
Q: What are the documents required to apply for education loan?A: The major documents needed to apply for educational loan are:
a) Mark sheet of all qualifying examsb) Proof of admissionc) Two passport size photographsd) Estimated expense including fee and lodginge) Bank statement for six months of the borrowerf) Income tax assessment order not more than two years old
Q: Do I need a guarantor to get an education loan?A: Yes, you must have a guarantor to apply for education loan. In case the applicant fails to repay the loan amount, the guarantor is responsible for paying it back. The guarantor is selected on the basis of the net income of a person.
Q: How much loan can I get?A: If the candidate is studying in India, the maximum education loan amount he/she can get with moratorium is Rs. 10 lakh and without moratorium is Rs. 7.5 lakh. If the candidate is going abroad for higher studies, the maximum amount he/she can get with moratorium is Rs. 20 lakh and without moratorium is Rs. 10 lakh.
Q: What is the interest rate of education loan?A: The interest rate of educational loan depends on two factors: the amount taken by the student and the bank that has issued the loan. Usually, the interest rate of student loan varies from 11.25% to 13.5%.
Q: When should I start repaying the loan?A: The student has to repay the loan in EMIs (Equated Monthly Installment) once the course gets over. Usually, banks ask the student for the repayment of loan within six months to one year after completing the course. The student will get 10 to 15 years to repay the education loan, again depending on the bank from which he/she took the loan. If the candidate fails to complete his/her studies, the loan repayment must start immediately. But, some banks give grace period up to six months to the candidates to start the repayment.
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