Tips on Applying for an Education Loan in India

High-quality education is vital for everyone to build a steady career and get a higher salary package. However, constantly rising educational fees makes it too expensive for students from middle-class background. Thus, a study loan from banks and NBFCs has become a common source of funding education for students. It is a great way for students to fund their higher studies in India or abroad. Eligible person can apply for the loan for themselves, their children, or their spouse. Also, parents and legal guardians of a student can take the loan to fund their child’s studies. However, different banks and NBFCs have diverse terms and conditions regarding the loan amount, loan tenure, interest rate, etc. So, it is vital to consider all these important points to make a well-informed decision. Here are some tips to help you apply for the right education loan for studying abroad.

Check Eligibility Criteria

Firstly, you must know that loan options vary in all private and government sector banks. So, it is vital to go through all the options, check their eligibility criteria, and select the one that is most suitable for you. For students, loan eligibility depends on diverse aspects, such as the financial institution, the loan type, the student’s academic profile, future earning potential, and accreditation of the course selected by the student. If a student applies for a higher loan, he will need to pay a margin amount to the bank upfront. Make sure you are aware of the margin charges before applying for a loan.

Consider your Loan Requirement

Before looking for loan options, you must assess your need and be clear about the course you want to study. The loan amount should be enough to cover all the major expenses, including college fees, tuition fees, hostel charges, and cost of books, laptops, and other equipment. In most financial institutions, the maximum loan amount for domestic and international colleges is Rs 10 to 25 lakh. However, you should compare the loan amount offered by various lenders in the market.

Check Interest Rate

The rate of interest is also a key factor that should be checked before applying for a study loan. The education loan rate of interest can vary significantly between different banks and NBFCs, based on students’ eligibility, amount, and tenure of the loan. Students should select the lowest interest rate possible since it will determine their financial responsibility for specified years.

Repayment Period

Many banks and NBFCs offer different loan tenure and multiple repayment options, allowing students to select one according to their ease. You can start repaying the loan amount from the time you are in college through a part-time job or once you complete the course and get a job. It is wise to select a lender that provides you with proper time to repay the amount.

An education loan should not overburden students while studying abroad. A little research and a proper plan before applying for an education loan for study abroad will help in the long run.