What is a Education Loan ?

Quality education is of prime importance to any individual, and students go the extra mile to achieve that. However, the cost of education is on the rise lately and opting for an education loan seems to be the single best solution.

An education loan is a loan that students apply to meet the financial requirements to complete their course. Many banks and NBFCs in India offer education loans at competitive rates to help educate the upcoming innovators and leaders.

Types of Education Loans Based on Location

• Domestic Education Loan: Students who would like to pursue education in India can apply for this loan type. The loan will get approved only if the applicant is admitted to an Indian educational institution and meets all other lender criteria.
• Overseas Education Loan: Such loans help students realise their dream of pursuing the course of their desire in a foreign institution. The loan covers the airfare, accommodation, and tuition fee for students who wish to study abroad only if they satisfy the eligibility criteria.

Based on Course

• Undergraduate Loans: This type of education loan is provided for students to give financial aid to students so they can complete their undergraduate degrees. An undergraduate degree will usually be a 3 to the 4-year long course under various specialisations. Having an undergraduate degree helps individuals to land a decent job and start earning.
• Postgraduate Loans: Many undergraduates would like to continue their education with a postgraduate course, usually a 2-year long course in India. An advanced degree is desired to get more profound knowledge in the area of interest.
• Career Development Loans: Many professionals who work for a few years in corporate jobs prefer to pause their career and take up professional courses and training to improve their employment prospects. Such individuals would strive hard to get into reputed business and technical schools to polish their skills and reach greater heights in their career.

Based on Collateral

• Loan Against Property, Deposits, and Securities: You can pledge immovable assets, such as agricultural land, residential land, flat, house, and others, fixed deposit certificates, recurring deposits, gold deposits, bonds, debentures, and equity shares to get the necessary financing to pursue education.
• Third-Party Guarantee: A guarantee letter from an employee of the bank or a home bank can help the student get an education loan.

Features and Benefits

• The loan amount can go up to Rs.1 crore for international students and up to Rs.50 lakh for domestic students.
• 100% financing available for certain conditions.
• The financing covers other expenses, such as student exchange travel expenses and laptop.
• Preferential forex rates may be available for international disbursements.
• Loan repayment tenure can go up to 12 years after six months from completing the course.
• Parents should be joint borrowers for the education loan.