Getting that college degree from that coveted international college that secures your future is mostly every student’s dream. So when you fall short of college funds because you missed out on that scholarship or a grant, most students rely on a education loan, to pursue higher education.

As college fees only seem to get higher and higher everyday, education loans are incredibly high in demand as they cover the most basic needs of every student – tuition fees, books fees, travel expenses, etc. Moreover, getting a student visa for your international study term gets all the more easier when you have a student loan, since the college fees are paid directly to the college by the bank, thus making your case stronger and secure.

It all started back in the early 2000s when education loans in India started gaining prominence. States in India with the highest literacy are the ones that are availing the maximum amount of education loans. According to the data provided by the department of finance, over 54% of students from South India have bagged loans than any other part of the country.

So let us see what are the features and benefits of taking a education loan:

  1. Expensive Foreign Study – education Loans are designed to offer the financial cushion that every student is looking for to pursue a quality education. Most of the reputed international colleges have a higher fee structure, as they are mostly private colleges and charge anywhere between Rs. 10 lakhs to Rs. 20 lakhs for a course. Plus, student fees for international courses seem to be rising every year and saving that much amount isn’t possible for an average middle class family. That is where education loans arrive as a saving grace for deserving candidates by offering them a chance to pursue their dreams without worrying about day-to-day educational costs.
  1. Don’t Put Your Parent’s Life Savings At Stake- Your parents probably spent their entire lifetime saving for their retirement and to break their savings such as FDs, mutual funds, etc. for your international education takes away their security that was planned for an emergency/exigency. The best way to teach children to be financially responsible is to get a student loan for them, which they can repay once the course ends.
  1. Tax Benefit – A student loan can be a great way to save taxes as the interest paid on the loan can be claimed by the borrower as deduction under Section 80E of the Income Tax Act. The deduction can be claimed only when the student starts repaying the loan until the time the interest is paid on the loan.
  1. Opportunity To Build A Good Credit Rating – Education Loans are probably the first loan for any student who is starting off as a financial borrower. Hence, this opportunity can prove to be an excellent start towards developing a good credit history that will surely help in the future.
  1. Benefit of Repaying After The Course Ends – Unlike any other type of loan, student loans gives one a flexibility to start repayment only after the course finishes – be it one year or a five year course.
  1. Door Step Service – Education Loans can be borrowed without much hassle of running after banks. With one simple phone call or by filing up a form, the bank representative will visit your home to guide you and help you with the entire loan process.
  1. Financial Independence – Education Loans takes off the burden from the parents and gives the child financial independence. It’s a win-win for both the parents and child.
  1. Flexibility – Education Loans can also provide much flexibility when you do not have much liquid savings. You can use any kind of collateral in cases where banks need some form of additional security. Education Loans also provide longer repayment tenure.
  1. Quick Application Timeline – Education Loans offer a much shorter approval timeline than other loans as banks understand the urgency of securing a college admission and most of the colleges require a prior approval for visa processing.
  1. Attractive Schemes and Discounts – In the competitive race, banks offer many attractive discounts and flexible schemes to lure the borrowers into applying for an education loan with their bank. Students can reap these benefits and get a great deal.

Easier To Secure A Student Visa – Most banks offer student loans instantly on a pre-approval basis and promptly offer a Letter of Authorisation, which is required by the college at the time of admission as well as in the submission of Visa documents. This makes securing a student visa much easier as the approving visa agent can ascertain the security of funds.

Costs Covered by A Education Loan:

While the coverage varies from one bank to another, here are some of the common costs that are covered by banks in general:

  • Tuition Fee
  • Hostel Fee
  • Examination Fee
  • Library Fee
  • Laboratory and Research Fee
  • Books
  • Educational Equipment and Professional Instruments
  • Various Types of College Deposits
  • Travel Expenses

Repayment Structure – The repayment structure of the education loan is highly flexible as most banks allow a time period of anywhere between 7 to 12 years on an average for students to repay the loan.

Eligibility Criteria – While the eligibility criteria varies depending on the individual bank requirements, the age limit falls anywhere between 16 to 35 years. It is also important that the student is an Indian resident. In most cases, education loan for a higher amount requires a collateral to be submitted and a co-applicant for full-time courses. The co-applicant can be anyone from the close family of the student such as parents, spouse, siblings, in-laws and paternal or maternal aunt and uncle.

Education Loan Interest Rates –There are a lot of factors that are considered for the interest rate to be determined by banks. On an average, education loan interest rate can fall anywhere from 9% to 16% per annum depending on the bank. However, the base-lending rate for student loan that is determined by the Reserve Bank of India is 9% to 10% per annum.

We at Letzbank remain sanguine that we will make all efforts to guide you that you make the right decisions and help you in that hour of need. We want to keep up the goodwill of our customers – because we value our relationship with you.

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