The most powerful weapon that can change the world is education. Everyone should get an opportunity to receive a quality education that will work as an ornament towards prosperity and a refuge in case of adversity. With time, the cost of education is increasing. This affects children who already have financial limitations.
Ambitious students with financial limitations can apply for education loan from any banking institution or loan provider. They need a co-applicant that may be a parent, spouse or sibling. An education loan covers the basic course fee along with the related expenses that include accommodation, examinations and other miscellaneous college charges. It is applicable for full-time, part-time, vocational courses and graduation or post-graduation in technical, management, or medical stream, etc, from recognized institutions within the country or abroad. Aspirants should have citizenship of India, of course. To apply for an education loan, applicants need to carry the application form with photograph, identity and residence proof, admission letter of the institution, mark sheets of previous examinations and processing fee cheque. Besides this, income documents like salary slips or income tax returns, etc, of the co-applicant are required. The repayment period starts 1 year after completing the course/ 6 months after getting a job, or it will start right after the loan disbursement of the first instalment. Generally, the tenure for repaying the loan is between 5 - 7 years right after the loan was granted but can be extended beyond that. During the tenure of the course, the bank charges simple interest on the loan, this rate varies from 8.5 per cent to 15 per cent and for women, a 0.5 per cent concession is usually made. If the loan amount is below 4 lakhs, then the bank generally doesn't ask for margin money. For loans above that, margin money is required to be paid by the borrower. This is 5% for domestic study loans and 15% for overseas study loans in most cases. Besides education loans, the cost of higher studies can be maintained by a personal loan. Due to certain key reasons, an education loan is preferred over a personal loan. This includes a moratorium period, there is no waiting period and EMI repayment starts immediately. The repayment period for education loans is 5 – 15 years depending on the amount while for a personal loan it is 5 years maximum without tax benefits. A low-interest rate along with reasonable processing fees is mostly offered for education loan. Besides these loans, to meet educational needs, students can also depend on various scholarships, fellowship and grants. There may be a risk that the applicant does not get a job immediately after completing the course, so co-applicants must be ready to take up the risks. Further, taking education loans helps you to build a good credit score. This is generally the first loan in a person’s life, and if the repayment is on time without any defaults, then it makes it easier to get a home loan, car loan, etc. in the future.
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September 2021
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