Education Loan: A financial boon for students
Education is one of the most planned investments in India. Every parent wishes a bright future for their child. In consideration to liberalization in monetary policy, onset of education loans has facilitated students to pursue higher studies in India or take up studies abroad. It helps the deserving bright students to follow their choice of career without worrying about funding. It has become a boon for both parents as well as students.
Nowadays, educational loan facility is offered by all the banks as well as financial institutions in seeking school and college admission. These banks have scrutinized the scope and needs of education sector and have accordingly, formed alliances with recognized educational institutions to ease the burden of candidate. Moreover, parents and students can easily get education loan while they are applying for online school admission and online college admission. The question that arises in our mind is which bank is giving the loan at cheaper interest rates?
Let’s discuss the points to look at before applying for education loan for school or university admission.
- Rate of Interest: The foremost point of consideration before choosing the bank is the offered rate of interest. It depends on three things I.e. Loan amount, Tenure of loan, Educational institution. The obvious option would be the bank with a cheaper rate.
- Eligibility Criterion: Each Bank or FI has fixed its eligibility criterion based on which the loan is granted to the applicant student, for instance, student’s academic track record, Type of institute I.e. whether it is approved by central or state government or any foreign institution, viability of the borrower, nature of the course or the repute of the institute etc.
- Repayment Method: Every bank or FI has its own repayment criterion i.e. some fix it up to 5-7 years or some start after the completion of course or as the student get placed and start working.
- Collateral/Margin/Third Party Guarantee: It is a must for all the banks provided the loan amount is above Rs.4 Lakhs. One can choose a bank/FI depending on the kind of security the applicant can give to the bank or FI.
- Amount of Loan: This is generally fixed for all the banks i.e. Rs.10 Lakhs for higher studies in India and Rs.20-30 lakhs for studies in abroad.
A Comparative analysis of Banks providing education loan
In current scenario, people often compare the interest rates before selecting their best feasible option i.e. with lowest interest rates. As observed and found, the rates of all the banks, where tenure and loan amount keep fluctuating. Amongst Banks, Central Bank of India is offering education loan by the name of ‘Centvidyarthi’ at the rate between 10.25% -12.25% and rate of United Bank of India vary between 10.25% to 12.75%.
The rates of afore-mentioned banks are comparatively lower than other banks. The rates of other bank go from 10.25% to 14%. In addition to that, there are banks that charge minimal processing fees or give special extra concession to girl students, for instance, Canara Bank.
State Bank of India does not charge any processing fees for loans to student’s studying within India but for students pursuing loans for abroad studies, the sanctioned limit is maximum i.e.Rs.30 lakhs with Rs.5000/- as processing fees.
With ease in availing education loan, there has been an increase in college admissions across the country. Relieving the parents from the burden of huge admission fees, education loan definitely is a boon in disguise.
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