With the rising cost of tuition, educational loans have become increasingly important in many people’s lives
Higher education figures are likely to stun you even more, with an average MBA degree costing around Rs 50-60 lakhs by 2025 and an average engineering degree costing around Rs 25-30 lakhs. If you want to send your child overseas, the prices would be much higher. In such a situation, parents are almost forced to take out an educational loan in order to avoid depleting their entire life savings to pay for their children’s schooling. Here are some items to remember if you’re thinking of taking out an educational loan for your children’s future.
Criteria for eligibility
The first thing you can learn about is the loan’s eligibility requirements. Although the conditions differ from one lender to the next, they are generally the same. The lender would weigh factors such as your credit score, salary, current loans, age, and so on. You should also be aware that the loan is not valid for all courses, expenses, or colleges/universities. You should contact the lender of your choice to learn more about the classes, costs, and colleges/universities for which they provide loans. A co-applicant is needed for an education loan. Lenders seldom sell such loans to students on their own. Usually, lenders would not ask for any collateral for loans up to Rs. 4 lakh. If the co-income applicant’s is inadequate, lenders may ask for collateral for loans between Rs. 4 lakh and Rs. 7.5 lakh. Many lenders will require the co-applicant to have collateral for larger loans.
Covered expenses: This is extremely significant. If you decide to take out an education loan, make sure you understand what it covers. Tuition fees, commuting costs, stationary costs, assignments, computers, and other expenses are typically covered by an education loan. This varies by lender, so be sure to ask which parts of your course the lender can cover. Since students at the start of their careers do not earn much, they can choose a loan with a longer repayment period, such as 10-12 years. This significantly reduces the debt burden on the student by allowing for smaller EMIs.
In order to process an education loan application, banks will often request an offer letter or a conditional offer letter if the seat has been obtained but admission has not yet been announced. Confirmed admission in professional courses such as Management, Engineering, Medicine, Computer science, Architecture, Hotels and Hospitality, Agriculture, Fine Arts and Design, Pure Sciences, BA, MA, B.Com, M.Com, Post-Doctoral courses, and some vocational training and technical training courses such as Aviation and Air-hostess training at colleges/universities recognised by the UGC/Govt./AICTE, etc. in colleges/universities recognised by the UGC/Govt. Since this is a student’s first loan, taking out an education loan is a significant step toward establishing a positive credit score. If you repay the loan on time and without defaults, you would be in a better position to apply for a home or car loan in the future.