Like everything else, cost of education is also on the rise. Getting higher education has become so difficult that students are left with no other choice than getting educational loans. Such loans are specially designed for students who want a part of their education (in India or abroad) to be funded by a financial institution on various terms. An educational loan typically covers expenses of tuition and examination fee as well as hostel and mess costs. Several banks also get on board to finance the cost of equipment, books and various instruments required for the completion of a particular course.
Eligibility criteria for getting a loan varies from one bank to another, but the uniform paradigm is the confirmation of student's admission in an institute. Other criterions that vary in each bank are student's age, qualification, good academic record and the fixed source of income of parents. Another important factor most lenders consider is that the institute must be recognized.
Likewise, maximum amount to lend also varies from one bank to another. Most banks consider the course program and the institution for which a loan is being sought; others come to decision after going through the monthly salary of the parents of the borrower. Some banks even have policies of offering 75 percent of the total cost of the course program. However, the loan amount solely depends on the relevant bank's discretion.
Under Section 80 E of the Income Tax Act, banks allow a deduction in repayment of the loan. The amount is deductible for only full time higher education courses, professional courses and applied sciences programs. The deduction is available for up to eight years from the beginning of repayments.
The interest must be paid from the following month of loan disbursal whereas the principal amount is payable only after a specified amount of interest and principal amount has been repaid. The candidate must keep paying the amount of interest on his loan while studying. The repayment schedule is charted out by the bank and is based on various factors. It includes interest rates, monthly payment, term of loan repayment, payment due dates and total repayment obligations.
While repaying the educational loan, one should always ensure that payments are made on time. When a borrower fails to make timely payments or meet the terms and conditions of the bank, he may face legal consequences. The lender will take legal action against the debtor and may withhold his income tax refunds.
If he fails to make payments, the debtor will be left with a bad credit which will make him ineligible for any kind of future financial aid from all lenders. Therefore, one must follow a few suggestions in order to avoid such situation:
Go through the terms of loan thoroughly so as to fully understand it
Keep the contact information updated so that bank can reach him any time
Automatic payments should be set up to avoid late repayments
If in need of help, contact the lender ASAP
Since the rules, regulations, repayment options, interest rates and others are, at times, revised by various lenders, it's advised to the borrower to be up-to-date with the changing policies of the bank, evolving market trends and various schemes on offer by the lender.
You may need loan for any reason. It may be some personal reason like marriage or education of your children or even some foreign trip.
Higher education can be expensive. If you send your children abroad for education then there are lots of costs involved including lodging, boarding, and tuition charges. The cost of foreign education is going up and up due to lots of factors. The most of people in India can't afford foreign education due to this reason. Here comes the need for education loan, which is a kind of financial aid given to needy students for meeting the expenses of their higher education both in India and abroad. After furnishing all the required documents to the bank, students get the loan. The bank or the financial institution pays the money directly to the educational institute or university at the due time. The loan is re-payed by the student after he has finished his education and starts earning after getting a job. The terms and conditions of the loan can be negotiated.
Suppose your children have grown up and they have finished their schooling in India. Now they want to get some higher study abroad. Then you need lots of money for sending them abroad. If you are not very rich and do not have lots of money saved then you simply can't afford to pay for the education abroad. In this situation education loan comes to your rescue.
Higher education in a foreign country may help in the future of your children. After completion of their education, they may land a well paying job either in India or abroad. So, it is better for you to get education loan for your children as it will be beneficial for them in the long term.