Friday, December 12, 2008

Education Loan

Education Loan



 

Higher education can be costly without a scholarship. But there is no better investment than a good degree. Perhaps, you have the admission letter from your dream university across seven seas; you now only need the dough... 

If the obstacle is cash, an education loan is the answer. The icing on this cake is that such education loans not only cover the cost of the tuition fee but also almost all the expenses involved in the pursuit of academics. You just need a set of eminently gettable documents and a guarantor to set yourself on the road to academia. So don’t quit your studies because of shortage of funds, consider a study loan from a bank. It is easy to get and reduces your taxes, “any loan taken to ultimately improve your economic status is a good loan” says Harsh Roongta,CEO of apnaloan.com. Now the queries will arise in your mind How to take a study loan? What is the eligibility? How to apply ? How much can I get? What is the interest rate? Any collateral security needed? When do I repay?  Read the following. You can get some idea.

 Eligibility: Loans are offered for diploma, undergraduate and post-graduate study in India or overseas to pay for tuition security deposits books and equipment [including a computer] and travel.

How to apply? Find out from the bank about all documents required. Some banks allow online applications. Check if your college has a tie-up with any bank-[if so you may not require collateral.

How much?  For studies in India you can get upto Rs10lakhs; Rs20lakhs for overseas. For loans above Rs4lakhs you’d be required to meet atleast 5.%of expenses from your own funds for study in India and 15% for study abroad.

Any collateral? Zero for loans below Rs.4 lakhs For rs.4lakhs to Rs 7.50 lakhs, you may need a third party guarantee. Higher amounts will require collateral of a like value. Banks also assess the student’s ability to repay after the course.

What interest rate? Differs from bank to bank and is normally in the range of 12 to 14.5%. Shop around.

When do I repay? Although you’ll have to repay simple interest on the loan from the start, only a year after completing the course, or six months after getting a job—whichever is earlier- is any repayment of the principal expected. Some public sector banks provide a “repayment holiday”, during which no repayment has to be made, but the interest adds up.

Tax benefits on study loans, the full amount of interest paid is tax deductible.

 The boom in the banking sector has led to release of large amount of funds for education loans. Now, education loans are easily available from various banks in India and this change is encouraging more and more students to take up higher education despite their financial shortcomings. Many nationalized banks have come up with various educational loan schemes that students can benefit from. Even private banks are not lagging far behind.

 The wave of change could be well gauged from the amusing situation that immediately after the results announcements of CAT or PMT/ IIT JEE, the representatives of the banks queue up for giving education loans to the successful candidate even with very flexible conditions. This scenario is certainly helping the illustrious students to pursue higher education and realize their dreams.