Category Archives: Loans

Top-up loans are available for parents/students who have already taken out an education loan. Top-up loans can be obtained from the same bank where you previously obtained an educational loan.  What are Top up loans? The amount supplied to the borrower by a lending institution in addition to the current loan is referred to as a top-up education loan. When a borrower approaches a lender for financial aid to fund, say, higher education overseas, a specific amount is approved based on various parameters. If a borrower applies for a secured loan,' the lending institution will authorize the amount of the loan based on the value of the collateral, which could be land, property, or a fixed deposit, for example. This loan would receive a top-up loan based on the same/different property.  In the event of an unsecured loan, the sanctioned amount is determined by factors such as academic profile, particularly GRE Score, credit worthiness depending on the applicant's and co-credit applicant's history, sources of income, career prospects after completing higher education, and so on. Money is given to the borrower from this sanctioned amount when the borrower needs it. After reevaluating all previously analyzed elements, a top-up loan on this loan would be offered. Need for Top-up loans With life returning to normalcy post the pandemic, students who'd already put off traveling abroad for further education are now continuing their plans. Currently, the expense of such an education is out of this world. People who have children studying abroad or who want to send their children abroad for studies generally take out education loans to cover the costs of their studies. As a result, if you need extra cash, you could consider taking out a top-up loan to pay for your study abroad. With rising costs, it is common to see parents/students struggling financially. In this case, you can take out a top-up loan, over and above the loan already taken. Furthermore, because the bank already has your information, you will have an easier time getting loan approval. However, authorizing an additional top-up loan depends on the higher loan eligibility. The bank also considers the outstanding amount you may have as a borrower. The calculation for Top Up Education Loan  Let’s see this example, as a borrower when you were qualified for Rs 50 lakhs but chose a credit of only Rs 35 lakhs, you also had Rs 15 lakhs available to you. Furthermore, if you've already paid Rs 5 lakhs from the Rs 35 lakhs, your overall eligibility increases - and you are now eligible to obtain a loan of Rs 20 lakhs more. Institutions offering top-up education loan  Instead of going with your bank, you might check into other choices, including other banks, non-banking finance companies, and education financing firms, which may be able to provide you with a loan at a lower interest rate. If your current bank refuses to approve the increased money requirement, you could check into alternative banks, NBFCs, and education finance businesses. Furthermore, if your present bank declines your additional loan application, you could try to transfer your existing loan to a new loan company instead of accepting a new loan from the new bank. Remember that additional loan approval is subject to the bank's policies, and not all banks offer top-up loans. Conclusion Applying for an education loan to help pay for higher education abroad necessitates careful planning. It requires the borrower to arrive at a precise approximation of the tuition fee and a determined prediction of other expenses, such as the cost of living. However, a student may need to borrow more funds from a bank to make up the difference due to currency rate fluctuations or fee increases. FAQs What is a top-up education loan? A top-up education loan refers to the additional amount given by the lender on top of the regular lending amount. Can I get a top-up on an education loan? Yes, you can top-up your education loan with your bank. What is top-up loan eligibility? If it's a secured education loan, then the top-up is based on the value of your collateral, and if it's an unsecured education loan, then the amount is disbursed based on your relationship with the lender, your credit history, your academic profile and your repayment discipline.

Higher education has become a necessity in today's competitive environment. And the cost of quality education is increasing every year gradually. Many of us don't plan for such high college fees, and some of us cannot anticipate it. So, to pursue higher education, we need external funds, which can be funded by a loan from a financial institution. Now, the question arises of which loan we should go for, either a personal or education loan. Education loan is not so popular, whereas personal is known by most of the population. An education loan is best suited to meet the expenses of higher education as it is designed to meet the requirements of educational expenses. 1. Interest rates Education loan comes with lower interest rates. Generally, education loans have comparatively lower interest rates than personal loans. The interest on an education loan ranges from 6.85 - 11% annually, depending on various factors like the course you are applying for, college, etc. The interest rates on personal loans range from 10 - 17% annually. Please note that the range mentioned may change, subject to the change in interest rates. 2. Tax benefit When you pay the interest on an education loan, you can claim the deduction for the amount you are paying as interest and get the tax benefit under Sec 80 E of the Indian Income Tax Act. There is no upper limit for claiming the deduction. You can claim as high as you are paying. And you can claim it for a maximum of 8 years. There is no tax benefit on personal loan interest paid to the lender. 3. Loan amount You take an educational loan for as low as Rs 50,000 and as high as Rs 1.5 Crores, depending on the vendor. But the personal loan amount ranges from Rs 50,000 to Rs 50 Lac. However personal loan amount will wholly depend on the borrower's credit score. 4. Moratorium period This is the period when the borrower is temporarily exempted from paying the installments. The aim is to give students sufficient time to complete the course and find a job. This period is extended from 6 -12 months after completing the degree. The interest is charged on the loan amount as simple interest. In a personal loan, no moratorium period is applied (under normal circumstances). Conclusion Education loans have multiple benefits like a moratorium period, lower interest rates, etc., which personal loan does not possess. Considering an education loan over a personal loan could be the right choice FAQs Can I use personal loan for education? Yes, individuals can use a personal loan to finance their education expenses. The loan amount and the repayment tenure depends on your credit profile and your loan provider. What is the difference between an education loan and a personal loan?An education loan is a loan to finance your higher education while a personal loan is a loan used for servicing personal needs like buying a car, a world tour, covering your personal expenses and much more. A personal loan can be used for paying for education expenses but an education loan cannot be used for your personal expenses like marriage, a house or other miscellaneous expenses. An education loan can be taken only by a student and has benefits like a longer repayment tenure, competitive interest rates, a grace period and tax benefits. Should you take a personal loan for your higher education? It is not a wise choice to take a personal loan for higher education because a personal loan's ticket size is not big enough to cover all your education expenses. Personal loans have a repayment cycle that begins immediately unlike education loans where students can get a moratorium period while studying. Benefits like a longer repayment tenure, competitive interest rates, a grace period, and tax benefits make education loan feasible and an attractive option in the long run.

There are collateral vs. non-collateral education loans in India. If you have decided to take a loan to fund your child’s further studies securing one is important to advance your child's future. As you do your research and try to figure out which loan is better for your child, it is important for you to keep several parameters related to collateral in mind https://www.youtube.com/shorts/Icp7ASAGrjw What is a collateral education loan? Collateral is typically property that you give to the lending bank as security against the loan you are taking. The larger the education loan, the greater has to be the value of the collateral. This works as a reassurance to the bank in case the borrower is unable to repay the loan. What is a non-collateral education loan? When the lender issues an education loan without any security, it is known as a non-collateral loan. In this kind of loan, the bank considers the student’s academic track record and the financial track record of the co-borrowers. Now a lot of parents debate over which of these is a better loan format. The fact is both types of loans serve a purpose. Apply for Education Loans As a co-borrower, you will need to analyze the features of both loan types and choose the one that works better for your situation. ParticularsCollateralNon-CollateralCost of loan7-9% per annum11-14% per annumHow much loan can you getUp to 90% of collateral value, can even go up to Rs. 1.5 crUsually limited toRs.50 lakhsTenure of RepaymentUp to 15 yearsLimited to 10 yearsRepayment periodUsually after 1 year, of course, completion/start of the jobAfter 6 months of job completion, immaterial whether the student has got a jobFlexibilityThe interim grace period before the loan is to be repaid can be extended on request if the student is unable to find employmentThe interim grace period before the loan is to be repaid can be extended on request if the student is unable to find employmentDocumentationExtensive paperwork, with a confirmation of admission to the institute of your choiceMinimal paperwork and admission confirmation requiredProcessing feesA percentage of the loan amountA percentage of the loan amount, but these can be negotiatedProcessing timeAnywhere from 30 to 45 days depending on the documents submitted. The due diligence done to verify the ownership of the collateral is quite stringent10-15 days if all your documents are in order: admission confirmation, the credit history of co-borrowers, credit scores, etcWhat can be offered as collateralProperty with no liabilities, fixed deposits, stocks, bonds, etc- Both collateral v/s non-collateral loans have much to offer the customer. While on paper, a collateral loan definitely makes a lot of financial sense, everyone may not be able to manage the collateral of large properties or other instruments that the bank may require as security. So it helps to review all the options in the market and pick the one that works best for your specific situation. Whether you opt for one or the other, there are a few thumb rules you absolutely must keep in mind when applying for an education loan.  If you have plans to take an education loan to fund your child’s higher studies, start saving from the early years. Borrowing money should be your backup for the shortfall in your funds. Do not make overseas education plans with the money you can borrow. Financial conditions can change at any point in time, and having your own funds will give you the confidence you need to guide your child to the career option of their own choice. Once you have taken an education loan, your priority should be to save money and pay back the amount as soon the possible. Interest rates and rising inflation rates make the amount of your loan repayment variable, and it is easy to get stuck in the debt trap if you do not have a clear repayment strategy. Help your child enter the adult world with as little debt as possible and encourage good financial discipline from the early days. This will stand him/her in good stead in adult years. Last but not least, once you have identified the loan that works for you, do due diligence, read the small print, ask questions, and then go ahead and take it. Let this loan be just the stepping stone to a great life that is planned for your child as he/she steps into a whole new world of global studies and learning.  Do not let a lack of funds hold your child back. With a little planning and discipline, you will find several tips to plan your finances well and secure a future for your child’s higher education. FAQs What is the main difference between collateral and non-collateral education loans? The primary difference is that collateral education loans require an asset as security, while non-collateral loans don't require any asset. Collateral loans may offer lower interest rates, while non-collateral loans are unsecured. What assets can be used as collateral for education loans? Common assets used as collateral include property, investments, or even a vehicle. The exact types of assets accepted can vary between lenders. Do non-collateral education loans have higher interest rates? Non-collateral education loans often come with higher interest rates because they carry more risk for the lender, as there's no collateral to secure the loan. Are there any advantages to taking a collateral education loan? Yes, collateral education loans typically offer lower interest rates, higher loan amounts, and may be easier to qualify for, especially if you have valuable assets to pledge. Can I switch from a non-collateral to a collateral education loan later on? It may be possible to refinance or convert your non-collateral education loan into a collateral loan if you have assets to pledge, but the terms and feasibility will depend on your lender's policies.

Education inflation impacts student loan interest rates, however, this impact is not direct or uniform. In inflationary times, the chances of high-interest rates are feasible because the need to cut demand in the market is high.  1. Education inflation rises faster than the standard economic inflation This means that if the standard inflation in the country of your choice is at say, 5% - 6%, in the education segment it can easily go up to 8-9%. This is observed extensively in the education costs in Western countries. The reason: excessive growing demand v/s fixed supply. With this trend here to stay at least for the next decade, you would do well to consider its impact on the education loan that you are planning for your child. 2. Understanding the variables in student loans There are two factors to be considered for student loans: a. whom are you taking the loan from; b. What kind of a loan are you taking? Whom are you taking the loan from You can take an education loan from government organizations or nationalized banks in India, or you get one from private organizations: private banks or private funding/finance companies. With interest rates in the first category being lower, these loans are usually more difficult to obtain, as there are several eligibility criteria, including a pre-selected list of institutions for which they will issue the loans. These are the top-rung institutes of any country and not every international student will qualify for the same. Also, they have extensive paperwork. So the application and approval processes in these lenders are comparatively slower. On the other hand, the private players have a larger pool of institutions for whom they will grant loans, and often their eligibility criteria are less stringent. But their interest rates are higher and over the long tenure of the education loans, even small differences in the interest rates can compound and snowball into large amounts. What kind of interest rate are you opting for: you can choose between fixed interest rates and variable interest rates. It is important to note that in India, fixed rates rise slower than variable rates; but they definitely rise. So do not be misled by the term ‘fixed’. 3. How does all of this impact your child’s education loan? Inflation means less purchasing power: Well, as inflation grows, and interest rates go up, your child’s purchasing power gets limited as salaries do not keep pace with inflation. This puts stress on repayment funds. Missing education loan payments affect the individual’s credit score: This is a serious implication and must be explained well to the child. While the temptation to miss the monthly payments is high, the young adult must be disciplined to make the necessary payments on time. Refinance the education loan: This is a good way to revise the loan terms, especially as most lenders offer waivers when education loans are transferred. This allows the student to negotiate payment terms that are more suitable to his / her current financial situation. And yes, these loans can be refinanced several times.  Start a side hustle: If the primary salary is not enough to cover the loan payments and expenses comfortably, the student should consider taking up a side hustle. This will help ease the pressure, and ensure the loan is being regularly paid up. 4. Save during the study years and pay up the loan at the earliest While this may seem contrary to the idea of taking a loan, this really is the financially smart thing to do. If you are taking the education loan for your child’s undergrad studies, you will typically have these four years of grace before repayment starts. As a family, you must plan your savings and investments in such a way that by the time your child graduates, a considerable corpus is ready to pay up. This may mean foregoing luxuries and living on a budget for your child during the college years, but it is the fastest way to get your child out of debt. Why do block payments help? Changing market dynamics and growing inflation push your loan repayment amounts ever higher with increased interest rates, extended tenures, and so on. Starting your life with so much liability puts a lot of restrictions on your child’s early career. Instead, putting money away, investing in mutual funds or the stock market, and building a solid corpus with expert guidance from EduFund can give your child a confident start in their career. Choose well, and don’t let the education inflation turn your child’s future into a whirlwind of merely getting out of education loan debt. Plan the finances well, and let your child really fly up to the skies of success. DisclaimerIf you are taking an education loan from a lender in another country, make sure you are aware of the rules and regulations that apply to student loans in that country. FAQs How does education inflation impact student loan interest rates? Education inflation tends to drive up student loan interest rates, causing a significant impact on repayment. What are the variables to consider for student loans? Two key factors are the lender (government or private) and the type of interest rate (fixed or variable). How does education inflation affect a student's purchasing power? As inflation rises and interest rates increase, a student's purchasing power diminishes due to slower salary growth. What options are available for managing education loan payments? Options include refinancing the loan, starting a side hustle, and saving during the study years to pay off the loan early. Why is saving during the study years a financially smart choice for education loans? Saving during the study years can help build a corpus to pay off the loan, ensuring a debt-free start to a child's career despite rising inflation and interest rates.

Post-pandemic online master’s degrees have become extremely popular. If you have applied for an online degree and are finding it hard to pay the fees, then here are some merits and demerits of opting for a personal loan for an online master’s degree!  From top universities like Harvard University, Oxford University, the University of Edinburgh, and Johns Hopkins University to online platforms like Coursera and SkillShare made accessibility to quality education easier and a great way to upskill. While some are free, there are some that charge a heavy fee. Depending upon the course, the average cost of an online master’s degree can go up to $29,000 (Rs. 23-24 lakhs).   This can be tough to finance independently as most banks do not offer education loans are not offered for online degrees. Some banks like Axis Bank do offer education loans for an online master’s degree. But space is still limited. Maximum banks and financial institutions only sanction education loans that require students to study on campus, and online degrees are not covered by them. Thus, if you are short on expenses, then you can opt for a personal loan for your online master's degree.   What are the merits of opting for a personal loan for online master’s degrees?  1. Zero Collateral   Personal loans are called unsecured loans and they do not require collateral from the borrower to sanction their claims. It is easier to get a personal loan as banks do not need you to give land, shares, or other bonds as collateral to claim. The approval largely depends on your credit scores, income history, and general eligibility or worthiness in terms of repayment. If the bank feels that you are not capable of repaying the loan, they are likely to reject the application.   2. Easy Sanctions  Personal loans verify the candidate’s worthiness, credit history, and financial stability. If you can provide an assurance to the bank that you are able and willing to repay then the banks are likely to sanction your loan faster. In terms of personal loans without collateral, your relationship with the bank, income stability, and financial background comes in handy for easy sanctions.   3. Easy Disbursals  Some banks disburse funds within seconds! Once your loan is approved and accepted, the banks can wire the money to your account immediately. Most personal loans and their lenders pride themselves on immediate and easy disbursements so that the borrower can finance their immediate needs faster. It may not be the case for all types of loans as each has its own processing period.   What are the demerits of opting for a personal loan for online master’s degrees?  4. High-Interest Rates  Interest rates vary from bank to bank and to lender. Personal loans are by nature unsecured which means the chances of getting a high interest rate may be higher. Beware of the interest rates, try to consult multiple banks before starting the application process. Having a good relationship with a bank and a financial history can help you.  5. Stress of Repayment   The stress of repayment is associated with every loan and is not exclusive to personal loans. Most borrowers struggle with repayment and may find it overwhelming at times. Having a stable income or savings can help you with the process of repayment. The cumulative interest rates and rising prices can make the job tougher but not impossible.  6. Eligibility Rigidity  Since most personal loans are unsecured, they focus largely on your credit score and financial history to sanction it. This can be a merit and demerit because a low credit score could jeopardize your application approval and make it tougher for you to gain the amount you want. Applicants are scrutinized more closely and any flaw could delay the process.    These are some merits and demerits of opting for a personal loan for an online master’s degree! An informed and well-rounded decision can help you pick the right path and help you secure a brighter future. FAQs Can you take an education loan for online degrees? Axis Bank offers education loans for online courses and executive courses that further your career. However, most banks do not offer education loans for online programs. Is it wise to take a personal loan for higher education? If you have the capacity to repay your loan on time then you can consider but it's wise to opt for an education loan for education purposes because it is made for meeting your education requirements. Should you opt for a personal loan in lieu of an education loan? No, education loans and personal loans are not the same. They can not be interchanged. Personal loans have a shorter repayment tenure, higher interests, and no moratorium period, and the loan amount offered may not be efficient enough to cover all your education expenses.

Are you planning to co-signee on your child's education loan? Then here are some questions cosigners should ask before taking an education loan! Education loans are important and useful. Especially when the inability to meet the demand for a higher fee structure is quite common. In India, the RBI has reported a spurt in the demand for big-ticket education loans. The role of a cosigner at such times is very important as they automatically become equally liable for the loan repayment as the borrower if things do not go as planned. Generally, organizations do not sanction an education loan without a creditworthy cosigner. He/ she can be a family friend, relative, spouse, guardian or parent, etc. and his/ her responsibility is immense. Thus, it is important to know about the different questions cosigners should ask before taking an education loan. 7 questions cosigners should ask before taking an education loan 1. Why does the loan applicant need a cosigner? Generally, young adults who apply for education loans have just started and have no earnings. Other times, they might have bad credit reports because of missed or late payments. Lenders need assurance from a reputed cosigner before sanctioning an education loan to such people.  One of the questions cosigners should ask before taking an education loan is about the credit history of the borrower. In case his/ her credit report is good but/ he is being asked for a cosigner just because of underage then it is okay to sign alongside. But, a bad credit history should make the cosigner beware of the pitfalls of cosigning. This also helps the cosigners find out whether the loan applicant is trustworthy, as well as, responsible by nature.  2. What is the loan amount? The co-signer must be fully aware of the total amount of the education loan. The co-signer, in no doubt, is signing alongside the borrower in good faith. However, down the line, should anything untoward happen, the co-signer may have to be responsible for the loan repayment. 3. What are the terms of the loan? One of the relevant questions cosigners should ask before taking an education loan is about the terms of the loan. It includes payment term length, repayment options, when is the loan repayment going to start and what happens if the repayment premium is not on time. The standard education loan is for ten years with a fixed monthly premium. The cosigner must remember that the loan terms, extended repayment options, and interest rates are different for private and federal students. Cosigners must ask questions as if they are borrowing money for themselves because only then they can know about the exact loan terms. Additional read: What is the cost of school education in India? 4. Will the loan applicant be able to meet the terms of loan repayment? The cosigner should be fully aware of the loan applicant’s financial position and the loan amount. He/ she should ask him/herself whether the borrower has the necessary assets or financial means to fulfill the loan terms. The cosigner should also know whether the loan applicant has any other loan in his/her name and whether he/she can continue to make payments for all of them.  5. In case of default, will the cosigner be able to pay the loan amount? According to statistics, at least 38% of cosigners are called upon to pay up the loan amount because the loan applicant is unable to do so. The co-signer must be prepared for any eventuality and ask him/herself whether he/she is ready to do so under unforeseen conditions. 6. What are the risks involved for the co-signer? The cosigner should know about all the risks involved if he/she signs the education loan. If the borrower is late then the credit score of the cosigner also drops alongside him/her. If the cosigner wants to get a loan or a mortgage then the cosigned loan will have an impact on his/her credit history. 7. Is there an option where the cosigner can be released from the responsibility? Sometimes, lenders offer release terms to the borrower under specific terms. The co-signer must be fully aware of them to minimize the risk factors involved in signing the education loan. FAQs What are the risks involved for the co-signer? The cosigner should know about all the risks involved if he/she signs the education loan. If the borrower is late then the credit score of the cosigner also drops alongside him/her. If the cosigner wants to get a loan or a mortgage then the cosigned loan will have an impact on his/her credit history. Why does the loan applicant need a cosigner? A cosigner offers a guarantee to the lender that the loan will be repaid. The presence of a cosigner/co-applicant helps your application especially as a student going for an education loan because they In case of default, will the cosigner be able to pay the loan amount? According to statistics, at least 38% of cosigners are called upon to pay up the loan amount because the loan applicant is unable to do so. The co-signer must be prepared for any eventuality and ask him/herself whether he/she is ready to do so under unforeseen conditions. Conclusion There are numerous questions cosigners should ask before taking an education loan because they will also have a responsibility towards fulfilling the conditions of the loan in case of any default. There is an inherent risk involved in being a co-signer. Hence, it is doubly important for him/her to ask the relevant questions. Undertaking a serious discussion with all the involved stakeholders will help to clear all the doubts and understand whether it is feasible to sign as a cosigner or not. Consult an expert advisor to get the right plan TALK TO AN EXPERT

Education expenses are soaring high in leading institutions. Hence, students of lower and middle-income states are finding it difficult to manage the associated expenses. One of the first considerations that come to mind while thinking about studying in a top institution far from the home city is the expense of accommodation and studying there. Students take out school loans and, in many instances, disregard the expenditures covered by the loan.  People perceive school loans from a particular perspective, viewing them as a limited funding source covering the tuition charge. But student loans have changed substantially over time, including much more than the average person may imagine. Below are some expenditures that financiers often include while providing education loans. These expenses being considered as a part of a loan shall differ from bank to bank:  Expenses covered under education loans 1. Tuition charges  University tuition costs account for over half of the entire cost of a student's higher university education. Tuition fees are the highest cost that must be paid to the institution. As a result, it is supported by all financiers like government banking institutions, non-banking finance companies, private sector banks, multinational lenders, and other lenders. One of the primary reasons individuals would take out an education loan is to pay for tuition charges since the remaining expenditures may be met if they do any part-time jobs.  Read more: Tips on how you can pay off educational loan 2. Tickets for travel  Traveling to a different state is a significant investment for children from poor and middle-income families. Though the amount is not too huge, many lenders will allow the provision to include the plane ticket cost in the aggregate loan balance. It is required to be considered that banks do not normally include travel expenses as a defaulted element of the loan. This can be incorporated at the borrower's desire. It is recommended to include the transportation cost in the loan for individuals who could not afford it.  source: pexels 3. Expenses associated with aids for studying  Studying is not limited only to education. Studying in reputed universities far from home city entails a larger range of activities to be completed as part of their studying process. This includes project work, research, group projects, scientific studies, etc. The value of college tuition charges should not be confused with expenses associated with studying. Many banks recognize this and, subject to a limitation, issue loans for library expenses, laptops, stationery, and so on. It's usually a good idea to check if the education loan funds the study expenses.  Read more: How much expensive is education abroad 4. Health insurance and coverage  Health insurance is not typically included with student loans. The majority of lending institutions don't cover the expense of health insurance. Still, some banks may agree to cover the expense of health insurance per the ask of the borrower. Therefore, just a few banks would consider health insurance as a portion of the loan.  5. Expenses for daily living  Living expenditures could be a fairly large bracket including eating, accommodation, everyday expenditures, etc, especially when studying in a different state from the home state. There is little consistency in how loans meet expenditures. Certain banks sometimes restrict monthly spending based on a percentage of the entire loan amount, whereas other lenders may use a different technique to calculate the corresponding living cost. It is important to consider the degree of coverage information and loan coverage while taking a certain loan. Education loan portfolio in Tamilnadu and all India level Up until 2013–14, both in Tamil Nadu and in all of India, the growth of the education loan portfolio was decelerating. However, in 2014–15, it surged to double digits, only to moderate in the years that followed. Tamil Nadu's increase of student loans went into the negative zone in 2018–19, while the rate of fall slowed down in 2019–20. Though southern states comprise a large share of PSB education loans, they also account for the majority of accounts that turn in non-performing assets and the total amount of outstanding NPAs Education loan interest rates 2022 Find out the most recent interest rates for student loans from the largest banks in India so you can compare rates and select the one that best suits your requirements. A variety of factors affect how much these loans will cost in interest. Conclusion  Students must evaluate the aspects discussed while managing funds for their studies when calculating the loan amount. The expense of education in top universities is significant, running into many lakhs and sometimes into crores. As a result, students must look forward to seeking advice from experts and financial institutions operating in this sector. With their recommendations & suggestions, students can be confident that their loan would cover all of their expenditures.   While considering expenditure coverage, consider that the loan must be returned, and the interest amount on the loan is substantial. So, enlisting the assistance of specialists will assist in weeding out less acceptable possibilities and incorporating the more essential recommendations. Thus, it will benefit the borrower in the longer - term. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

An education loan is a great instrument for pursuing higher education. With the cost of education rising every day, arranging for a massive amount for their child’s education is difficult and loans can ease that burden.  However, banks do not offer loans to everyone. Education loans have a high rejection rate.  Reasons why your child's education loan can be rejected  1. Academic performance  The academic performance of your child plays a vital role in deciding whether the loan can be approved or not. A student is usually expected to have average and above average marks on their report card to get a grant or a loan. The consistent score in the past few semesters and their performance in co-curricular activities are considered. Those students who have shown exemplary results in academic areas are given more preference for the grant of loans.  2. Missing documents  Incomplete information is one of the primary reasons for rejecting your child’s education loan. You must present all the documents the bank mentioned for the verification procedure. Also, you must ensure that you add the correct information while filling out the form. Check the form multiple times after you have filled it out. None of your documents should be fake. Make sure you get help from a bank professional if you do not know the steps. They will guide you with the further procedure.  Apply for Education Loan with EduFund 3. Admission to an unrecognized university  Banks often do not approve loans if they find the university unknown. They conduct a verification process on their level to know about the university. If unsatisfied with the data, they might cancel your child’s education loan application. On the contrary, they also ask for details from the parents to get a better view of the whole scenario. 4. Low credit score  A low credit score is another critical reason for canceling your child’s education loan application. The banks consider the score of your parent or the guarantee who will be signing the form. The application gets rejected if the guardian has not been good with repayments or has defaulted in the past. To increase the chance of the loan getting passed, it is advised that the parent or the guarantor should have a good record of repayments along with a healthy CIBIL score. source: pexels Type of education loan  The type of education loan is yet another factor that should be considered. Rejection rates are lower when you opt for a secure education loan (collateral-attached education loan). The unsecured education loan tends to get rejected during the verification process. You have to provide collateral such as agricultural land, your house, or some asset the bank can keep to get their money back in the case of fraud or non-payment. In the case of an unsecured loan, the pledged collateral is seized by the bank if the person taking the loan cannot pay the amount back.   Everything you need to know about education loans Read More Things to keep in mind while applying for an education loan a) Keep an account of the loan amount and policies  You should check the loan amount and guidelines provided by the banks. The procedures will vary with different principal amounts that are being borrowed. The interest rates also vary depending on the total amount of the loan.   b) Check the course, university, and eligibility  Make sure that the course and the university your child chooses are recognized. If the banks do not find them to be known, they might as well reject the plea for an education loan. Take proper guidance from an expert or professional to understand the course structure properly.   Next, check whether the university and course are eligible for the loan. Not only that, you must ensure that your child crosses all the eligibility factors, including citizenship, academic performance, and so on.   c) Interest rates offered by the banks   Make sure that you look at the interest rates and moratorium carefully so that you do not encounter any issues later. Some key points that require proper research are the duration of repayment, late payment fees, moratorium period, and so on. Usually, the interest rates for education loans lie somewhere around 9% to 15% of the principal amount. Do proper research on the long-term and short-term repayment periods to understand better what to choose. FAQs What are the reasons for education loan rejection? Poor academic score Lack of co-applicant Poor borrowing history of the co-applicant Courses that offer low employment options/ROI Choosing obscure universities that they not be accredited Type of education loan Incomplete documents Fake documents Country selection for the loan Insufficient income of the co-applicant How do you avoid loan rejection? To avoid loan rejection, you need to ensure all your documents are in place. Speak to the bank of your choice or take guidance from an education loan expert in getting all the documents, understanding the process, and the costs involved. Some tips are to make sure your financial history and your co-applicant's financial history are sound, your documents are real and your marks are on-point. Is an education loan easily available? Education loans are easily available in India. There are many lenders such as government banks like SBI, private banks like HDFC, Axis Bank, etc, and NBFCs like Avanse and Prodigy Finance. TALK TO AN EXPERT

In the previous article, we discussed how parents can find the best education loan. In this article, we will discuss the responsibilities of a parent in an education loan Education inflation is making things worse for parents. Let’s cite some figures to help you realize the state of education inflation in India. The education inflation rate in India was 0.63% in April 2021. But it has increased to 4.12 in the corresponding month of 2022. https://www.youtube.com/watch?v=awKjIuVlRAQ On the other hand, with the economy taking a hit due to COVID-19, many parents might find it tough to fund their child’s education. That’s when an education loan is one of the best solutions to make your child realize their dreams.   You can apply for an education loan in the public sector or a private bank. Even non-banking financial institutes nowadays offer education loans to eligible candidates. But with increasing costs, savings won’t be enough to fund your child’s education. No doubt, the best way to support your child’s higher studies is with the help of an education loan. So, what are the exact responsibilities of a parent for an education loan?   1. Always maintain a high credit score   If you are applying for a student loan for your child, the lender would ask you to act as a guarantor for the loan. It is crucial for parents to maintain a good credit score to showcase their creditworthiness to lenders.   A minimum requirement for credit score varies from lender to lender. A credit score of more than 700 is pretty good. Maintaining a good and higher credit score can help you negotiate with the lender to provide the loan at a better interest rate  https://www.youtube.com/watch?v=fufyFB9aMQI 2. You shouldn’t worry much about the collateral   Parents often hesitate to apply for education loans due to the fear of mortgaging their assets or property. However, you shouldn’t stress much about mortgages and collateral. An education loan can be collateral free. It also decreases loan sanction time and makes the overall process hassle-free.   Best way to explain child education loans Read More 3. Tax benefits on education loan  Note that tax deduction under Section 80E is one of the main advantages of an education loan. This deduction is available both to the parent and child, based on who repays the loan. Education loans offer a good tax planning opportunity. Since the complete interest can be deducted under Section 80E, the actual repayment cost becomes much lower.   https://www.youtube.com/watch?v=4gTQkdePOWM 4. Try to in still healthy financial habits with your children    As a responsible parent, your primary objective should be to instill good financial habits in your children. Good financial habits will help your child to repay the loan on time. And when your child bears the loan repayment responsibility, it is an excellent way to inculcate financial discipline. In this manner, they can build their own credit history. Building their own credit history in the early stages opens up a world of financing opportunities for them in the future.  5. Go for competitive interest rates   Interest rate is one major factor that influences the loan amount and EMIs. For instance, if the interest rate is high, the repayment amount will increase drastically. As a parent, your primary responsibility should always be to opt for education loans that come with lower interest rates.   Education loans in India don’t come affordable. Moreover, the overall NPA of educational loans is pretty high. That’s why banks charge exorbitant interest rates. As a responsible parent, you should remember that banks decrease interest rates by 1% when it is paid while the child pursues their education. Furthermore, you should repay the loan without defaulting.          6. Make use of the moratorium period  Parents typically make use of the moratorium period. Note that you cannot get a moratorium period on every education loan. Certain lenders and government-based financial companies don’t begin the loan repayment process unless the student finishes the course and completes at least six months in the professional workplace.   7. Know the significance of margin money  You should closely analyze how much the financial institution will finance and how much you need to put in. The contribution from your end is known as the margin money. The requirement of margin money usually varies from one lender to another.   For instance, the PSU banks typically charge a 5% margin money for education loans above INR 4 lakhs for candidates studying at Indian Institutes. On the other hand, they will charge 15% of the margin money if your child enrolls in a foreign university.   In most cases, private lenders typically don’t charge margin money when you apply for education loans from them. But as a responsible parent, you should make sure not to pay higher interest just to avoid margin money.     By keeping these facts in mind, you can ensure that your child can repay the loan quickly and become debt-free! Plan your finances well and educate your child wisely to help them become successful in their careers. TALK TO AN EXPERT

In the previous article, we discussed how to save your child from a student debt trap. In this article, we will discuss whether should you take a loan for a child's education. The cost of education has been steadily rising. Many parents struggle to provide for their children's educational expenses. Today, the price of an MBA ranges from Rs 10 lacs to Rs 25 lacs.   If you want your child to attend top-tier universities abroad, then the cost automatically multiplies!   Given the exorbitant price of college and the innate desire to give your child the best education possible, you may think about either saving money or borrowing money. Let us examine these two choices in more detail:   Education loan Access to education loans is simple and is given by all of India's leading financial institutions. An advantage of an education loan is that it is readily available.   You don't need to spend years building up a corpus. You can pay for your child's education in a few short weeks. Of course, the interest rate is a major drawback.   An education loan typically has an interest rate between 10% and 13%. Of course, this increases the price of schooling overall, which is already relatively high. Education loans have the drawback that your child will be responsible for paying them back once they are old and working.   Education loan puts undue pressure on your child. They may not be able to pursue a career that aligns with their interests because of the pressure of large repayments. This kind of debt may unnecessarily burden the family finances in the long run.   Thus, taking on an education loan is efficient yet the interest rates and pressure of repayment can be mentally and financially stressful for the family and your child. Let's look at investment as a means of paying for your child's education.   source: pixabay https://www.youtube.com/watch?v=tdwqQH0xkFw Investment Investment is an underutilized way of paying for your child's education. Many parents turn to loans rather than saving for their child's educational needs. Investment requires time and depends upon your child's age and the kind of education they want to pursue in the future. By utilizing a strategy for systematic investment in an equity mutual fund scheme, you can leverage the power of compounding to accumulate a sizable corpus by setting aside a manageable sum each month to pay for your child's education. There are no interest charges or payback obligations. Although you can immediately support your children's education with an education loan, it might not be the most excellent choice.   Your children will eventually be required to contribute a portion of their future income to the debt repayment. The repayment burden frequently emerges as a crucial factor when assessing employment alternatives.  The best way to save for your child's education is through a SIP. Your initial investment and monthly payments are not only considerably less, but you can take care of this significant expense relatively easily compared to taking a loan.  It is important to note that tax exemptions for education loans are allowed only for up to eight years. In contrast, the tax benefits to mutual funds apply even if you invest in equity-linked saving schemes (ELSS) that come with a lock-in period of 3 years.   Coming to the comparison, it seems that equity investments offer more advantages overall than student loans. However, you don't need to pick one; you can combine the two to achieve your objectives efficiently.   Utilizing both will ensure lower interest costs and leave money for unexpected requirements. Perhaps employ more investments rather than loans to fund your children's education. But ultimately, the choice is yours. TALK TO AN EXPERT