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How tough is it to get an Education Loan?

How tough is it to get an Education Loan?

As you look to plan your child’s career and consider their higher studies in a good institute in India or overseas, the question that most parents ask themselves is, how hard is it to get an education loan? Today, education in India has become quite expensive from the school level onwards. Given the rising inflation rate, fees across the board for higher education in reputed Indian and international universities are going up yearly. In this scenario, if you are serious about sending your child to an excellent Indian institute or abroad for higher studies, chances are high that you will be required to take an education loan. Taking an education loan for a four-year undergrad engineering course from a private institute in India can cost you upwards of Rs. 12 lakhs in tuition fees. The same course in an international university can go up to Rs. 60 - 70 lakhs, with travel and stay extra. Most parents today opt for an education loan to fulfill their child’s educational and career aspirations. That brings us to the topic of this article: how hard is it to get an education loan? To understand the challenges, you must understand what the lenders look for in an education loan application. Apply for an Education Loan What lenders look for while reviewing education loan applications There are several education loans available, as RBI promotes these extensively. So most nationalized banks will offer you these loans. Here is the list of factors they consider when reviewing an education loan application: 1. Financial history of the borrower and co-borrowers Especially in the case of undergraduate courses, parents as co-borrowers must have an excellent credit rating and must show the financial capability to meet the need for repayment, should the need arise. 2. Co-borrower or Co-applicant While international lenders may not ask for a guarantor, most public sector/govt lenders do. They require a guarantor or co-applicant, especially if the loan is for a significant amount. Again, the guarantor's credit history will be scrutinized while sanctioning the loan. 3. Collateral Public sector/nationalized banks and several private lenders need collateral to issue an education loan if the amount is enormous. The value of the collateral is worked out in light of the loan required and varies depending on the lender, but collateral is a must. There are various non-collateral options available for students as well. Most of these even offer loan amounts up to 1 crore, but it depends upon the individual and their application. 4. University of your choice This is another crucial aspect for lenders. Most leading lenders have their preferred list of universities and courses for which they will issue loans. So, you must ensure that the institute your child is shortlisting is on that list and an accredited educational institute that the banks recognise. 5. The academic record of the student An excellent academic record goes a long way in assuring the lender of the child’s seriousness toward education and career. It works as an indicator for them that the student will complete the course for which the loan is being given and will be able to repay the same by building a promising career. FAQs Do we get education loans easily? The easiest way to get an education loan is to connect with EduFund. EduFund helps students by connecting them directly to the right education loan provider! With EduFund, you can get the lowest interest rates, express approvals, and end-to-end assistance in securing the right education loan for your profile. EduFund experts can also help you avoid hidden fees, get approvals without an offer letter, and ensure a smooth loan disbursement for your future plans. Connect with our experts here! Do education loans get rejected? Yes, education loans can be rejected. Banks can reject your loan application if there are any discrepancies in the documents. If your co-applicant does not meet the set criteria, or if you have opted for a course or university that the bank does not recognize. There are many reasons - the best way to avoid rejection is to plan with experts like EduFund, who offer end-to-end assistance. Why is it difficult to get an education loan in India? Yes, the loan process in India can be lengthy and tiresome if the candidate is applying on their own. With the help of experts from EduFund, you can avoid the lengthy process of getting in touch with the right providers directly and applying for a loan in no time. TALK TO OUR EXPERTS
Your Guide to Education Loans in India

Your Guide to Education Loans in India

With quality education becoming expensive and costlier every year, education loans are becoming extremely popular among students. In reality, the price of attending a reputable university is already very high. An MBA that cost 13 lakhs a decade ago, would now cost almost double that. Parents who plan their child’s education in advance and want to provide them with the best opportunities possible to invest their money in mutual funds (MFs), fixed deposits (FDs), and stocks. Amid all this, there still is a possibility of a financial shortfall. In such a situation, an education loan plays a critical role in bridging the gap between the shortfall and the necessary amount. The rising cost of education According to Forbes, education costs are rising at double the rate of inflation. In 15 years, the cost of an MBA is expected to rise from Rs 2.5 lakh to Rs 20 lakh. So, if a couple saves Rs 2,500 per month for 15 years at a rate of 12%, they would have saved about Rs 12.5 lakhs, ultimately needing some more funds if their child decides to pursue an MBA. Now, you must have some questions on your mind regarding the intricacies of availing of an education loan. We have tried to answer a few commonly asked questions to enhance your understanding. Apply for your dreams, get an education loan with us! 1. Who can apply for a student loan? The primary creditor is a student. A co-applicant may be a parent, partner, or sibling. 2. What is covered by a student loan? It includes the basic course fee and other costs such as accommodation, exam fees, equipment, and other miscellaneous expenses. 3. Who can avail of a student loan? It is available to students who wish to study in India or further their education outside the country. The overall sum available for studies in India and abroad differs from one bank to the next. 4. For what courses can the loan be availed? It is available as a full-time, part-time, or vocational course leading to graduation or post-graduation in engineering, management, medicine, hotel management, architecture, and other fields. 5. What are the eligibility criteria and documentation requirements? To be eligible for the loan, one must be an Indian citizen who has been accepted into a college or university that is recognized by a competent authority in India or abroad. The applicant must have completed his senior high school education.Some banks can provide a loan even before a student has been accepted to a university. The Reserve Bank of India (RBI) guidelines state that there are no upper age limits, but some banks may impose them. Additional documents such as the institution's admission letter, fee structure, and Class X, XII, and graduation (if applicable) mark sheets are required by the banks. The co-applicants income records, such as salary slips or income-tax returns (ITR), are also needed. 6. Is collateral required for financing the loan? Depending on the amount, banks will fund up to 100% of the loan. There is currently no margin money required for loans up to Rs 4 lakh. To study in India, the applicant must contribute 5% of the necessary funds. The needed margin money for international studies, on the other hand, rises to 15%. Banks may also need collateral for loans exceeding Rs 7.5 lakh. For loans up to Rs 4 lakh, financial institutions currently do not need any collateral or third-party guarantee. A third-party guarantee is required for loans between Rs 4 lakh and Rs 7.5 lakh. For loans exceeding Rs 7.5 lakh, a security deposit is required. According to the fee structure, when a loan application is approved, the banks send the funds directly to the college or university. 7. What is the rate of interest charged on the education loan? To set an interest rate, banks use the Marginal Cost of Funds Lending Rate (MCLR) which in India ranges anywhere from 7% - 8% plus a spread (about 1 - 2.5%). Applying with EduFund can get you interest rates starting at just 9%! 8. What is the process of repayment? The individual availing the loan for their education is responsible for repaying the loan. In most cases, repayment begins when the course is completed. Some banks also give you a six-month grace period after you get a job or a year after you finish your studies before you have to pay back your loan. The repayment period is usually between 5 and 7 years, but it may also be extended to 15 or 20 years depending upon the bank and the applicant. The bank charges a basic interest rate on a loan over the repayment period. The student's equated monthly instalment (EMI) burden for future repayments is reduced by paying basic interest during the course duration. 9. What precautions should one take while applying for student loans? When availing of a loan, one must consider bank fees such as transaction fees, pre-payment fees, late EMI payment fees, and so on. The majority of lenders charge a processing fee of the total loan amount. 10. Are there any tax benefits? The interest paid on the repayment is deductible under Section 80E of the Internal Revenue Code. This tax benefit is only available to people who are paying interest on a personal loan. The whole amount of interest charged is deductible from your taxable profits. This deduction can be taken for up to 8 years. There are no tax deductions available for the principal sum. 11. How can I apply for an education loan? You can visit the Education Loans page on the EduFund website and fill up a simple form. You will get all the details, along with guidance from experts in the field. FAQs What is an education loan? An education loan is a type of loan used for educational expenses such as tuition fees and education-related expenses like books, accommodation, living expenses, and much more. Education loans can be availed for studying only and one of the requirements is an offer letter from a reputed university/college. Who can apply for an education loan? The primary creditor is a student. A co-applicant may be a parent, partner, or sibling. How can I apply for an education loan? You can visit the Education Loans page on the EduFund website and fill up a simple form. You will get all the details, along with guidance from experts in the field. Conclusion Good education is extremely important in the present dynamic world. It not only boosts self-confidence in students but also equips them with skills that in turn help them lead their life in the best possible way. Taking a loan might look frightening but in the long run, it definitely pays off, provided the student is focused and makes the best of the opportunity. Also, since an education loan is a person's first loan, it aids in the creation of a good credit score. If you repay the loan on time and without defaults, it would be easier for you to obtain a home loan, car loan, or any type of loan in the future. CONNECT WITH OUR LOAN EXPERTS
Common mistakes when taking an education loan  

Common mistakes when taking an education loan  

If you've come to this page, it's likely that you're looking into getting an education loan to pay for your studies abroad.   Studying abroad may be a rewarding experience that presents a wealth of chances for both professional and personal development. However, there might be a considerable cost associated with getting a degree abroad. To pay for their foreign studies, many students turn to student loans, but there are a few typical mistakes that can be made when applying for loans.   High interest rates, trouble repaying loans, and other financial problems might be brought on by these errors. In this post, we'll go over some of the most typical mistakes students make when taking out student loans to fund their international studies and offer advice on how to prevent them. Apply for Education Loans Stay away from these blunders 1. Not reading the terms and conditions  When taking out an education loan for international study, one error to avoid is failing to carefully read and comprehend the loan's terms and conditions. To make sure you comprehend the interest rates, repayment alternatives, and any costs or penalties associated with the loan, it's crucial to read the tiny print and ask any questions you may have.  It's also crucial to take into account the whole cost of the loan, which includes the principal borrowed, interest, and any other expenses. After you graduate, make sure you have a clear repayment strategy in place and that the payments are manageable given your anticipated post-graduation salary.  Finally, only take out as much credit as you need. Only borrow what is needed to pay for education, housing, and other necessities after carefully evaluating your financial condition. Overextending your borrowing capacity could result in future debt that is unneeded and financial stress.  Rules for taking education loans Read More 2. An incorrect estimate of the cost  It's a big financial choice that needs considerable thought and preparation to take out an education loan to study abroad. Underestimating their costs is one of the most frequent errors that students make when taking out a student loan.  Students frequently concentrate on the upfront expenses while making plans to study abroad, such as tuition, living expenses, and travel expenses. Yet, there are other additional indirect expenses that can mount up quickly, including those for books, supplies, meals, and travel. Accurately estimating these fees can be difficult, particularly if the student has never lived in the nation previously.  Many issues can arise because of underestimating costs. First, the student might become broke while studying, which could be stressful and have an effect on their grades. After graduation, they might have to take on extra debt or work part-time, which would add to their financial load. Second, kids might not be able to go on trips or take part in extracurricular activities, which could limit their international exposure. Finally, individuals might be forced to make painful lifestyle compromises that could harm their general well-being.  Students should think about the following advice to avoid underestimating costs while taking out an education loan for studying abroad:  Do your homework: Students should thoroughly examine the cost of living in the country they intend to attend school. They should take into account all costs, including indirect ones like food, transportation, and entertainment.  Talk with professionals: Students should speak with education loan companies or advisors who assist them in organizing their finances for study abroad programs. These professionals can give them precise cost information.  Create a budget: Students should put together a sensible budget that accounts for all costs and distributes money appropriately. Also, they need to budget for any unforeseen costs that might occur while they are away from home.  Be conservative: It's better to estimate costs that are too high than too low. When evaluating costs, students should use cautious estimates and make backup plans.  https://www.youtube.com/watch?v=7Y0V6Z0lcJs 3. Dependence on a single lender  It's crucial to weigh all of your options and not rely entirely on one lender when taking out an education loan because doing so increases your risk of making mistakes that could wind up costing you money in the long run. There may be fewer options available, so it's critical to evaluate and contrast the many loan options to choose which one best suits your financial condition and academic objectives.  It is crucial to take into account the possibility of higher interest rates, undisclosed costs, flexible repayment options, and diversification when taking out a student loan. Interest rates may be higher than expected, and you may not be aware of the expenses involved with the loan. Flexibility in repayment is also crucial because different lenders could provide different levels of flexibility.   Finding a loan that offers good conditions and matches your financial situation might help you spread your risk and diversify your portfolio.  An overseas school loan is a substantial financial choice that has to be carefully thought out and planned. When submitting a loan application, students and their families can make a number of typical blunders that can lead to long-term financial troubles.   While taking out an education loan, some typical mistakes to avoid include not doing your homework on the lender, borrowing more than you need, forgetting to read the loan's terms and conditions, not checking into all your loan possibilities, and depending on just one lender. It is crucial to do extensive research on the lender and loan terms, figure out the precise amount of money you need, read and comprehend the loan's terms and conditions, investigate multiple loan options, and avoid relying on just one lender to avoid making these blunders.   Planning and being proactive are ultimately the keys to avoiding blunders when taking an education loan overseas. You can locate a loan that matches your needs and enables you to pursue your academic objectives without experiencing undue financial hardship by taking the time to properly investigate and weigh your options. Taking out a student loan can be a wise investment in your future if you approach it correctly and make the necessary preparations. FAQs Why does an education loan get rejected? There are several reasons behind loan rejection. It could be due to incomplete and fake documents, the co-applicant's poor credit history, low marks in school or college, low repaying capacity, etc.  Can I get an education loan with 50% marks? Yes, some banks do provide loans to students who have scored 50% marks in school. Connect with us here to know more! What are the conditions for an education loan? Some basic conditions for an education loan are: The applicant must be a student between the age of 16 to 35 years of age, must be an Indian citizen, must have a co-applicant, must have a conditional or confirmed admission letter for processing, must have the capacity to pay back the loan and a satisfactory credit history that meets the bank's requirements. TALK TO AN EXPERT
Education loan vs Self-finance. Which is better?

Education loan vs Self-finance. Which is better?

Choosing between an education loan vs self-finance for your child’s higher education is as tough as planning for a child's higher education. Most parents consider self-financing a viable alternative to pay for their child's education by liquidating valuable assets like land or FDs or borrowing from family, friends, and relatives. Such financial assistance is not available to all families. This is when a student loan can help. Let’s look at the benefits of student loans and their preference over self-financing. Self-financing  Taking out an education loan can be a financial burden for most students and parents, so they prefer self-financing as a viable option to avoid future debt. For one reason or another, students don't want to be burdened with EMIs when they can pay for everything at once. What exactly qualifies as self-financing? Self-financing may be preferred in the following circumstances: Paying for your own education Request for financial help from family, friends, or relatives Securing funding from a third party (excluding government banks or education loan providers) Education Loans In the debate between education loan vs self-finance, education loan has emerged as a strong competitor. The demand for student loans in India has increased steadily even during the pandemic. Collateral loans or Secured loans are offered based on the collateral provided. When a borrower pledges collateral to obtain a loan, the lender is guaranteed partial compensation for any outstanding loan debt. In case payments are not made on time, they can seize the mortgage and sell the property. The best mortgage loan providers in India are government and commercial banks Collateral Free or Unsecured loans do not require any collateral to be pledged. These loans are available to students with insufficient assets to pledge. However, when financing unsecured loans, lenders consider factors such as parental income, university ranking, and fees are taken into account when considering unsecured loans. Education loans vs Self Finance Conclusion Student loans come with several benefits, whereas self-funding has limited benefits. Self-funding your child's higher education can help reduce your child's financial burden. Saving for a child's higher education may be tricky, but if you plan early, you can start from a small amount and create a large corpus over time to protect your child's future. If you are facing difficulty in saving and do not know where to invest your savings, then download the EduFund app today and connect with experts to know how you can save and plan for your child's higher education. FAQs What is self-financing? Self-financing is when you pay for your education or tuition fees out of your own pocket without taking on any debt or liability. Which is better, a personal loan or an education loan? An education loan is better if the aim is to pay for your education expenses. A Personal loan is better if you need it for vacation expenses or personal needs. What type of loan is best for education? An education loan is the best type of loan to finance your education. It is designed for students who wish to better their lives through good quality education and upskilling. Education loans have relatively low interest rates, a moratorium period to take debt-free while studying, flexible tenures and much more. TALK TO AN EXPERT
Can you repay your education loans before time?

Can you repay your education loans before time?

For parents who desire to send their children to continue higher education but cannot financially do so on their own, an education loan is certainly a blessing. Many people eventually sell off family belongings, including gold, to pay for their children's further education. With the aid of an education loan, you may preserve these priceless possessions while paying for your child’s education. Few loans for higher education may need collateral, and few won’t. Many education loans from the country’s top lenders are available to pay for different courses. Whatever form of student loan you decide to take out, you must have a reliable repayment schedule in place. By doing this, you or your child will be able to pay the monthly payments without going into default. You've come to the right place if you need assistance managing student loans. Apply for Education Loan Tips to repay education loans faster 1. Advice for managing student loan debt Are you soon to take out a student loan? Continue reading for some practical advice on managing student loans. 2. Select a loan with a shorter term A brief tenure is a fantastic choice for managing student loans. While a shorter loan term can result in higher EMI payments, it will also enable you to save significantly on interest payments. Now, this does not imply that you choose EMIs that are too expensive for you to afford. Instead, go with the shortest tenure you can handle. To figure out how much you can afford to pay each month for your student loan, use an EMI calculator. How Does Education Loan Work? Read More 3. Pick a suitable repayment strategy Choosing the appropriate repayment option is the best method to manage student loans. You will have several repayment choices from your lender. Pick the option that fits your budget the best. You must be mindful of the duration of your moratorium. You will then be aware of how much time your child has left to obtain employment and save funds before the first EMI is due. Do not forget to consider how much they can expect to make in their first job. You can determine the appropriate tenure and EMI with the help of all of this. Without such careful planning, you can end up selecting an EMI that would be very expensive for both of you. https://www.youtube.com/watch?v=9EAyvncisU4 4. Set up automatic payments Missing loan installments might seriously harm your child's financial situation. Their credit score may be impacted, and they may incur late fees as a result. Just ask them to set up automatic withdrawals from their savings account so you won't have to worry about missing payments. They won't incur any missed EMI charges because these payments will be made on time. They will be able to retain a good credit score with regular payments. In turn, a good credit score is beneficial for making future loan applications. Education Loan Repayment Strategy Read More 5. Pay off interest during the moratorium Your payments don't start right away when you take out an education loan. They start after the moratorium has ended. The moratorium is a six-month or one-year period that starts when you finish your course. The interest on your child’s school loan starts to build the instant they receive the funding, even if your payments won't start until the moratorium is over. Therefore, it would be good to begin paying this interest while your child is still attending school. The best student loan advice you will likely receive is this. While still in college, your child might want to think about having a part-time job. The money they make from this job can be used to pay off their student loans. Either of you will significantly reduce the total amount that must be paid if you pay off this simple interest before it accumulates. 6. Make additional loan repayments Did you get a pay raise at work? Or perhaps your relatives gave you some cash as a gift. You might want to think about increasing your student loan payments if you get some extra money. This is a fantastic strategy to reduce the overall payback burden. Making larger payments on your student loan may enable you to pay it off earlier. One of the best pieces of advice for properly managing student loans is this. Check with your lender to see if there are any prepayment charges, though. Before going through your loan application process, you can check the fine print or ask your lender whether there are any penalties. https://www.youtube.com/watch?v=fufyFB9aMQI Conclusion The repayments of a loan can be very stressful. You and your child should do whatever you can to make it easier. These points will help reduce the burden on them and help them go through the process. If after this there are any questions, advice, or information you need, EduFund’s team of financial advisors is available to talk to you FAQs Can I repay my education loans before the scheduled time? Yes, most education loans allow early repayment without penalties. Check with your lender for specific terms. Are there benefits to repaying education loans early? Yes, early repayment can save you on interest costs and improve your credit score faster. What should I consider before repaying my education loans early? Ensure there are no prepayment penalties, evaluate your financial situation, and prioritize higher-interest debts first. Is there an option to repay your education loan before time in India? There are NO penalty charges for prepayment. You can prepay your education loan anytime. Can we close the education loan before tenure? Before prepaying your education loan, you should consult your lender to understand whether they will levy any kind of prepayment penalty. In India, there are no penalties on prepayment but it's important to consult and check to avoid extra payments. Connect with our Loan Experts
Benefits of refinancing an education loan

Benefits of refinancing an education loan

What does refinancing a loan mean?   Refinancing an education loan lets a new lender take over the existing loan and pay out the old lender. The new lender typically offers a lower interest rate on your loan, may offer a refinancing bonus, and provides better pay-back terms and service, making the shift attractive.    Why do students refinance education loans?   Most education loans have a tenure ranging from 5 years to 20 years. During this tenure, the loan rates may change in the market, and the current lender may not pass on the benefits of lower interest rates to the borrowers.    To ensure your education loan has the lowest interest rates, you can monitor the education loan market closely after taking the loan. Even a slight lowering of interest rates can impact the repayment tenure or per month EMI. As your child starts their career and begins to repay the loan, every small amount saved will enable them or them to repay the loan faster.    There are usually three main reasons to refinance an education loan:    To optimize the monthly pay-outs   Lower the interest rate   To change the loan tenure   Additional read: 5 ways to make getting an education loan easier for your child What are the eligibility criteria to refinance an education loan?   To refinance an education loan in India, the student should have taken the loan to pursue graduation or post-graduation degrees from well-known institutes and colleges.      The repayment process of the education loan usually begins once the student has already started earning.   Accordingly, the student should have completed the course and either could have begun the repayment process or be in the process of starting repayment.    The borrower must have a good credit history and score, with financial resources in terms of a regular salary to pay back the EMI month after month. Most lenders will also check on the other debt that the borrower may have.    Dos and don’ts of refinancing an education loan   Apply for Education Loans While refinancing an education loan, ensure you do the following:   Do due diligence before rushing in to shift the loan to a new vendor. In India, refinancing a loan may invite charges from the old and the new lender. The Old Lender typically charges a foreclosure penalty, and the New Lender has processing charges upfront that will add to the overall payout. Before deciding to shift your lender, check on the additional costs that the refinancing will incur.   Monitor the education loan market carefully. Changing rates can impact the total amount payable by you considerably. When you find the market rates dropping, you can speak to your existing lender to refinance your existing loan at the current rate or connect with a new lender for the same.    Opt for a fixed interest rate, and explore the possibility of a student loan refinancing bonus. These amounts can considerably impact young students starting out in their careers.    If your child’s refinancing application has been rejected initially due to low salary / insufficient funds, a promotion or salary increase can make them eligible later. Ensure your child uses these career developments smartly to refinance the education loan.    Instruct your child not to default on the student loan as it impacts the individual’s credit score in the long run. Poor loan repayment habits will affect their chances of getting a refinance and even new loans in the future.    To see how a change in interest rates will affect the monthly pay-out and tenure of your education loan, check out our Loan Calculator. This will help you understand the benefits of having the education loan refinanced.    If your refinance application is rejected for any reason, you will do well to start saving money through our various investment options and build your own corpus to settle the education loan at the earliest. Early loan repayment helps you minimize the interest you are paying and keeps your overall payout under control. FAQsIs it good to refinance student loans?  Refinancing student loans can be a good financial decision if you can secure a lower interest rate than your current loans, potentially reducing monthly payments and saving money over the loan's lifetime. However, it may not be suitable for everyone, so carefully evaluate your situation before deciding.  What happens if I refinance my student loans?  When you refinance your student loans, you basically take out a new loan with different terms to pay off your existing loans. This may result in a lower interest rate, a different repayment term, and a new lender. It can lead to lower monthly payments, cost savings, or both, depending on the terms of the new loan.  What is not a good reason to refinance a student loan?  Refinancing may not be a good idea if you're relying on federal loan benefits such as income-driven repayment plans, loan forgiveness programs, or deferment/forbearance options. Refinancing federal loans into a private loan could make you ineligible for these valuable benefits. Additionally, if you have a low credit score or unstable income, refinancing may not yield favourable terms.  Is it beneficial to refinance a loan?  Refinancing a loan can be beneficial if you get lower interest rates, reduced monthly payments, or faster loan repayment. It can save you money and simplify your financial situation. However, the benefits depend on your specific circumstances, so it's essential to carefully assess the terms and compare them with your current loan before refinancing.  TALK TO AN EXPERT
Education loan process for the UK.

Education loan process for the UK.

The United Kingdom has been one of the preferred global destinations for Indian parents who want to send their children abroad for higher education.  The thought is exciting enough as it opens new doors of opportunity for a flourishing career but it requires a considerable sum of money that every parent cannot afford. Education, especially higher education in foreign countries like the UK, is revered in India, no doubt. But it is a fact that every Indian parent cannot afford to send his child abroad without an appropriate loan. Knowing about the education loan process for the UK must be a priority for a parent as it will help in fulfilling their children’s dreams to a great extent. https://www.youtube.com/watch?v=sRiktJ_KLmo Cost to study in the UK   Studying in the UK entails various costs, including tuition fees, accommodation, living expenses, and study materials. Tuition fees differ based on the university and program, with undergraduate fees ranging from £10,000 to £38,000 per year for international students. Postgraduate fees can vary similarly. Accommodation expenses vary by city and housing type, with average rents ranging from £800 to £2,000 per month. Additional living costs, such as food, transportation, and utilities, might average around £700 to £1,000 per month. Scholarships can help offset these expenses. It's crucial to budget for visa fees, health insurance, and potential travel costs. Researching scholarships, part-time job opportunities, and efficient budgeting strategies can make studying in the UK financially manageable.  Documents required for Education Loan Approval:  Applying for an education loan to study in the UK is a significant step towards realizing your academic aspirations. To ensure a smooth loan approval process, it's essential to provide the necessary documents that demonstrate your eligibility and commitment to your education journey. The documents required typically include:  Admission Letter: A formal confirmation of your acceptance into a recognized educational institution in the UK is a crucial document that validates your need for financial support.  Cost Estimate: Present a detailed breakdown of the anticipated costs of your education, including tuition fees, accommodation expenses, living costs, study materials, and travel expenses. This estimate will guide the lender in determining the loan amount.  Academic Records: Submit copies of your academic transcripts, certificates, and standardized test scores, such as IELTS or TOEFL results. These documents showcase your academic prowess and your commitment to your studies.  Collateral Documents: If you're applying for a secured education loan, provide relevant collateral documents. These might include property papers or certificates of fixed deposits that demonstrate your capacity to secure the loan with valuable assets.  Proof of Identity: Present a valid passport, Aadhar card, or any other government-issued identification document to establish your identity.  Proof of Address: Furnish documents that verify your residential address. This could include utility bills, rental agreements, or any other official documents.  Income Proof: Showcase your parents' or co-borrowers income stability and capacity to support your education. This might involve salary slips, income tax returns, or business-related documents.  Co-borrower Documents: If you're including a co-borrower, such as a parent or guardian, provide their identity and address proofs, as well as income-related documents.  Letter of Admission: A critical piece of evidence that affirms your intention to study in the UK. This document outlines the course details, duration, and starting date.  Types of Education Loans for the UK:  When pursuing an education loan to study in the UK, you'll typically encounter two primary types: secured education loans and unsecured education loans.  Secured Education Loan: This type of loan requires you to offer collateral, which could be property, fixed deposits, or other valuable assets. For the lender, the collateral serves as security, lowering their risk. In return for this security, secured loans often come with lower interest rates compared to unsecured loans.  Unsecured Education Loan: Unsecured loans do not require collateral. These loans are based on your creditworthiness, academic performance, and the financial stability of your co-borrower. While they provide a valuable avenue for those without significant assets, unsecured loans usually come with higher interest rates to compensate for the increased risk borne by the lender.  Expenses Covered in Education Loan for the UK Education loans for the UK are designed to comprehensively cover the various expenses associated with pursuing higher education overseas. These expenses typically include:  Tuition Fees: The loan covers the tuition fees required for the chosen course of study.  Accommodation Expenses: The loan encompasses accommodation costs, including rent and related charges.  Living Costs: This includes day-to-day expenses such as food, transportation, study materials, and personal needs.  Travel Expenses: The loan can cover travel costs related to your journey to and from the UK.  Insurance Fees: Comprehensive health insurance is essential when studying abroad, and education loans often account for these costs.  It's essential to have a clear understanding of what expenses your education loan covers. This knowledge will allow you to plan your finances effectively and avoid unexpected financial burdens.  Eligibility for Education Loan for the UK While eligibility criteria can vary among lenders, certain common factors determine whether you qualify for an education loan to study in the UK. These typically include:  Indian Citizenship: You need to be an Indian citizen to be eligible for most education loans.  Admission Confirmation: You must secure admission into a recognized educational institution in the UK.  Co-borrower Requirement: Education loans usually require a co-borrower, often a parent or guardian, who demonstrates the ability to repay the loan in case you face difficulties.  Academic Performance: Lenders often consider your academic performance as an indicator of your commitment to your studies.  Financial Stability: The financial capacity of your co-borrower to repay the loan is a crucial factor in the approval process.  Education Loan Documents Required for the UK When applying for an education loan to study in the UK, the following documents are commonly required:  Completely fill out the application form that the lender provides.  Admission Letter: A formal letter of admission from your chosen UK educational institution.  Cost Estimate: An estimate of the total expenses involved in your education, including tuition, living costs, and other related expenses.  Academic Records: Copies of your academic transcripts, certificates, and standardized test scores like IELTS or TOEFL.  Collateral Documents: If applying for a secured loan, provide relevant collateral documents.  Income Proof: Documents that establish the income stability of your co-borrower, such as salary slips or income tax returns.  Proof of Identity: A valid passport, Aadhar card, or other government-issued ID.  Documents that attest to your residential address serve as proof of address.  How to Make a UK Student Loan Application:  Acquiring an education loan for studying in the UK involves a structured process:  Research: Begin by researching the various lenders that offer education loans for studying in the UK. Compare the terms, interest rates, and qualifying requirements of each.   Application: Once you've selected a lender, complete their application form and gather the necessary documents.  Document Submission: Submit the application form along with the required documents to the lender's designated branch or online portal.  Loan Approval: The lender will review your application and documents to assess your eligibility and creditworthiness.  Loan Sanction: Upon approval, the lender will issue a sanction letter outlining the loan amount, terms, and conditions.  Repayment of Education Loan Repaying your education loan is a significant responsibility that begins after the completion of your course or after a predetermined grace period. The repayment term varies, typically ranging from 5 to 15 years, depending on the loan amount and terms. It's essential to factor in your post-education financial situation and choose a repayment plan that aligns with your capacity to repay. How to Choose the Best Lender? Selecting the right lender for your education loan significantly impacts your financial journey. Here is some advice on how to choose wisely:  Interest Rates: Compare the interest rates offered by various lenders and opt for one with competitive rates.  Loan Amount: Ensure that the lender covers the full extent of your education-related expenses.  Repayment Terms: Evaluate the flexibility of repayment terms and choose a lender with options that suit your financial situation.  Processing Time: Opt for a lender with an efficient and streamlined loan processing system to avoid unnecessary delays.  Customer Service: A responsive and supportive customer service team can make your loan journey smoother.  Additional Benefits: Some lenders offer additional benefits such as pre-visa disbursement and reduced interest rates for female students. When choosing, keep in mind these benefits.  How to start the UK education loan process? Some important facts about the education loan procedure for the UK are as follows: Step 1: Research the education loan procedure Research is the key. So, start looking at viable options at least 8 – 10 months before the new semester begins in the UK. The loan procedure of every country is different. Hence, going through reputed sites like EduFund to gain the correct information is absolutely crucial. https://www.youtube.com/watch?v=Obks6fyQyhs Check Education Loan Eligibility Step 2: Know the difference between secured and unsecured education loans Secured loans: Secured loans refer to collateral-based finance options like government banks for funding higher education in foreign countries.  The low interest rates and fewer processing fees make them look inexpensive when compared to other types of education loans Unsecured loans: Unsecured loans refer to education loans secured with the help of NBFCs or non-bank financial companies.  The interest rates are high, no doubt, but it is a feasible option if a student wants to pursue an education course in one of the top 10 or 20 universities in the UK.  This service is also available on the EduFund App at zero hidden charges and fast disbursal. Step 3 - Decide the university in which you want to enroll Identify the university in which you want to enroll. Make sure it is offering the education course you want to pursue. Look at the eligibility criteria for admission. Look at the average fee structure. Calculate the amount of education loan you will need to study at the specific university.  Include both academic and non-academic expenses like tuition fees, other compulsory fees, accommodation expenses, transportation costs, books and supplies costs, and, health insurance premiums. Look at the amount you can shelve out from your pocket and the amount needed to pursue the studies. Calculate the difference and identify the actual loan amount you will need. Step 4 - Make inquiries about the banks and loan options Identify the banks that offer loan opportunities. Check the criteria for loan eligibility. Look at the interest rates. Calculate the actual amount you will have to pay. Know about the payment schedule and the terms of payment. Enquire about the penalty or the additional amount you will have to pay in case you are unable to pay on schedule or as directed. For a hassle-free process, you can check your eligibility for easy educational loans at EduFund. Why? No hidden charges, low-interest rates, and collateral-free loans up to Rs 75 Lakhs. Step 5 - Compare the education loan options in the UK You have already shortlisted the banks with viable education loan options.  Compare all the relevant details like interest rate, processing fee, processing time of the loan, loan margin, payment terms, and also available income tax exemptions. Do not hesitate to make comparisons as it will help to save a good amount of your money. https://www.youtube.com/watch?v=mW0VH10uH9I Conclusion The presence of widespread Indian communities and numerous academic courses like Medical, Engineering, Hotel Management, Finance, and Business coupled with an easy education loan processing for the UK acts as a magnet to lure in students from all over the country. To interested Indian parents, EduFund is here to help you. Explore all of your options and compare them all in one platform. CONNECT WITH OUR STUDY ABROAD EXPERTS
Simplify Child Education Loans: Expert Tips

Simplify Child Education Loans: Expert Tips

Today's expanding world of opportunity benefits greatly from an education loan. Your child has so many educational courses to choose from. A decent education is essential for your child's growth and development, and several institutions throughout the world provide student loans with low-interest rates to those who cannot rely on their savings. Banks and other financial organizations provide outstanding education loans with a reasonable interest rate and loan payback time.  An education from a reputable university is the first step to a prosperous profession. The cost of college expenses is rising quickly, though, and for parents who might not have enough money, taking out an education loan sounds like a perfect alternative for their child. https://www.youtube.com/watch?v=tdwqQH0xkFw In reality, the cost of higher education overseas and for Indian parents has increased enormously due to the rise of the dollar value versus the rupee. This pattern is also observed in TransUnion CIBIL data, where the average ticket size of a newly issued student loan increased by 48 percent from INR 5.73 lakhs in 2015 to INR 8.5 lakhs in 2018.  So, here are the five best ways if you are planning to get a student loan for your kid and help them to pursue higher studies easily. Tips to Consider Before Taking an Education Loan Choose the right course  Let your child choose a subject that fascinates them enough to make it their career. Don't allow your child to do what the majority of others are doing to deter them from following a passion of yours. For example, a student who is required to study engineering could not do well or even finish the course if they are least interested in the subject  However, if the student in question were interested in law, he would make a brilliant attorney and have a successful profession as well as a happier life. Therefore, a wise piece of advice for parents is to let their kids discover their passion by researching the course's requirements before making a choice. After completing their education, you should consider your child’s career possibilities and see if they can find employment to help you pay off the debt. Ways to Tell Your Child about Education Loan Read More Research about banks  Make sure to do your thorough research before choosing a bank. Avoid making rash or emotional decisions when applying for a loan. By conducting an extensive study, you can comprehend the varied interest rates, processing costs, terms, and conditions, etc. The amount you must repay varies depending on each bank's interest rate. You will need to spend and repay a certain amount of money for every point in the interest rate. Verify if your loan's interest rate is fixed or fluctuating. Making a choice between these rates is crucial since it significantly impacts how you intend to repay your loan and how much your EMI will be.  Borrow only what you need  If you want to take out an education loan for your child, resist the urge to request the utmost amount permitted. If your child has any financial awards, such as scholarships, you should constantly assess how much you have or how much you can afford to support your child’s education. Decide how much you want to borrow from the bank as an education loan after doing the math for the amount you have. As a parent, you must help your kids understand that every amount they take will have a specific interest rate levied on it. Hence, it is essential to borrow only the amount they can repay. https://www.youtube.com/watch?v=4gTQkdePOWM Educate your child about the loan  Whether you want your kid to continue their education in India or overseas, you should be aware of the specifics of their current coursework and any loans you have taken out. A VISA will allow your child to enter a foreign nation but does not give them access to everything. They could be questioned about their intentions and entry procedures at the airport. Your child should be ready to answer any queries about their course, organization, teachers, tuition costs, loan amounts, repayment terms, interest rates, etc. Your kid should also be aware of their personal information and information about their families, such as names, birthdates, residences, levels of education, and jobs.  Plan for repayment   Even though interest starts to accumulate from the first month, students may occasionally be given a moratorium or one-year grace period before they must begin making loan payments. One advantage of this time frame is that, even if your child can pay the EMI after this grace period, you can start repaying the EMIs early and assist your child in paying off the loan more quickly by doing so.  Early investment and saving can help reduce the financial burden that a high-quality education places on families, but some parents may not have the opportunity to do so since they are already dealing with admissions. An education loan could be the best option in such situations.  However, choosing the correct course, university, and financial institution may assist enhance the possibilities of simple loan payback, making the student debt-free sooner rather than later. This is in addition to creating a decent repayment plan. FAQs What is an education loan? An education loan is a type of loan used for educational expenses such as tuition fees and education-related expenses like books, accommodation, living expenses, and much more. Education loans can be availed for studying only and one of the requirements is an offer letter from a reputed university/college. Who can apply for an education loan? The primary creditor is a student. A co-applicant may be a parent, partner, or sibling. How can I apply for an education loan? You can visit the Education Loans page on the EduFund website and fill up a simple form. You will get all the details, along with guidance from experts in the field. TALK TO AN EXPERT
How to Repay Education Loan?

How to Repay Education Loan?

An education loan is a great means to end a dream college! It can enable you or your child to attend their dream university or course. Kickstart their careers. While it is a great medium for securing your end goal it requires planning and systematic payoffs. Paying off your education loan on time can  raise your credit score, save better and work towards different financial goals.     Paying off a loan is a process and here are some tips on how to pay off your education loan:   1. Read the fine print   No one likes to read the paperwork involved in securing a loan but it's highly important. This fine print can tell you when you have to start paying back right after the course or after securing a job. Knowing when you have to start paying the EMIs can help you budget and prioritize your expenses.   Fine print discusses your loan interest rate, duration, penalties, and tenure period. It can tell you whether you need to attach collateral, benefits, and the payment plan.  Before signing up for a loan understand the conditions and prepare yourself to repay it.    2. Plan for repayment  Once you know the terms and conditions of your loan agreement, you can start formulating a repayment plan. Education loans require you to start paying after completing the course or securing a job, but planning should not wait that long. Once you know the amount you have to pay back monthly, start thinking about you will manage it. Find out how much you need to save in order to make timely payments. Consider lifestyle changes and even cutbacks to ensure your financial freedom is not compromised.   Having a proactive repayment plan can bring financial discipline, help you prepare for future financial goals, and budget your expenses with ease.   3. Consider part-time jobs   If you want to pay off your education loan faster or save up extra for the future then part-time jobs, passive sources of income, paid- internships, freelancing, or making reels can help. The world is teeming with opportunities where you can earn extra, save for future repayments, and hopefully, get paid off your education loan faster.   You can also save up through discounts, budgeting well, looking for shared apartments, going for homecooked meals, seeking scholarships and stipends to help sustain your everyday expenses, or saving for the future.    4. Budgeting and saving are important    A monthly Netflix subscription costs around Rs.800, which is Rs.9,600 for the entire year. Without budgeting, you won’t realize how much you are spending and where this money is going. Rather than spending without care plan your expenses, and set aside a portion of your savings for investing. This fund of savings can reduce the stress and burden of repaying the loan when you are looking for a job after graduation.    5. Know tax deductions   Education loans allow for tax deductions under Section 80E of the Income Tax Act. Deductions can be claimed by the person who is repaying the loan - a parent, guardian, or spouse of the student. Talk to your financial advisor and get the full benefit of tax deductions on your education loan. 6. Loan transfer at a lower interest rate  A loan transfer can cut down the cost then go for it. This can help you save on the generated interest and make more affordable EMIs.  Before opting for a lower interest rate, read the fine print and find out the extra costs and fees to have your loan transferred from one lender to another. Only opt for the transfer if it makes up for the difference.   Taking an education loan is a huge responsibility and its repayment requires heavy financial planning. By following these tips, you can easily plan your repayment installments and make your life easier and stress-free!  FAQs What is the best way to repay an education loan?  Ans. The best way to repay an education loan is to make timely and consistent payments. Create a budget, consider income-driven plans if applicable, and explore options like refinancing or loan forgiveness programs.  Can I pay off my education loan early?   Ans. Yes, you can typically pay off your education loan early. Check your loan terms for any prepayment penalties, and if there are none, making early payments can save you interest.  What is the smartest way to pay student loans?   Ans. The smartest way to pay student loans is to prioritize them in your budget, pay more than the minimum, when possible, explore refinancing options, and take advantage of loan forgiveness programs if eligible. 
How to avoid an education loan when your child wants to be a doctor?

How to avoid an education loan when your child wants to be a doctor?

MBBS is considered one of the most expensive degrees in the world – it costs up to Rs. 1 Crore to study MBBS from a private university in India today. In the 10 years, this cost will only increase further - thanks to the impact of inflation. If you are those lucky parents whose children have decided to become a doctor in the future, then here’s how you can start saving early to avoid any hassles.   How to avoid education loans? More and more parents in India find it hard to manage the rising higher education cost. Even if they want to study abroad or choose any professional course, they find it challenging to meet the overall cost of their studies. MBBS is the most expensive course and arranging funds to enroll the child in the best MBBS college in the country is a difficult task. This growing cost of education has affected parents’ ability to meet the financial goals for their child's education.   Taking up an education loan is the fastest way to let your child enroll in medical coaching and medical school. There is no doubt that you have to be financially strong for the child to let them become a doctor. But, for low-middle-class and middle-class families, getting an education loan can be tough. They bring their own set of worries and tensions to the family as well.   Most education loans are non-collateral, which can cause high interest rates and fees. The average interest rate of 9.55% to 13.25% per annum can be hard to pay off after 5 years of medical schooling.  The interest rate can be cheaper if you take a collateral-secured loan. However it requires you to provide an asset, FD, or property to the bank as collateral. The collateral acts as protection in the event of repayment.   To avoid the pain of education loans, there are financial instruments that parents should consider if their child aims to become a doctor:   Mutual funds An underrated financial instrument, Mutual funds can be a great investment option if you have a time period of 10 to 15 years. Families that invest in Mutual Funds can get good returns over the years. With a small monthly SIP of Rs. 1000 for your child today, you can reap the benefits in the future.    Public provident fund It is an excellent solution where the banks give you a reasonable interest rate on the payment. It will ensure that you can save money on the superb return and keep your child's future for the better. There is no looking back if you save a child's money through PPF. People find it the safest investment option, meaning you do not have to think much. PPF generally has a lock-in period and allows you to save up to Rs. 1,50,000 yearly as deposits.   https://www.youtube.com/watch?v=tdwqQH0xkFw Digital gold Another option that will give a good return in the future and ensure you get the benefits of the saving. It has good market value, and there is nothing to fear about digital gold. You can save money from your income and invest in buying digital gold. Later if you want to sell the gold, you will get a reasonable market price as per the current gold value.   Fixed Deposit If you already have good income savings, you can put that bulk money in a fixed deposit for 20 years. It is a fixed source of income that will double up with the interest rate when it gets coverup after maturity. FD is the oldest form of saving and can be a good investment if the base lumpsum amount is large enough to give a good return.  Know the future cost of education Finally, the only way to save is to know how much you need to save in the future.  A good financial plan requires a set of targets, which is why by using the College Cost Calculator, you can find out the future cost of studying medicine across the globe. Find out this future cost before you start planning your savings.   If your child aspires to become a doctor, then support their dreams mentally and financially. While there is no harm in taking an education loan, it is harmful to ignore the plethora of financial instruments that can easily help you build a good education corpus to help your child actualize their dream. FAQs What will happen if I don't pay an education loan?   If you don't pay an education loan, it can have serious consequences. These may include accumulating interest and late fees, damaging your credit score, facing legal action or debt collection efforts, and potentially having your wages garnished or assets seized. It's crucial to communicate with the lender to explore repayment options and avoid default.  What happens if you don't pay an education loan in India?   If you don't pay an education loan in India, it will lead to serious consequences. The lender may initiate legal action, which can result in a damaged credit score, difficulty obtaining future loans, and potential asset seizure. It's crucial to communicate with the lender and explore repayment options to avoid such situations.  Can I get 50 lakhs education loan without collateral?  Getting a 50 lakhs education loan without collateral may be challenging. Most banks and financial institutions require collateral or a co-signer for large loan amounts. However, some lenders may offer unsecured loans for smaller amounts. It's best to research and compare loan options from different institutions to find the most suitable one for your needs.  TALK TO AN EXPERT
What is an Education loan & How does it work?

What is an Education loan & How does it work?

Business Insider says, “The average expenditure on a child in India is ₹8,331 per annum. The average fee for enrolling in a professional course for higher studies can go above the ₹72,000 mark.”  According to Yourmoney.com, “Around 65% of parents set money aside for their children’s education once they turn 3”. But despite efforts to ensure long-term investments in Fixed Deposits (FD), Mutual Funds, Gold, and insurance plans, they seek ways to bridge the small amount required.  With parents striving to ensure quality education in India for their kids, it is essential to know about education loans.  Here’s your guide to understanding how education loans work What does an education loan imply?   An education loan is an offering that banks provide to guardians to fund a child’s secondary and higher education requirements. Different banks and government institutes offer education loans at other criteria and interest rates. An education loan is of 2 types - Domestic and Overseas.  General eligibility criteria for education loans in India  Education loan eligibility criteria  You must be a citizen of India  The age limit must be 18-35   The child must have a solid academic record  The child must ensure a confirmed admission receipt from the respective educational institution in India  They must be undergoing a post-graduation/ graduation/ diploma  The institution must share the UGC or AICTE affiliation  Students pursuing a full-time graduation course must have a co-signer on loan.  NOTE: These criteria may or may not vary depending on the bank offering these loans. You are advised to check the specific eligibility criteria for the education loan you are interested in. What does an education loan cover?   It covers the following costs:  Tuition fee  Hostel fees  Stationary  Exam fees  Library fee  Books fee  Educational trips Documents required to get a quick education loan approval in India   Seeking approval from a lender is easy if you meet the document requirements without fault.   Documents required:  Accurately-filled loan application form  A recent photograph of the student  Age Proof (Aadhar Card, Identity proof, voter ID card)  Address Proof  Admission proof (Admission letter)  Marksheet (10th/12th/graduation/GRE/TOEFL/IELTS, whichever is applicable)  Income proof of the co-signer on the loan. He can be a guardian/parent.  Bank statements (Last six months)  The previous two years’ income tax returns along with income computation  Audited balances sheet for previous two years  Proof of yearly revenue/salary receipts  Documents of assets for collateral requirements on the loan Read more: Pay off an education loan How does an education loan work?   An application process may vary from bank to bank. However, here is the general way an education loan works:  source: pexels Step 1 - Explore the interest rates from different banks  Check the factors below before applying:  Total costs over EMI (Equated Monthly Instalments)  Repayment period  Money margin: It is an upfront cost to pay on a loan. If the loan exceeds 4Lakh, the lender exempts the margin.  Check the bank’s partnership with NBFC (Non-Banking Financial Companies)  Check the tax deductions you may qualify for under Section 80 E of the income act. It is a tax deduction on education loans for higher education. A taxpayer applying for a child’s education abroad can qualify.  Guarantor or collateral over the loan  Step 2- Fill out the loan application  After choosing the bank to partner with and checking the terms, fill out the loan application. Check whether or not the banks provide loans for a particular course. Always check the loans for the periods before applying. Banks offer loans for both parts and full-time education.  Fill out and submit the application form with the documents mentioned below:  Passport size photographs (2)  Graduation, secondary or higher secondary Marksheets  KYC documents (Voter ID, PAN card) ID address  Age proof  Signature proof  Guardians/Parent’s income proof  Documentation of immovable property  You can file for a loan either online or offline at your convenience  Step 3 - Confirm the loan sanction   After meeting the requirements and attesting to the required documents, you will receive a mail detailing the loan terms and elements. Read carefully before signing. If applying for a secured education loan, the lender may ask you to provide collateral details.  Read more: How to avoid education loans? How does an Education loan repayment work?   After the loan sanction, the bank provides a memorandum period. It is a defined payment gap in the loan tenure until which a borrower is not liable to pay any repayments towards the loan. Banks generally provide a 6-12 months memorandum period. However, education loans have competitive interest rates. Talk with your lender and begin your repayments early.  If the lender agrees, you can improve your credit score by paying off the loan early. Enquire for pre-payment loan fee (if any). Do so only if not availing of tax deductions (Section 80E) on the loan. Else, qualifying for tax deductions, in this case, stands next to null. It is known as an auto-deduction loan.  Repayments vary from bank to bank according to the loan amount availed. If unmanageable, you can set up an auto-debit system to make monthly payments towards the loan.  Conclusion  Finding a low-interest and non-collateral educational loan is tasking. Edufund eases the process for you by filtering out the best loan options from multiple banks and NBFC partners. Contact us for more details. FAQs How does an educational loan work?   An educational loan is a financial product that helps students and their parents fund education expenses. The borrower borrows money from a bank or financial institution, and after completing the education, they start repaying the loan along with interest, typically in monthly installments over a specified period. The interest rate and repayment terms vary depending on the loan provider and the borrower's creditworthiness.  Is education loan interest-free?  Education loans are generally not interest-free. Interest is charged on the loan amount, and borrowers are required to repay the principal amount along with the accrued interest over the loan tenure.  Is taking an education loan a good idea?   Taking an education loan can be a good idea if it enables you to pursue higher education and career opportunities that would otherwise be financially challenging. However, consider the repayment terms, interest rates, and your future earning potential before making a decision.  TALK TO AN EXPERT
Best way to explain education loan to your child

Best way to explain education loan to your child

In the previous article, we discussed how to plan for your child's bachelor's in Australia. In this article, we will talk about what to tell your child about education loan It is quite interesting how one day students go from choosing their study course to choosing a student loan for their higher studies. Many students choose to take an education loan and end up struggling with it. It is mainly because they don't have clarity about how education loans work.   So, it only makes sense to step in as a parent to have a serious conversation regarding an education loan with their kids. It's never too late or too early to talk to your child about the cost of college. Moreover, if you haven't saved much for your child, you can always start doing it now. Bear in mind that every penny counts.   Apply for Education Loan What should your child know before taking an education loan? 1. They need to repay the loan with interest  When one takes a loan, one must repay all of it, including interest. No other time can be best for you to explain this to your kid. Tell them how the loan-taking procedure works. You will also come across certain student loans that do not add up the interest when your kid is in college. Nevertheless, repaying it with interest is a must for all other loans. The interest levied on private and government student loans works similarly to auto loans or home mortgages.   Education Loan Schemes in India and Other Countries Read More 2. There are different types of loans  While you talk to your child about taking an education loan, ensure that they understand the difference between the different types of loans. So, when it's the right time, fill out the loan application form with your child. It will give them a better understanding of the loan procedure.   You will come across various education loans that cater to the requirements of different education programs. You may apply for a loan based on the type of education course like diploma and certificate courses, skill-based courses, and studying abroad loans.   Regardless of the course, two main categories of student loans are:  Domestic education loan: Those who want to pursue their education courses in their own country can apply for a domestic education loan. Your child must meet the eligibility criteria and obtain approval from the lenders.   Study abroad education loan: This loan is beneficial for those who wish to study in a country different from theirs. The student has to secure a seat in an institution among the eligible list of colleges/universities to get their loan approved.  Co-Applicant Role in Education Loan Read More 3. Courses that get loan preference  Usually, engineering, medical, and management courses get faster approvals for a student loan. Financial institutions provide a loan based on the course type you select, such as:  Graduate student loan: This loan is applicable to those who want to continue studying in institutions in their own country. It is specifically for students who plan to pursue postgraduate degrees after completing their undergraduate programs.   Undergraduate education loans: These loans are available for those students who want to pursue their undergraduate degree courses.   Professional education loans: Many banking institutions offer loans to students who want to go for career education.   The most important factor of a loan provider is the applicant's repayment capacity. Therefore, it makes sense to apply for a loan for courses that have a higher chance of giving you better job placements and offer a high-income generation.   Best Banks for Education Loans in India Read More 4. High-amount loans require a third-party guarantor  Student education loan amounts may vary from Rs 1 lakh to Rs 30 lakh. For loan amounts up to 4 lakhs, you need not provide any third-party guarantor or collateral. Nevertheless, for loan amounts above 4 lakhs, providing a third-party guarantor is a must. Almost all banking institutions will ask you to provide a co-applicant or a guarantor when applying for an educational loan. This is because when the applicant is unable to repay the loan, their guarantor has to take care of it.    Questions to ask before taking Education Loans Read More 5. The repayment period starts as soon as the course ends  Help your kids understand the loan repayment procedure. The applicant is responsible for repaying the loan. It is highly recommended that the applicant starts repaying their loan as soon as they can. The repayment period will start at the end of the course. Certain banks may offer a relief period of 6 months after the student’s course ends. The repayment period can be between five to seven years depending on various factors such as the value of the loan, interest, EMI, etc.   Educate your kids about the process of applying for a student loan. Also, make them aware of the consequences of not repaying the loan. This will only make them more responsible for each step they take while applying for a student loan. FAQs What is an education loan in brief? Education loans are loans for students that cover tuition, books and supplies, and living expenses. Can parents take education loans for kids? Parents can sign as co-applicants for an education loan for their children. However, they are not the main applicants because an education loan is issued to the student. Is it wise to take an education loan? Yes, it is wise to take an education loan if the course offers a great ROI if you are short of funds or do not want to dig deep into your savings and understand the impact of taking legal responsibility as a student.
The Pros and Cons of Taking Education Loans

The Pros and Cons of Taking Education Loans

In today's rapidly evolving world, education plays a vital role in shaping our professional paths and opening doors to countless opportunities. However, the rising cost of education often poses a significant financial barrier for many individuals. This is where education loans come into the picture, offering a way to finance higher studies and bridge the gap between aspirations and affordability. In this blog, we will explore the advantages and disadvantages of education loan, providing a comprehensive understanding of the pros and cons associated with this financial decision. https://www.youtube.com/watch?v=gbPJ_XjILUA Advantages of taking an education loan Education loans offer several advantages that make them a viable option for individuals seeking financial assistance to pursue higher education. Here are some key advantages to consider: Accessibility to Education: Education loans make education accessible to a broader range of students who may not have the immediate financial means to fund their studies. By providing funds to cover tuition fees, books, accommodation, and other related expenses, education loans enable individuals to enroll in desired courses and institutions. Flexible Repayment Options: Most education loans offer flexible repayment options, allowing borrowers to start repayment after completing their studies or opt for affordable installment plans. This flexibility provides students with the necessary time and resources to focus on their education and secure employment before beginning loan repayments. Building a Positive Credit History: Taking an education loan and making timely repayments can help individuals build a positive credit history. This can be advantageous in the future when applying for other financial products, such as mortgages or car loans, as lenders often consider creditworthiness. Potential Tax Benefits: In some countries, education loan interest may be tax-deductible, offering potential tax benefits for borrowers. This reduces the overall cost of borrowing and provides additional financial relief. Focus on Education: By obtaining an education loan, individuals can focus on their studies without the constant worry of managing immediate financial obligations. This allows students to dedicate their time and energy to academic pursuits, maximizing their learning experience and increasing their chances of academic success. taking education loans Disadvantages of taking an education loan While education loans provide an avenue for individuals to finance their education, it is important to consider the potential disadvantages that come with borrowing. Here are some key points to be aware of: Accumulating Debt: Taking an education loan means accumulating debt that needs to be repaid. Depending on the amount borrowed and interest rates, this debt burden can be significant and may take years to pay off, impacting an individual's financial situation for an extended period. Interest Accrual: Education loans typically accrue interest over the repayment period, adding to the overall cost of borrowing. Higher interest rates can significantly increase the total amount repaid, making education more expensive in the long run. Repayment Obligations: Loan repayments can be a financial burden, especially for individuals who are just starting their careers or facing other financial obligations. Monthly loan payments can limit financial flexibility, affecting one's ability to save, invest, or pursue other life goals, such as homeownership or starting a business. Risk of Default: Failing to meet loan repayment obligations can lead to serious consequences, including damage to credit scores and potential legal action. Defaulting on an education loan can have long-lasting effects on an individual's financial health and future borrowing opportunities. Dependency on Income: Loan repayments are often tied to income, which means that individuals may be required to allocate a significant portion of their earnings toward loan repayment. This dependency on income can limit career choices and job flexibility, as individuals may feel compelled to prioritize higher-paying jobs to meet their repayment obligations. https://www.youtube.com/watch?v=uPGJr3BiXpI Considerations for Taking an education loan Before committing to an education loan, it is essential to consider various factors to ensure a well-informed decision. Here are some key considerations to keep in mind: Financial Planning: Evaluate your current financial situation and future earning potential. Create a budget to determine the amount you can comfortably borrow and repay without compromising your financial stability. Alternative Funding Options: Explore scholarships, grants, part-time work, or employer-sponsored education programs as alternatives to borrowing. These options can help reduce the amount of debt you need to take on. Loan Terms and Conditions: Thoroughly research and compare loan options from different lenders. Pay attention to interest rates, repayment terms, fees, and any hidden charges. Understand the implications of deferment, forbearance, or early repayment. Future Career Prospects: Consider the potential return on investment for your chosen field of study. Research the job market and earning potential to ensure that your education loan is aligned with your future career prospects. Ultimately, by carefully considering the advantages and disadvantages, individuals can make informed decisions and strike a balance between financing their education and managing their long-term financial well-being.  When approached responsibly, education loans can be a valuable tool in achieving academic dreams and building a brighter future.
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