An education loan is the amount of money that is borrowed from a Bank or a financial institute to fund higher or post-secondary education expenditure. Basically, these loans intend to cover the cost of books and supplies, tuition and living expenditure during the process of acquiring a degree.
Often, payments are deferred when students are still in college. Sometimes, based upon the lender, these payments can be deferred for an extra six-month period after getting a degree.
Generally, education loans are issued for the objective of attending a university or a college to pursue an academic degree. Education loans can be acquired from private-sector or government lenders.
While some lenders provide lower interest rates, some others provide subsidized interest. Generally, the private-sector lenders follow a traditional process and have higher interest rates in comparison to government loans.
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The education loan covers some of the basic course fee and relevant expenditure - like college accommodation, exam fee, and other miscellaneous charges. As far as applying is concerned, either a student, a parent, sibling, or a co-applicant can apply for this loan.
This loan can be procured by both such students who want to study in the country to travel overseas for higher education. The maximum loan amount for in-country and international education varies according to the lender and selected course.
Basically, one can take this loan for a graduation, post-graduation, vocational course, part-time or full-time courses in the field of architecture, hotel management, medical, management, engineering, and more.
In terms of education loan eligibility, only an Indian citizen, who has managed to secure an admission in the university or college, can apply for this loan. Furthermore, this university/college should also be recognized by a substantial authority in India or overseas.
The applicant should have completed higher secondary level of schooling. Mostly, it is easier to find such banks who offer loan even before somebody can secure admission into the college or university.
According to the Reserve Bank of India (RBI), there are no substantial restrictions on the age limit; however, some banks may pose the same. The banks would require additional documents, like fee structure, admission letter from the institute, Cass X, XII, and graduation (if available) mark sheets. Along with that, documents like Income-tax returns (ITR) and salary slips of the co-applicant would also be needed.