How to apply for education loan: From eligibility to benefits, all you need to know

Tuition, living expenses and other fees rank among the many high costs associated with higher education. Education loans are an effective means for students to meet their objectives without ever having to consider money. This is a comprehensive guide on how to properly understand, apply for, and manage an education loan.

Understanding education loan

An education loan is a financial aid extended by banks and other financial organisations to assist a student in funding his or her education. All these loans cover tuition fees, boarding charges, travel, and any other expense a student incurs during his or her study. Due to the flexible repayment options and moratorium period, students can focus on their studies and even start repaying it once they complete their course and obtain employment.

Benefits and features of education loans

1. High loan amounts: Up to ₹1 crore can be borrowed for further education.
2. Flexible payback tenure: Fifteen years is the maximum payback duration.
3. Worldwide coverage: Student loans are offered both in India and beyond.
4. Pre-visa disbursement: Before a visa is granted for foreign study, some lenders offer certain amounts.
5. Easy procedure: The doorstep document collection service.
6. Special benefits: Convenience for female students with discounts, and children of bank employees enjoy preferential pricing.
7. Moratorium period: No repayment is necessary up to one year after the completion of the course.
8. Tax benefits: For up to eight years, the payments on interest can be deducted from taxes.

Types of education loan

• Undergraduate loans: After high school, undergraduate loans can be raised to further one's education in college.
• Postgraduate loans: After undergraduate studies, postgraduate loans are taken to further one's education.
• Profession advancement loans: For courses meant to enhance one's skills, certifications, or profession.
• Parents loans: Parents take parental loans to fund their children's education.

Eligibility criteria for education loans

• Programmes covered: All approved undergraduate, graduate, diploma, technical, professional, and career courses are covered by loans.
• Eligibility for institutions: The applicant must be selected by universities or other foreign institutes that are government-recognised.
• Academic eligibility: The minimum requirement for undergraduate courses is 10+2 (12th standard), and for postgraduate courses, a bachelor's degree.

How to apply for an education loan?

Online way:

• Step 1: Open the website of your respective bank of choice.
• Step 2: Find & select the education loan section from the website.
• Step 3: Fill the application form with all the required information.
• Step 4: Submit all the required documents such as identity proof, address proof, and academic documents.

Step 5: After this, the bank will verify your application. If satisfied, it will disburse the amount in your account.

Offline way:

• Step 1: Visit the official branch of your respective bank.
• Step 2: Request an educational loan application form.
• Step 3: Fill out the application form with the necessary personal details.
• Step 4: Submit the application form with all the required documents for verification.
• Step 5: The bank will verify your application, and if satisfied, the amount will be disbursed to your account.

Since student loans might carry hefty interest, the decision to take one should be prudent. Look carefully at your financial status, understand the loan terms, and, if needed, consult professionals. Proper and wise choices, coupled with careful budgeting, can help students utilise education loans to open the gates to a better future without any senseless debt.

(Note: Raising a loan comes with its own risks. So, due caution is advised)