The role of higher education in the growth and progress of a nation has been well recognized for centuries. The higher education sector, owing to its huge potential, holds very promising prospects. With an estimated 150 million people in the age group of 18-23 years, the sector offers one of the most attractive yet highly complex markets for private and foreign players. The population of India has begun to appreciate the value of education in a global economy and has demonstrated an increased willingness to pay for quality education and more students are now opting for higher education after school.
Factors before seeking education loan
The cost of pursuing higher education abroad far exceeds Rs 20 lakhs. Not all families can bear this cost, however there are many financial institutions that can help students in acquiring a loan to help them enrol in a college of their choice. The process of applying and getting approval for an education loan is a tiresome procedure but it can be made less stressful if students plan in advance and exert due diligence. Students can seek education loans to pay for graduation, post-graduation and professional courses from government approved institutes. The educational loan not only covers college fees, school fees, hostel fees, but also covers travel expenses for international education.
The eligibility criteria includes factor such as Indian nationality, age, and course period. The age limit for students falls between 16 and 35 years. The maximum amount of educational loan provided for studying in India is around 10 lakhs to 15 lakhs and for education through foreign universities is up to Rs 20 lakhs. The loan amount is decided according to the student's course type and the family's annual income. Many banks provide loans with lower interest rates to female students.
Most of the Private Sector banks, Foreign Banks and Public Sector Banks in India provide student loans as mandated by the RBI. Some of the main banks that have flexible Education loan schemes are Bharat Overseas Bank, Central Bank of India, HDFC Bank, Canara Bank, Axis Bank, HSBC, ING Vysya Bank, ICICI Bank, UCO Bank and many more. Debunking a common myth, students can begin repaying their loan after course completion. The repayment period could be between 5 and 7 years post completion of course. In case of failure to complete the course, a 2 year extension can be sought to complete the course.
Things to Keep in Mind
An educational loan is a form of financial aid that must be repaid, with interest. Interest rates vary based on the loan amount and the type of course. It is generally somewhere between 8 percent and 15 percent. Banks and financial institutes charge a processing fee which can be 0.5 percent to 2.5 percent for processing the loan. A third party guarantor or security amount is required depending on the loan amount. A co-applicant is the third party guarantor such as parent, spouse, siblings, in-laws or any other close relative. Loans above Rs.4 lakhs requires a security token to the effect of the house property, deposits or any other form of property. Candidates are required to provide identity proof, age proof and address proof and an admission letter along with the fee structure. He/she is also required to submit co-applicant's document which includes relationship proof, address proof, and income document. A foreign bound student must submit Visa approval papers, travel papers, and GMAT / GRE Scores. Education loans can bridge the gap between your career aspirations and financial inadequacy. However, caution and due diligence should be exercised while borrowing and spending the amount.
Government of India in consultation with Reserve Bank of India (RBI) and Indian Banker's Association (IBA) has framed a Comprehensive Educational Loan Scheme to ensure that no deserving student in the country is deprived of higher education for want of finances. The new scheme covers all type of courses including professional courses in schools and colleges in India and abroad. India's aspirations to establish a knowledge society in the context of increasing globalization, is based on the assumption that higher and technical education essentially empowers people with the requisite competitive skills and knowledge. With this new scheme more youngsters can pursue their higher education and follow their dream careers.