Educational Bank Loans in India
India is fast becoming an economic power to reckon with and its surge is noticed by global markets. This growth has made education a very important aspect for sustaining this development. The Indian Government has taken all the necessary steps for providing education to students from all walks of the society by granting loans for education. All the private as well as state and national government aided banks provide loans for education. Students can also hope to find monetary aid from charitable trusts that provide loans for educational aspirations.
A tight budget should not be a hurdle in your endeavour to pursue higher education. The favorable conditions for obtaining student or study loans are highly beneficial for students aspiring to take their career to a higher plateau via specialisation studies or higher education. A bright future is awaiting the students with open arms. Lack of education due to non-availability of funds should not be the reason for stunting your personal and professional growth.
The educational loans are a boon for students who wish to enhance their career by studying in reputed colleges and also prefer moving abroad for educational purposes. Most of the Indian banks include the cost of living, travel and other expenses while granting loans to eligible students.
Salient features for student loans in India
The student loans obtained from Indian banks are loaded with a host of features which make them the best alternative for funding your education. Some of the highlights of such loans are mentioned herewith:
Ease of re-payment: According to the guidelines prescribed by the Reserve Bank of India (RBI), the repayment of student loans begins an year after course completion or 6 months from the date of obtaining employment, whichever event occurs earlier. The duration for repayment may vary between 5 and 7 years. However, the parents or guardians can choose the period of moratorium to pay interest for availing of a concession in interest rates.
Collateral security: RBI proposes that all student loans above INR Four Lakh (Rs. 4,00,000/-) needs to be jointly availed of by the parents/ guardians. Some banks might also need a guarantee from third parties. Additionally, security in the form of national saving certificate (NSC), fixed deposits, assignments about future income and mortgages can also be asked by the bank.
No Tax: All the interest paid for the student loans is non-taxable under SEC 80 E of the Income Tax Act, 1961 under the following conditions:
- Higher education has to be the purpose of availing of a study loan
- The institute of study has to be recognised by government bodies (Local, State or Central)
When you apply for a student loan for education by submission of a loan form, the concerned bank will compare the amount expected with the actual expenses for the course, accommodation (if needed) and other expenses. The bank might reduce the amount applied for in case this comparison does not match.
Following the above procedure, the bank will verify if the applicant is employed or not to check for repayment options and tenures as mentioned above. High rate of interest is charged for the repayment method which starts after the completion of the course or obtaining of employment, compared to the immediate repayment mode.
Once the applicant opts for floating rate of interest, he/she does not have the option of shifting to fixed rate. The borrowers can be changed by the applicant. This means that the loan can be transfered to a bank of your choice in future. This facility is useful if you receive better deals from other banks.
Other important benefits
Young students do not have any kind of credit history with banks. Availing of a student loan is a very good way to begin a credit history with these banks. Study loans are considered responsible pecuniary habits when it comes to your credit history. Delinquencies in the repayment schedule can lead to a bad credit score. Comparatively, if the repayment schedule is followed correctly, your credit score will increase, thus making provisions for future loan applications such as home loans or car loans.
The attractive element of the repayment schedule as mentioned above is the deferment of years on offer. This is very useful from the student perspective, as this entails that the students do not have to worry about the loan, and rather concentrate on successfully completing their education. The hassles regarding repayment stay away from the students while they pursue their education.
Surveys have proved that many bright students are unable to pursue higher studies due to an acuteshortage of funds. With the advent of educational loans in India, this issue has been resolved completely. We recommend that students should not stop their growth due to the problem of funds, and opt for the educational loans provided by various banks in India.