Everything You Need To Know Before Taking An Education Loan

For students who want to pursue higher education from India or abroad, an education loan can provide them with financial assistance to cover their overall educational expenses. From tuition fees to hostel fees, an education loan will cover it all. Thus, with the help of an education loan, you can achieve world-class education without fearing the monetary burden that it can be on your parents.

The financial institutions and banks have also lowered the education loan interest rates considering the constantly increasing education cost.  They also offer longer return tenures and tax benefits to provide as much support as possible. But before you apply for an education loan, you must consider a few things that might prove beneficial in the long run.

Education Loan Eligibility Criteria

Any student who got admitted to an approved college or university is eligible for an education loan. Apart from that, the student must be of or above 18 years of age to be eligible for the loan. Since being a student, you might not have a credit history or credit score. Thus, banks and financial institutions provide the loan on the basis of your guardian/parent's creditworthiness. So, an education loan is co-borrowed by you and a co-applicant who is also considered as a primary debtor. The co-applicant should also be above 18 years and should have a stable monthly income. Moreover, you are eligible for an education loan if you have a minimum score of 50% in high school.

The Types Of Courses An Education Can Loan Cover

An educational loan is available on career-oriented graduate or post-graduate courses associated with medical studies, technical courses, business studies or other professional disciplines.  Even if you are willing to get your degree abroad, an education loan can cover its entire cost considering you qualify the eligibility criteria. The loan can cover everything from the cost of books, accommodation, laptop and other tools and devices, examination costs, tuition fees and so on.

What Are The Documents Required?

Before you apply for an education loan, you need to arrange certain documents to prove your eligibility. Nonetheless, every bank and financial institution might not have a similar requirement, but here are few common documents that are usually mandatory:

1. Income Proof Of The Co-Borrower: In order to assure the repayment of the amount if you fail to pay it back,income proof of the co-applicant is required.  Therefore, the salary slips filed income-tax returns of the last two years and bank statement/passbook can be used to prove it. However, there might be a different requirement in the case of self-employment, so check carefully before applying.
2. Admission Letter: To get an education loan, you must submit a copy of the admission letter sent by the college/university.  Along with that, the financial institution or the bank also requires the 'fee schedule' of the particular course.
3. Pass Certificate Or Mark sheets: A copy of the pass certificate or mark sheet is mandatory to be submitted by you to apply for the education loan.
4. Birth Certificate:To confirm your age and eligibility, you must submit government authorized documents like your passport, Aadhaar, PAN card, driving license and more.
5. Address proof: Any government sanctioned document or utility bill in your or your co-applicants name can confirm your address. Thus, it is considered a valid address proof. 
6. Identification Proof:The banks or financial institutes require any government document with your picture like your Aadhar Card, passport etc., to approve your identity. 

Education Loan Interest RateAndRepayment

The banks or financial institutes offer education loans to be repaid by the student along with an additional charge levied as the rate of interest. The loan repayment tenure usually begins six months after the student has completed the course and has secured a stable job. Reputed banks like Axis Bank Indian offer education loans at lower interest rates on amounts ranging from INR 50,000 to 75 lakh or more, creating a bridge between them and their dreams.