Students avoid education loan since they are not aware about the process & the benefits. It is a two-step process where a student has to submit necessary documents and he is eligible for the loan under different slabs,says Rachit Jain
The cost of education is on the rise and it is predicted that after 20 years or so it will increase at least five folds in comparison with the costs of education today. It is no secret how costly the private school education has become in recent years and that is just the tip of the iceberg. The admission fee for pre-school costs more than the whole year’s tuition fee in Delhi University.
If statistics are to be observed then the average cost of doing an MBA in India would be between Rs 50-60 lakh (at present, it costs this much to pursue an MBA abroad) in 2025. In India, which is a far cry considering the current average cost of MBA/PGDM courses which is in the range of Rs 12-Rs 15 lakh. Similarly, engineering courses would cost around Rs 30 lakh in the year 2025 and by that time medical education fees would’ve also increased significantly.
This is why many middle-class families insist and, in some cases, pressurise their children to outperform every other student by achieving the highest marks, which in turn would ensure that they make it to the cut offs of top Government universities and colleges where tuition fees is comparatively lesser than private institutes.
Today, children’s higher education can become an uphill task for the parents. At times, parents have to use all their savings to support their child’s future and there still remains a possibility that they might come up short. Consequently, the gravity of the situation often makes the parents borrow money from friends or relatives. But there is an alternative and most people are reluctant to consider it. This is the most appropriate time to go for an education loan.
In fact, parents should encourage their children to opt for an education loan. Not only is it a huge burden off the parents’ shoulders but it also saves them from the embarrassment of asking for money outside family. An education loan is the first loan in a child’s life that has to be paid when he starts earning. Also, there is a great life lesson here, the child will learn the value of money, opportunity and time.
Not to mention the benefits of paying the loan amount before due time, it improves the child’s credit score and this helps in getting other future loans easily.
Education loans are basically taken to fund the expenditures of graduation and post-graduation courses that also include lodging expenses, books, travel and other related expenses. Education loans are offered in three slabs; below Rs 4 lakh, between Rs 4 lakh and Rs 7.5 lakh and above Rs 7.5 lakh A student is eligible to apply for an education loan if his admission has been confirmed for a graduate or post-graduate course/degree in India or abroad. Although there are some banks which provide education loans regardless of this criterion.
Benefits
- Most banks including SBI approve education loans within 15 day period. Government banks provide education loans at lower interest rates than private banks. SBI is the only bank in India that offers education loans up to Rs 1.5 crore.
- There is no processing fee while applying for the loan. Only some financial institutes charge 1% processing fee which depends on the type of loan.
- Banks provide ‘moratorium period’, a holiday period of six months to one-and-a-half years after the course/degree is over to search for jobs and pay back the loan amount only starts after this period.
- Loans below Rs 4 lakh can be availed without any margin costs, that is, all the money will be financed by the bank without asking the borrower to contribute anything. Also, there is no security collateral required if the loan amount is below Rs 4 lakh.
- Repayment of the loan amount can be done in 10 years after moratorium period. (The period of repayment of loan amount will vary depending upon the type of education loan.)
- Education loan saves tax according to Section 80-E of the Income Tax Act, 1961.
- Some banks are also known to provide life insurance cover with an education loan.
It is heart breaking to see that sometimes deserving students have to compromise with their career goals due to shortage of funds. But with the rising education costs, education loans are becoming a feasible option.
It’s comparatively easy to avail education loans at attractive rates these days. Moreover, students should opt for education loans to ease off their parent’s burden and to build good credit history early in their lives for future prospects.
Which college is better
Students need to know the answer to this question before applying for an education loan. There is a plethora of educational institutes in India. Everyone knows about the top B-schools, engineering and medical colleges but these institutes remain out of reach for many students who may not be the top scorers in the country per se.
These students must understand the importance of selecting the most suited college for themselves in order to make an informed decision that will provide value for money along with best career prospects in future.
Students avoid education loan since they are not aware about the process & the benefits. It is a two-step process where a student has to submit necessary documents and he is eligible for the loan under different slabs,says Rachit Jain
The cost of education is on the rise and it is predicted that after 20 years or so it will increase at least five folds in comparison with the costs of education today. It is no secret how costly the private school education has become in recent years and that is just the tip of the iceberg. The admission fee for pre-school costs more than the whole year’s tuition fee in Delhi University.
If statistics are to be observed then the average cost of doing an MBA in India would be between Rs 50-60 lakh (at present, it costs this much to pursue an MBA abroad) in 2025. In India, which is a far cry considering the current average cost of MBA/PGDM courses which is in the range of Rs 12-Rs 15 lakh. Similarly, engineering courses would cost around Rs 30 lakh in the year 2025 and by that time medical education fees would’ve also increased significantly.
This is why many middle-class families insist and, in some cases, pressurise their children to outperform every other student by achieving the highest marks, which in turn would ensure that they make it to the cut offs of top Government universities and colleges where tuition fees is comparatively lesser than private institutes.
Today, children’s higher education can become an uphill task for the parents. At times, parents have to use all their savings to support their child’s future and there still remains a possibility that they might come up short. Consequently, the gravity of the situation often makes the parents borrow money from friends or relatives. But there is an alternative and most people are reluctant to consider it. This is the most appropriate time to go for an education loan.
In fact, parents should encourage their children to opt for an education loan. Not only is it a huge burden off the parents’ shoulders but it also saves them from the embarrassment of asking for money outside family. An education loan is the first loan in a child’s life that has to be paid when he starts earning. Also, there is a great life lesson here, the child will learn the value of money, opportunity and time.
Not to mention the benefits of paying the loan amount before due time, it improves the child’s credit score and this helps in getting other future loans easily.
Education loans are basically taken to fund the expenditures of graduation and post-graduation courses that also include lodging expenses, books, travel and other related expenses. Education loans are offered in three slabs; below Rs 4 lakh, between Rs 4 lakh and Rs 7.5 lakh and above Rs 7.5 lakh A student is eligible to apply for an education loan if his admission has been confirmed for a graduate or post-graduate course/degree in India or abroad. Although there are some banks which provide education loans regardless of this criterion.
Benefits
- Most banks including SBI approve education loans within 15 day period. Government banks provide education loans at lower interest rates than private banks. SBI is the only bank in India that offers education loans up to Rs 1.5 crore.
- There is no processing fee while applying for the loan. Only some financial institutes charge 1% processing fee which depends on the type of loan.
- Banks provide ‘moratorium period’, a holiday period of six months to one-and-a-half years after the course/degree is over to search for jobs and pay back the loan amount only starts after this period.
- Loans below Rs 4 lakh can be availed without any margin costs, that is, all the money will be financed by the bank without asking the borrower to contribute anything. Also, there is no security collateral required if the loan amount is below Rs 4 lakh.
- Repayment of the loan amount can be done in 10 years after moratorium period. (The period of repayment of loan amount will vary depending upon the type of education loan.)
- Education loan saves tax according to Section 80-E of the Income Tax Act, 1961.
- Some banks are also known to provide life insurance cover with an education loan.
It is heart breaking to see that sometimes deserving students have to compromise with their career goals due to shortage of funds. But with the rising education costs, education loans are becoming a feasible option.
It’s comparatively easy to avail education loans at attractive rates these days. Moreover, students should opt for education loans to ease off their parent’s burden and to build good credit history early in their lives for future prospects.
Which college is better
Students need to know the answer to this question before applying for an education loan. There is a plethora of educational institutes in India. Everyone knows about the top B-schools, engineering and medical colleges but these institutes remain out of reach for many students who may not be the top scorers in the country per se.
These students must understand the importance of selecting the most suited college for themselves in order to make an informed decision that will provide value for money along with best career prospects in future.
source:-dailypioneer