Why is an education loan not a liability but an investment into the future?
![user](https://blog.epicred.in/wp-content/themes/ec-blog-theme/images/user.png)
![date](https://blog.epicred.in/wp-content/themes/ec-blog-theme/images/date.png)
Education for everyone is a powerful revolution! It opens up a world of possibilities for each and every individual out there. Imagine a world where everyone has access to quality education – that’s the kind of world we want to live in, right? When education is made available to all, it empowers people to dream big, learn new skills, and reach their full potential. It’s not just about getting a degree; it’s about empowering individuals, building brighter futures, and creating a more inclusive society.
However, the cost of education is often a significant barrier for many students denying them access to it. This is where education loans come in handy. Education loans are a great way for students to fund their studies without worrying about the financial burden upfront. Are you curious about how education loans work, the benefits they offer, and how to apply for one? Then keep reading to know better.
What is an education loan?
An education loan is a financial aid offered by banks for students to finance their studies. Just like how we take a loan to buy a car or a house, an education loan is specifically meant to cover the expenses related to your education. These loans are specifically designed to cover educational expenses such as tuition fees, books, accommodation, and other costs during your course of study.
They are like a helping hand that allows students to invest in their future by obtaining the education they desire. With the rising costs of higher education, education loans provide accessibility and affordability to students who may not have the means to pay for tuition upfront. Hence, these loans are designed to be student-friendly by banks. By offering flexible repayment options, competitive interest rates, and a grace period after you finish your studies before you need to start repaying, these loans empower you to focus on your studies and career goals without worrying about financial constraints.
Benefits of education loan
In the year 2023, education loans experienced a notable 17% growth, breaking a five-year trend of no change. According to data from the Reserve Bank of India (RBI), the total amount of outstanding education loans increased to ₹96,847 crore, compared to ₹82,723 crore in the previous year. This reflects the changing landscape of education in India, where there’s a growing demand for quality education and specialised training. How have education loans played a significant role in these developments?
Here are some key benefits of education loans:
Increased Opportunities:
With an education loan, students can choose from a variety of programs and institutions that may have been financially out of reach otherwise. This increased accessibility can lead to better job prospects, higher earning potential, and enhanced career opportunities in the future. Ultimately, an education loan can be a valuable investment in one’s future success and personal development.
Financial Relief:
Education loans provide a sense of financial security and peace of mind, knowing that the costs associated with education are covered. Instead of stressing over upfront tuition fees, education loans provide relief by spreading the financial burden over time. This means you can focus on your studies without the weight of financial worries dragging you down. It’s peace amidst the chaos of academic pursuits.
Affordable Interest Rates:
Education loans often come with lower interest rates compared to other types of loans, ensuring that you don’t end up drowning in debt while investing in your education. It’s like having a financial ally who genuinely wants to see you succeed.
Stressless Repayment Options:
With education loans, you’re not stuck with a one-size-fits-all repayment plan. Instead, you can choose a repayment option that aligns with your financial situation, giving you the freedom to manage your finances without feeling overwhelmed. It’s like having a tailor-made solution that fits perfectly to your needs.
Credit Building Opportunity:
By repaying your education loan on time, you’re not just investing in your education; you’re also building a strong credit history. It establishes a foundation for responsible financial management which can be beneficial for future financial endeavours, such as applying for other loans or credit cards.
Types Education Loans in India
In India, we’ve got a range of education loans worked on carefully just for you and your ambitions. Whether you envision pursuing higher education within the country or overseas, exploring vocational training, or enhancing your skill set, rest assured, there’s a loan option just for you.
Undergraduate Education Loan:
Are you kickstarting your journey towards a bachelor’s degree? The undergraduate education loan is designed to support your academic pursuits during your course of graduation. It covers everything from tuition fees to study materials during your course, the duration of which may vary between 3-4 years.
Postgraduate Education Loan:
Are you a graduate who wants to study further, pursue a postgraduate degree? Is your financial situation holding you back? These postgraduate loans have been introduced specially for you. It finances all your educational requirements during your course of study and allows you to repay them with a grace period till you find a job.
Study Abroad Loan:
Is it your ambition to study at a particular prestigious international university? Explore the study abroad loans crafted to fund your overseas education opportunity, from travel expenses to tuition fees and accomodation, making your big dreams a reality. However, availing this loan requires you to satisfy a few eligibility criterias set for the scholarship.
Vocational Education Loan:
Are you looking to develop specialised skills or vocational training? Vocational education loans are designed to support your learning journey in both traditional and non-traditional fields. It allows you to pursue diploma programs or skill enhancement courses in any field of your choice like animation, culinary arts, tailoring, accounting, automotive repair, nursing etc.
Competitive Exam Coaching Loan:
Do you aim to create a career in civil services, banking, engineering, MBBS or other courses that require you to crack exams? These loans are the ideal solution for your competitive exam coaching. They cover your coaching, exam preparation and application costs providing all the resources you need to pursue a career as you aspire.
Loan for Education Abroad with Parent as Co-borrower:
Taking a loan for education abroad with your parents as a co-borrower can be a smart move! Not only does it help you secure the funds you need for your studies, but it also allows you to benefit from potentially lower interest rates due to your parent’s involvement. Plus, having a family member as a co-borrower can make the process feel more reassuring and collaborative.
Breakdown of Covered Expenses in Education Loans
- Tuition and other fees charged by educational institutions.
- Fees for examinations, library usage, and laboratory facilities.
- Funding for travel expenses or necessary funds for studying abroad.
- Insurance premiums for student borrowers, wherever applicable.
- Caution deposits or refundable deposits supported by official institution invoices or receipts (limited to 10% of the total loan).
- Essential study materials such as books, equipment, instruments, and uniforms (limited to 20% of the total loan).
- Acquisition of a computer, if required for course completion, at a reasonable cost (limited to 20% of the total loan).
- Additional expenses essential for course completion, including study tours, project work, thesis expenses, etc. (limited to 20% of the total loan).
- Consideration of any available scholarships, fee waivers, or other financial aids in calculating the required loan amount for the student borrower.
Who is eligible for education loans?
- Loans are extended to candidates pursuing approved undergraduate programs, postgraduate programs, PhDs, diploma courses lasting six months or more, job-oriented courses, and technical/professional courses.
- Applicants must be enrolled in or seeking admission to recognized institutions that are approved by the relevant authorities, including government institutions, professional institutions, and international colleges and universities.
- For undergraduate courses, applicants should have completed their 10th and 12th standards, while for postgraduate courses, they should hold a degree from a recognized institution.
How to apply for an education loan?
Here’s how you can apply for an education loan online:
- Step 1: Visit the website of your chosen bank and select the educational loan scheme that suits your needs.
- Step 2: Download the application form directly from the bank’s website or simply click on the ‘Apply Now’ button to access the form.
- Step 3: Fill in the application form with all required information and attach the necessary documents. Once done, submit the form electronically.
- Step 4: The bank will kickstart the process by verifying your submitted documents, assessing the course of study you intend to pursue, and evaluating any collateral you may offer.
- Step 5: Upon approval of your loan application, the bank will disburse the sanctioned loan amount directly.
Alternatively, if you prefer to apply offline, you can visit the nearest branch of your chosen bank. Fill out the application form manually, attach the requisite documents, and submit them to the bank staff. The bank will then verify your application and proceed with the loan processing.
With a wide range of loan types and eligibility criteria to match diverse needs, there’s an education loan for everyone. It’s essential to explore policies and options to find the right fit. Ready to invest in your future and seize new opportunities? Explore the education loan options today!