Education Loan is a type of financial help for students who are good in studies and want to go for higher education but because of the scarcity of funds, find themselves unable to proceed and feel helpless. In such cases, Government tries to extend help in the form of an Education Loan. Student Loans can be availed for some recognized universities in our country and also the Universities abroad.
Why Student Education Loan Is Needed
The education of youth is the foundation of every country. The instability of India and its poor development could perhaps be attributed to the millions of uneducated people. As we know that our country is the second most populous country in the world. India’s rapidly growing population has led to many socio-economic problems. This has resulted in poverty and ultimately created undue pressure on our Government.
Role of Banks for Education Loans :
But the Government is making its best efforts to solve the issue. There are many different types of loans available for poor or middle-class people for their financial upliftment as house loans, education loans, festival loans, vehicle loans,s, etc. The banking sector is playing a very important role. Bank is the backbone of the financial sector. It always makes efforts to reach the consumers to facilitate them by distributing different loans which eventually helps them to earn some profit. Bankers remain very excited to give those loans which are quite assured.
Education loan is one of those different types of loans which are given by banks. However, repayment of the Education Loan is deferred while the lender is pursuing his course and sometimes it takes more time till the placement of the lender. Banks give a grace period of six months to make repayment.
Benefits of Education Loan
First thing is that those students who are financially weaker and are unable to continue their higher education can be benefitted from the Bank Loan policy for them. Secondly, the students, who avail of loans, are supposed to repay with interest after completing their education which helps banks to generate funds. In this way education loan is not only beneficial for students but also good for banks as education loan is a very assured loan. Bankers know that they are giving loans for education which can be recovered with interest easily. Because after completion of education, the student achieves a good financial position and becomes able to repay the loan.
After availing loan, the student develops financial prudence which helps him to achieve a good financial position. But it is not so, that everyone is free to avail of the loan. Some of the formalities and some criteria are to be fulfilled for education loan sanction. Most financial institutions provide loans for higher education courses in recognized institutions in India or abroad where there are Entrance Tests or Merit Based Selection Processes
Criteria for Education Loan
There are certain basic criteria that are supposed to be fulfilled by the applicant who wants to apply for an education loan. As you all know that all students don’t have enough collateral to pledge in order to avail of an education loan, they want an unsecured loan from Government Banks which is a bit difficult. In such cases, the credentials of the applicant are important. Contrary to this, where the students have collaterals to pledge for their education loan, they avail loans easily. But in both cases, before applying for an education loan the students need to know the procedure and criteria for applying for an Education Loan.
The first criterion for applying for an education loan is that the applicant must be a resident of India and should in-between 16 and 35 years of age. The applicant must have secured a minimum of 50% marks in the 10th and 12th standards. The course for which you are applying should be approved by UGC/AICTE/AIBMS/ ICMR or Government and it is mandatory for applicants to apply only to those educational institutions which are recognized. It is mandatory to have some co-applicant or guarantor. The co-applicant or guarantor can be the applicant’s parents, spouse, brother, sister, or in-laws.
Top Banks Offering Education Student Loan
Every year thousands of students from our country go abroad to attain quality education. The best way for opting for higher education is to consider an Education Loan, especially for the lower class or middle class who find themselves not able to afford the expenses of higher education. State Bank of India has many Education Loan Schemes for different categories of students.
- SBI Global Ed-Vantage Scheme
- SBI Student Loan Scheme
- SBI Student Scholar Scheme
- SBI Take Over Education Loan
- Bank of Baroda is also very quick to offer and approve education loans.
- Punjab National Bank However, most of the banks offer education loans with different terms and conditions of interest rate and moratorium.
- Many private banks are also extending financial help to students through education loans.
- Axis Bank
- Kotak Mahindra Bank
- Federal Bank
- HDFC Bank
Different Government Schemes for Education Student Loan
Pradhan MantriVidya Lakshmi Karyakram is the most liked web portal for education loans. As this portal provides online loan approval.
Financial Institutions have their own counselors who can guide you in getting a loan with or without collateral. You should stay in touch with them for guidance. With the help of these counselors, your application can be processed easily. They become helpful in the hassle-free process of loan approval with the lowest interest rate.
How to Apply for Education Loan
There are two ways of Applying For a Student Loan
Online: This is the easiest way to apply for an education loan. You need to fill out the application form for an education loan and attach all the required documents and submit the form. The lending institution will remain in touch with you to discuss all the details of the rate of interest and other terms and conditions.
Offline: When you opt for applying offline for an education loan, you need to visit the branch of the specific bank to which you have decided to apply for a loan with all the mandatory documents. You are supposed to apply in person. There you will find a counselor for helping you or there can be virtual assistants. You can discuss all the terms and conditions with him. Then you will be needed to fill out the application form and attach the documents. After applying for Education Loan either you call the lending bank’s branch or request them to call you back for discussing further details.
List of documents for applying for loans
- Mark sheet of 10th,12th, and Graduation with Entrance Exam Result
- Proof of admission in the form of an Offer Letter
- Expenses details
- Letter of scholarship or free ship
- Asset-Liability Statement of Co-Applicant or Guarantor
- Bank account statement for the last six months
- Permanent Account Number of the applicant and his guarantor
- Passport size photograph of applicant and co-applicant or guarantor
- Address proof of applicant and guarantor
- AADHAAR card of applicant and guarantor
- Income proof of guarantor as salary slip and IT Returns acknowledgment by IT Dept.
There are a few more documents required to apply for Student Loans from Universities abroad.
- A passport is mandatory for going abroad for higher education. As long as your passport is not ready, your Education Loan can not be approved.
- A visa is also essential for the completion of the loan approval procedure.
It is very helpful for Government policy to provide Student loans to those students who are ambitious and want to go for higher studies. Now money is no more a barrier for them. Every student who is intelligent and good in their studies can fulfill his dreams. By providing loans, banks also earn profit as they get the interest money when the applicant gets placement in a good company. The procedure of loaning and then repayment with interest helps banks in generating money.
Here in this procedure, both parties are benefitted. The only thing which is the most important is that the student or the applicant must be good in studies and a genuine person. In some special cases where the applicant is extra-ordinarily intelligent and is like an asset to the country and his education is for the welfare of the country, the Government provides interest-free loans.