Education plays a crucial role in achieving both academic and personal aspirations. However, the increasing cost of higher education can become a significant obstacle to reaching your goals. But what if there was a way to reduce this financial strain? Enter education loans—a practical solution to lighten your burden. Financial support often becomes essential to complete your education and embark on a successful career. If you are a student trying to get an education loan, here is everything you need to know about education loans..
What is an Education Loan?
An education loan is a financial or credit instrument of receiving Not an aid from financial institutions at a certain rate of interest. These loans provide financial assistance for the students to pursue higher education. They cover the college fees, books, laptop, and other academic expenses. In India, different banks offer loans at different rates of interest, making access to quality education easy and hassle-free.
Eligibility Criteria for an Education Loan
Let us look into the key eligibility requirements for applying for an education loan after 12th in India:
Age and Academic Requirements
- Must be citizens of India.
- Must be more than 16 and less than 35 years of age.
- Must have a good proven academic record.
- Must have completed 12th standard or Diploma.
Recognized Courses and Institutions
Loans are typically granted for courses offered by institutes, both Indian and overseas, that are:
- Listed
- Recognized
- Accredited
How to Apply for an Education Loan After 12th
A step-by-step process for applying for an education loan after 12th is discussed below:
- Choosing the Right Lender: Compare banks and financial institutions to know the best interest rate offers.
- Check Eligibility Requirements: Ensure that you meet the age and academic criteria mentioned by respective banks.
- Gather Documents: Collect all the necessary documents, like identity proof, admission letter, and income certificate.
- Loan Application: Visit the bank and get the loan application form. Online applications are accessible and more convenient.
- Submission: Fill out the loan application form and submit it, attaching the important documents.
- Loan Processing and Verification: The bank will review your application and verify the documents. Based on the authenticity and creditworthiness, the loan will be approved.
- Loan Disbursement: Once the loan is disbursed, the funds are directly released by the institution.
Types of Education Loans Available
Secured vs Unsecured Loans
The key difference between secured and unsecured loans lies in the collateral requirements. To disburse large amounts of money as loans, lenders usually demand collateral such as property paper. In case the borrower fails to repay the money, the collateral will be confiscated by the lenders. Secured loans charge low interest rates.
In contrast, the unsecured loans do not require collateral. Since the risk is high, high interest rates are charged with more documentation. These are suitable for low loan amounts or domestic studies.
Government-Subsidized Loans
To support and encourage economically weaker sections, the government offers subsidized loans. Until the students complete the study, the government covers the interest rate on the loans. This helps students to concentrate on academics without having to worry about finances.
This is applicable for students with a family income less than the specified amount who are willing to pursue professional courses.
Tips to Increase Chances of Loan Approval
Some tips and tricks to enhance your education loan application’s chances of approval:
- Have a co-applicant or guarantor with stable income to strengthen your application.
- Prefer a recognized institution that follows due process.
- Maintain a strong academic record to enhance the chances of loan approval.
- opt for secured loans to improve the likelihood of loan approval.
- Submit the right documents to avoid delays in the loan verification process.
- Ensure your application meets the necessary eligibility requirements.
Check: Best Educational Institute in Bangalore
Education Loan Repayment Options
Education loan repayment options are flexible in India. They include:
- EMI (Equated Monthly Installments)
The borrower can pay a fixed amount of money, that includes principal and interest, every month on a prearranged basis.
- Step-Up Repayment Plan
The monthly installment amount is increased in the later years, aligning with the career growth.
- Interest-only Payments
Here the lender allows the borrower to pay only the interest amount while studying.
- Full Payment Post-Graduation
Borrowers are free to repay the whole amount post-graduation.
Conclusion
Education is the basic right of every individual. But financial constraints stop many children from attaining their full potential. Most students are unaware of the education loan options. The facilities of student loans have to be explained to parents and students to reap the benefits, like lower interest rates and flexibility in repayment.
Also Know: How Scholarships Work?
Frequently Asked Questions (FAQs)
- What are the Eligibility Criteria for Getting an Education Loan after 12th?
To get an education loan after 12th, candidates must have a good academic record, must be a minimum of 16 years old, and must have completed 12th grade or diploma. - What Documents are Required to Apply for an Education Loan?
Marks sheets of 10th and 12th, identity proof like a PAN card or Aadhar card, college admission letter, income proof, and fee structure of the college. - How can I Improve My Chances of Education Loan Approval?
Choose the right lender. Check the eligibility criteria. Submit valid and original documents. Maintain a good academic record and have a guarantor with good credit scores to enhance your chances of loan approval. - What is the Difference between Secured and Unsecured Education Loans?
Secured loans offer loans on the basis of collateral. They charge low interest rates. Uncured loans do not demand collateral. But are offered seat higher interest rates.
