Education Loan: How to get education loan, here is complete information

Education is becoming quite expensive day by day. If you want to complete your education without burdening your parents or guardians or if you are unable to meet the expenses of your higher education, then you can go for educational loans. Education Loan: How to get education loan, here is complete information.

The first step towards taking an education loan is to meet an eligibility criteria for getting a loan in India.

What is Education Loan: It is financial assistance provided by banks and non-banking financial institutions for the purpose of education at India or abroad. Banks provide loan facility to students based on their educational qualification and desired course of study.

What does education loan finance: Apart from paying the fees of a particular course, education loan money can also be used for accommodation, books, and other teaching materials.

Who can apply: Students can apply for education loans. Parents, spouses, siblings can be co-applicants.

Who can get education loan: Those who want to study in India or those who want to pursue higher education abroad can get education loan. Banks provide loan facility from Rs 50 thousand to Rs 1 crore.

Which courses can get loan: Education loan can be availed for many professional courses like part time course, full time course, graduation, post-graduation, engineering, management degree, medical education, hotel management etc. The role of the bank is also important in deciding which course to lend.

Also applicants should have fixed monthly income. Apart from this applicant has to provide academic records, KYC documents. If you apply for a loan to enroll in a good course in a good educational institution and have a good rank, the education loan is available quickly.

Types of Education Loan: There are two types of education loans. One is secured loan and unsecured loan. Generally, banks do not ask for security for loans up to Rs 4 lakh. The interest rate for this loan is high.

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Banks make parents also applicants. Such loans are considered as secured loans. Here the parents have to bear the responsibility if the student loan repayment is missed. Usually a guarantor is required for loans between Rs 4 lakh to Rs 8 lakh. If the loan amount is more than Rs 8 lakh, agricultural land, plot, house and other assets have to be kept as mortgage.

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Tax Exemption: Interest payments on education loans are exempted under Section 80E of Income Tax. Tax exemption can be availed by the student or his parents. For example, if your annual taxable income is Rs 12 lakh and you have paid Rs 2 lakh towards education loan interest, you will have to pay tax only on Rs 10 lakh. No tax is payable on Rs 12 lakh.

Education Loan Interest Rate: The interest rate is decided based on the amount and tenure of the education loan. Each bank has a different type of interest rate. Interest is usually charged from 8.20% to 16%. It varies according to the repo rate.

Loan Repayment: Usually the repayment of the education loan starts after 1 year of completion of the course or 6 months after joining the job. Although there is a limit of 5 to 7 years for repayment of the loan, the period can be extended by submitting a request to the bank. The bank will charge interest on the loan taken during the course. It also needs to be reimbursed.

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