Pursuing higher education in world-class universities abroad is a costly affair. The Indian or international students are often concerned about the payment of fees and other expenses. But it shouldn’t bother them much nowadays because abundant educational loans are available today to meet the budget needs of students belonging to different economic sections. Achieving the degree from their dream institute can lend them a golden career and enable them to repay the loan in the future. To help you sort your study abroad education loan formalities, here are 5 things to keep in mind to apply for an education loan.
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5 Things to Keep in Mind to Apply for an Education Loan
Here are 5 things to keep in mind to apply for an education loan to kickstart your study abroad journey. Treat them as the golden tips for applying for an education loan to study abroad.
1. Check the Course and University Carefully
Among 5 things to keep in mind for an education loan, the first tip is that the student must be clear about the subject they wish to pursue and the University before applying for a loan. Without having clarity of the course and university, it might be a waste to borrow money for studies. Many students are unclear about their choice and later regret the decision. It also becomes difficult to pay the amount back. Hence, it is necessary to take the right guidance and fully understand the courses provided by the universities.
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2. Check Eligibility
The second very important thing that one must keep in mind is that for borrowing money from a bank or other financial source, a student should be a citizen or resident of India. The student should also be above the age of 18 years to be eligible for the loan. They are also expected to have a phenomenal academic background and solid proof of securing admission at the university. The most popular universities that provide student loans are the Indian banks. The loan is issued to the student rather than the parents or family members. However, it will be the student who shall repay it in the future. Public banks provide almost 90% of the total expense.
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3. Keep a Check on Loan Amount and Policies
Next up on our list of 5 things to keep in mind for an education loan is to always keep a check on the loan amount that you are taking and the applicable policies attached to it. There are different policies for different principal amounts borrowed from the banks. For example, students must have the prerequisite knowledge that education loans of up to INR 4 lakhs are provided without collateral, or for an amount between INR 4 lakhs and 7.5 lakhs, a co-applicant is needed. Also, for a loan amount above INR 7.5 lakhs, the rules and rate of interest may be applied after providing collateral.
4. Interest Rates and Moratorium
Moving ahead with our list of 5 things to keep in mind for an education loan, our next pro-tip is to always look into interest rates and moratorium carefully. The students must also research deeply about the loan details such as the interest rates, the duration of repayment, moratorium period, late payment fees, and similar other financial aspects. The most common rate of interest rates is between 9 to 15%. This is mostly the compound interest which means that the repayment amounts can increase over the years. Having said that, the students should also know that banks offer short-term and long-term repayment schemes to repay the education loan. Also, it is advisable for students to choose a bank with a long moratorium period.
Note: In longer repayment schemes, higher amounts of loans are sanctioned. Longer repayment periods make more sense for students since it takes time for them to start repaying by getting a job. students must take the amount in installments for their expenses in each semester rather than taking the entire loan at once.
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5. Checking Finance Aid Schemes Regularly
The last pro-tip on our list of 5 things to keep in mind for an education loan is to keep checking finance-aid schemes regularly that are provided by different universities and the government.
For example, the government of India has launched a Credit Guarantee Fund Scheme also known as CGFSEL for students to avail loans up to Rs.7.5 lakhs without the need of any co-applicants. Similarly, the Indian Bank Association Model Scheme allows students to take education loans up to Rs. 20 lakhs for higher studies abroad. Having said that, many prestigious and renowned universities abroad have their own funding systems or study abroad scholarship schemes to help and attract international students with their educational expenses. The universities also offer a scholarship to meritorious students for their financial needs.
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- ICICI Education Loan
- Syndicate Bank Education Loan
- YES Bank Education Loan
- InCred Education Loan
- Education Loan Scheme by Narendra Modi
- IDBI Education Loan
- Vijaya Bank Education Loan
So, these were 5 things to keep in mind for an education loan. We hope that you must have found this blog informative and interesting. Need help with finding the best education loan for your dream university abroad? Reach out to Leverage Edu and we will help you at every step of your study abroad journey!