September 6, 2023

Education Loan: Process, EMI, Interest 2023

An education loan, as its name suggests, is money borrowed in order to finish one’s education. When a person pursues further education, they typically need an education loan. This is due to the fact that most higher degree course fees are extremely exorbitant and not everyone can afford them.

Therefore, the issue of funding education is a significant worry for students today. The answer to this issue is to apply for an education loan from either public or commercial banks, or even from the universities themselves, who also provide a variety of financing options, such as fee-splitting into manageable EMIs.

Why Should One Take an Education Loan?

Practically all students desire to attend the greatest colleges for a top-notch education. But one must spend a lot of money in order to acquire nice goods in life. Today, there isn’t easy money, thus it’s harder to keep this quality in our lives. Education institutions and funding organizations have therefore developed a method for supporting one’s education, namely by offering an education loan, in order to address this issue.

Financial Advantages

One of the main advantages of applying for an education loan is that they are relieved of the responsibility of paying the cost all at once. For a student and their parents, that is hectic. Additionally, even if students cannot afford a high course fee, they have the choice to follow a different course for the same cost, however, the payment procedure is somewhat different.

No Hurry in Fee Payment

There is no pressure or deadline in the case of a school loan that requires us to pay the entire amount right away. With the aid of the simple EMI option, students may conveniently repay their education loan balance either after finishing their entire degree or when enrolled in it. These EMI alternatives can be created based on the student’s budget and criteria. Depending on their capabilities and criteria, they can create a 12-month EMI plan or a 24-month EMI plan.

Different Kinds of Expenses Covered

A student’s education loan does not just pay for their tuition costs. Their additional educational costs, such as living and travel expenses, textbook costs, laptop allowances, and other costs, are also covered by the education loan amount. The fact that the loan amount includes all of these costs lessens the student’s additional financial burden.

Repayment of Loan is Easy

The financial institutions that students use to apply for college loans provide fair interest rates and lending programs. Additionally, they offe­r a range of easy repayme­nt options that ensure students can re­pay their student loans without difficulty or stress.

Is Education Loan Available for Online Courses?

For the online programs, there are additional loan alternatives. Different online programs are now offered with these educational loan benefits, allowing students to pay their online program fees with ease. But are the possibilities for student loans offered by the online programs the same as those offered by the standard programs?

Actually, students enrolled in online programs may have different financing alternatives. It solely depends on the bank from which you are obtaining the loan. The following choices could be different for different online programs:

  • For online programs, there is no available moratorium period.
  • Some banks require graduates in any field as the minimum requirement to apply for school loans for online programs.
  • In addition to schooling, several banks additionally require that applicants for their online programs be employed professionals.

Education Loan Eligibility Criteria

If a student or loan application does not satisfy the eligibility criteria, they will not be offered the opportunity to apply for an education loan. The following conditions must be satisfied in order to qualify for an education loan:

  • Indian Resident: The candidate requesting for the loan must be an Indian resident in order to meet the basic eligibility requirements. One must produce any Indian government ID as evidence of citizenship if they are a resident of India.
  • Admission Confirmation: A verified acceptance to a globally renowned educational institution is a requirement for receiving an education loan. Since a letter of acceptance confirmation will be required when applying for an education loan, it sort of counts as a key qualification need.
  • Age Bracket: The applicant’s age range must be between 18 and 35 in order to be eligible for an education loan. If you don’t fall inside this age range, your student loan may be cancelled.
  • Approved College/University: The University Grants Commission (UGC), the All India Council of Technical Education (AICTE), the government, etc. must all have given their seals of approval to the educational institution where the student has been admitted. In other words, the institution must be properly accredited and in possession of all required authorizations.
  • Academic Records: Although it is not a crucial eligibility requirement, it is crucial for education loan clearing. If a candidate has a strong academic record from their prior classes, it makes repaying a student loan easier. The loan application process is then completed without commotion or obstacles.
  • Co-Applicant/Guarantor: When applying for the loan, the applicant will need a co-applicant if they are enrolled in a full-time program. Anyone, such as parents, guardians, spouses, or in-laws in the case of a married candidate, may serve as a co-applicant. Additionally, the co-applicant must be a professional who is currently employed. This is necessary to cover the loan amount in the event that the applicant is unable to pay it back owing to any circumstance.

Expenses Covered Under an Education Loan?

There is a widespread misconception that an education loan only covers the tuition for the course for which it is being applied for. But it is untrue since over time, the education loan has also begun to pay for a number of supplementary costs. Let’s learn more about all the costs that are paid for by student loans. Below is a detailed description of the costs covered by an education loan:

  • Course Tuition Fees: It is one of the fundamental costs that an education loan will cover. A student has sought for a loan in the first place since it is a necessary requirement. Therefore, this expense is the most significant that is paid by any student loan.
  • Living Expenses: Housing, food, transportation costs, and other living costs are included in the education budget. Because of this, the amount to which its expenses are covered may differ from bank to bank. Some may pay the entire cost of living, while others may just pay a portion of it. As a result, when applying for an education loan, one must carefully consider the loan coverage provided by a specific bank.
  • Study Expenses: In addition to tuition fee­s, education loans today often cover various othe­r study-related expe­nses such as research proje­cts, field trips, and additional resources. However, the alternatives for expense coverage vary from bank to bank. Even now, the majority of banks still do not pay for these costs. The fact that these costs are covered gives the student additional advantages while they are studying.
  • Travelling Expenses: If one has filed for an education loan to pursue a course abroad, these costs are reimbursed. This covers every travel fee, including ticket costs and any other essential travel expenses. Travel expenditures are often not covered by the bank, but if you want them to be under your school loan, you must specifically state this when applying for the loan. Otherwise, the student loan will not pay for this expense.

Education Loan Application Process

When considering an education loan, the application process is the part that most people find to be complicated. While some people find it simple to understand, the majority find it difficult. Therefore, when requesting an education loan, one only needs to adhere to a short list of steps:

  • Researching and Consulting: One must first conduct thorough research on the many banks out there that provide student loans. such as the maximum loan amount that may be offered, the interest rate at which loans are being offered, and much more. Before requesting a loan, one must thoroughly investigate all the factors. For the purpose of choosing a fantastic and affordable offer for oneself, consider all of your possibilities.
  • Fill out the application form: After conducting extensive research and choosing the bank where you want to submit your loan application, fill out the form. In the case of an offline application process, one must complete the application form that is available on the website or obtain the form from the bank.
  • Verification Check: The loan agent will contact you with the next steps after the application has been submitted to the appropriate bank and will inquire about all of your information and loan requirements. This functions very similarly to the verification check a bank performs before to processing your application.
  • Submission of Documents: Following a successful verification check, the bank calls the person to come in for an explanation of the loan process and to submit all necessary paperwork. It is recommended that people bring an expert along to help them understand the entire loan application process.
  • Approval of Loan: The bank verifies the paperwork after completing the required documentation work. If the bank determined that the applicant was qualified for the loan after a successful verification check, it continues with the loan application process. Lastly, the loan application is approved.
  • Loan amount Deposited: Following the loan application’s successful acceptance, the bank checks the prerequisites for the college or university. The loan amount is then either directly deposited by the bank into the student’s bank account or the account of the college or university. It entirely relies on each person’s needs at the time of the loan application.

How to Calculate EMI for Education Loan?

Regarding how we would repay our loans, we were all confused. What basis would the loan balance be paid? Therefore, how our monthly Equivalent Monthly Installment (EMI) will be determined is a significant worry. Therefore, one might utilize an education loan EMI calculator to address this issue.

This tool aids in the user’s understanding of the loan’s terms and payback schedule. To acquire specific information on your loan amount and its EMIs, all you need to do is enter a few pieces of information into our tool. Information such as the loan amount, interest rate, processing fee, and tenure aid in calculating the correct EMIs that must be paid each month to repay the loan. Additionally, it tells us what the final loan amount that a person must repay the bank will be once all the aforementioned criteria have been taken into account.

The EMI calculator truly assists and directs you by providing all the relevant details on the total loan amount, the principle amount, and the advantages of making payments within the specified time frame and at the specified interest rate. It somewhat reduces our anxiety on comprehending and simplification these complex aspects.

The EMI calculator’s prime formula is as follows:

  • P x R x (1+R)^N / [(1+R)^N-1] where,
  • P stands for The Principal Loan Amount
  • R stands for the Rate of Interest
  • N stands for the period for loan repayment

Education Loan-Major Features

Some features and benefits of an education loan are:

  • Up to Rs. 1 crore in loan benefits are available.
  • The maximum time frame for loan repayment is between 15-20 years.
  • One can apply for an education loan for foreign universities in addition to Indian universities and colleges.
  • The person receives a benefit of a year-long moratorium period. One is not required to make any loan repayments during this time.
  • On the school loan, there are also a number of tax advantages.
  • A range of advantages and features, including processing fee and interest rate concessions, are offered to female students who take out school loans.

Why Is EMI Now a Considered Such a Vital Factor in the Decision of an Online University or Course?

This question has a pretty straightforward solution. This is because student loans have so many advantages. The benefits of EMI or fee payments are also taken into account when choosing an online institution or course because online learning has become somewhat of a trend in recent years. Due to the fact that students profit in a wide range of ways while paying for their education using convenient EMI methods, online education providers are also using this feature as one of their course-selling strategies. Consequently, it is a kind of alluring feature that draws the student to a program and a university. Here is a breakdown of some of the online courses’ total education loan debt into manageable EMIs:

Course Total Loan Amount Monthly EMIs (If paid in 24 months)
MBA online courses Rs. 149500 Rs. 6229
BBA online courses Rs. 119500 Rs. 4979
Online MCA Programs Rs. 149500 Rs. 6229
BCA Programs online Rs. 119500 Rs. 4979

These are some of the courses, and they are also for a specific period of time. If the loan repayment period is extended, the monthly EMIs will reduce. This is just a general notion; for precise information, please check the relevant online university offering this function.

Factors Considered Before Approving an Education Loan

When evaluating an education loan, loan lenders take a number of things into account. Among these elements are

  • Educational Institute and Course: The applicant’s chosen course and educational institution are the first things a lender takes into account.
  • Loan Amount: The next item on the list is the loan amount that a person requests; this is taken into consideration regardless of whether the lender would provide it or not.
  • Academic Performance: When approving the loan application, the borrower’s past academic performance in classes is also taken into account. This is taken into account while evaluating the student’s ability.
  • Repayment Capability: To give the lender confidence that the borrower can repay the loan in full or not, the repayment capacity of the individual or the individual’s family is also assessed. Family assets or security assets are also taken into account when approving a loan.
  • Annual Income: When determining whether to approve the loan, the applicant’s family’s annual income is also taken into account.

Wrapping Up

Don’t compromise on your education because if you do, you’ll have to compromise on everything else for the rest of your life. It is preferable to use EMIs for a limited time to pay for schooling as opposed to making a lifetime EMI payment for a commodity. Instead of settling for less than you want in life, taking out an education loan can be a terrific way to get the education you want.