What Kinds of Education Loans Are Available in India?

 

Parents strive to provide their children with a quality education because it is regarded as vital for a successful life. However, the expense of education is constantly rising, and this rises further when a student applies to a prestigious university. Not every parent can afford these costs, and their children may need to take out an education loan to complete their studies. These loans, commonly known as student loans, are available to Indian nationals at low-interest rates and with flexible payment options. They can begin repayments after a specified period. For instance, after completing a course. Education loans, which can be unsecured or secured, can be used to fund educational expenses such as tuition, hostel fees, transportation, books, and so on.

Different Types of Education Loans in India

Education loans, often known as student loans, can be used to pay for a variety of educational programs. They are broadly classified as

Loans based on location:

Domestic education loans: These are loans for students who want to further their studies at Indian educational institutions. The lenders will have several eligibility conditions, and the loan will be accepted only if the applicant has been admitted to an institute that matches the lenders' requirements.

Loans for study abroad: These loans are designed to assist students in pursuing their studies overseas. Similarly to domestic education loans, the applicant must have secured a seat at an institute on the lender's list of acceptable institutions for the loan to be approved.

Loans based on the type of collateral

When applying for a secured loan, collateral must be provided as an assurance that the loan will be repaid. Some of the loan types are as follows:

• Loan secured by real estate: An immovable asset, such as agricultural property, residential land, a flat, or a house, must be committed to the bank.
• Loan against deposits: A loan against fixed deposits/recurring deposits or gold deposits might be obtained.
• Loans secured by securities: Bonds, debentures, and equity shares can be used as collateral.
• A certificate of assurance from an employee or a home bank might aid with the loan approval.

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Loans for courses

• Financial companies make loans based on the course type selected by the borrower. It could be to finish their basic degree or to study at prominent universities such as IITs and IIMs.
• Undergraduate education loans: These loans are available to help students pursue and complete an undergraduate degree program. The undergraduate degree might be three or four years long and will provide the candidate with numerous work opportunities. To be eligible for this loan, the applicant must have completed or be pursuing secondary education.
• Graduate student loans: These loans are available to individuals who want to further their education and get advanced degrees at universities in the United States. It is intended for students who intend to pursue a postgraduate degree or another professional program. To be eligible for this loan, the candidate must have finished the undergraduate program.
• Career education loans: Many banks and other financial institutions provide career education loans to pay for training and courses that aid in career development or qualification for jobs. This loan is available to applicants who plan to attend career-oriented programs at colleges in India as well as technical and trade schools.

Parental loans: Parents strive to provide the greatest education possible for their children, but the rising expense of school has made it difficult for many. To assist such people, several banks offer education loans to parents that can cover up to 100% of the cost of schooling. It is an unsecured loan that can be used for educational expenses such as transportation, books, and tuition fees. This service is available to anyone, not just parents.

College parent loans: These are loans obtained to fund educational expenses such as tuition, books, and so on. These unsecured loans require no security but must be co-signed by the applicant's parents if the applicant is employed and studying.

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Education Loan Repayment in India

Education loans not only assist in the payment of academic fees but also in the payment of related expenses. These loans, like all other loans, have payment terms under which interest on the principal amount must be paid. The start of repayment varies on the type of loan obtained, but it will be paid as EMIs for the agreed-upon term.

Contrary to popular belief, education loans are not only for studying overseas for higher education; they can also be utilized to pursue professional courses after completing the 10th and 12th grades.