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🔹Obtaining an education loan can be a significant source of relief for those who lack the resources to finance their children's education. This article will explain the loan process in easy-to-understand steps and provide guidance on how to obtain one.
Before applying for an education loan, it's crucial for individuals to verify that the college and course they plan to pursue are accredited. It's worth noting that not only in India, but banks also provide education loans for studies in overseas institutions.

🔗What are the different types of education loans available?
Education loans are typically divided into three primary categories, which include
1. Financing for studies at renowned colleges in India
2. Financing for studies at other colleges in India
 3.Financing for studies at educational institutions abroad
As interest rates and procedures may differ for each category, it's advisable to seek clarification from the bank.

🔗Qualifying courses for education loans
Education loans cover not only undergraduate and postgraduate courses but also technical, professional degree and diploma courses that are recognized by regulatory bodies such as UGC, AICTE, NMC and Government. The loan can be availed for a wide range of courses, including nursing, teacher training, pilot training, and others.

🔗What are the various expenses that an education loan can cover?
Understanding the expenses that are eligible for an education loan is crucial. Banks generally approve loans for costs such as tuition and hostel fees, exam/library/lab fees, the cost of books and study materials, and the purchase of a computer. In some cases, loans may also cover expenses such as uniforms, study tours, and project work.

🔗Interest on the loan
Education loans usually have a distinct interest rate compared to other types of loans. It's essential to inquire about the specific interest rate offered by different banks as it may vary. The interest rate on education loans is typically linked to the bank's prime lending rate and is subject to change. It's wise to take advantage of lower interest rates when they are available.
Certain banks provide exclusive interest rate discounts for female borrowers. Additionally, some banks offer a 1% reduction on the interest rate to those who make regular monthly interest payments. It's crucial to have a clear understanding of these offers when applying for an education loan.

🔗What are the necessary documents that one needs to submit to obtain an education loan?
Here are the documents that typically need to be submitted to apply for a general education loan:
•    Completed Education Loan Application Form
•    College admission letter/card
•    Detailed fee structure
•    Copies of the parent's Aadhar/PAN card
•    Parent's identification and address documents
•    Income tax returns of the parent or guarantor for the previous two years
•    Income certificate or assets and liabilities statement of the student and parent.

🔗What is the maximum loan amount that can be received through an education loan?
In India, banks typically offer a maximum of Rs 10 lakh for fixed education loans and Rs 20 lakh for loans for education outside of India. For education loans up to Rs 4 lakh, banks do not require any margin.
To obtain an education loan of up to Rs 4 lakh, banks do not demand any additional security or collateral. However, they may require the involvement of one of the student's parents in the loan process. For loan amounts ranging from over Rs 4 lakh up to Rs 7.5 lakh, banks may request a guarantee from another individual.

🔗Do not fear the repayment process
Individuals facing financial challenges should not be concerned about the burden of repayment. The benefit of an education loan is that there is no need to make monthly payments for up to a year after completing the course. However, if the borrower secures employment immediately after finishing the course, repayment must begin within six months. In cases where the borrower and their parents have an annual income of less than Rs 4.5 lakh, the loan qualifies for an interest subsidy from the central government.
The information provided is of a general nature. It is advisable for beneficiaries to contact their respective banks to obtain specific details and clarification.
🔗Repayment Duration
Certain banks provide a repayment period of up to seven years for education loans, while others allow borrowers to repay the loan over a maximum period of 15 years.
🔗What is the portal for applying?
The website https://www.vidyalakshmi.co.in/Students/ serves as a platform for individuals to apply for an education loan. It is advisable to visit the website, thoroughly read the information and terms and conditions, and ensure that you understand them before applying for a loan.

An article by Mujeebulla KM
Translated by Deena Hateek
CIGI Career Team