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Many of us are used to the idea that our parents are going to pay for our education. However, this may be difficult if you are opting for an expensive professional study. A trend has emerged now under which students go to expensive colleges & universities that lead to good recruitment, making it easy to pay for the educational loan when the student is finally employed.

Education has been commoditized & studying from the top-notch B-school or law school or other schools in various fields adds to the professional skills in your portfolio and gets you a placement for a good job. But often such placement-guaranteed education comes at a great price. The only option left when you don’t have the funds is to take an education loan, with the hope that you shall be in a position to pay it back from your earnings after completion of course.

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What is an Education Loan?

An education loan is a form of credit, advanced to students & scholars. It is designed to help students pay for college tuition fees, books, hostel fees, laptops & other living expenses. Educational loans are different from other types of loans as the interest rate is often considerably lower than other loans and the repayment schedule is deferred while the student is still in school. It is a priority sector lending for banks & NBFCs and also often relatively profitable – so most banks & NBFCs offer educational loans in large numbers.

An educational loan looks like a noble option, but banks and NBFCs cannot afford to grant you the loan without assessing risks involved. Since you aren’t going to start repaying the loan for at least 3 years from the issuance date, the bank or NBFC is investing in something that isn’t going to start repayment for quite some-time in the future. So, they will be more careful and extra cautious when someone asks them for an education loan.

And still, getting an education loan should be a piece of cake compared to the effort you shall put into getting through a good college. It can be a blessing for those who want to study & achieve their goals but do not have the money to pay.

Requirements for availing an education loan

The documents required may change from bank to bank, from time to time. Usually, the following will be asked for:

• Mark sheets of 10th, 12th and graduation (if any)
• Proof of admission into the college
• Schedule of expenses for the course
• Photographs (Usually passport size)
• Bank Account Statement of the Borrower for the last six months (If Applicable)
• Income tax Assessment statement of the guardian (Parents or Guardians)
• Statement of Assets & Liabilities of the co-borrower (Parents or Guardians)
• Proof of Income of the Guardian
• Identity Proof like Driving License, Passport or Voters ID for both the student and the Guardian
• Address Proof like Ration Card or Electricity Bill etc

The list provided above is not exhaustive but it covers most of the documents that may be required to get an education loan. So, it’s your responsibility to perform the entire mandatory research to ensure that you know what the bank or NBFC will ask for when you go to them for the loan.

Important Do’s and Don’ts for Education Loans

An educational loan is a long-term financial commitment, certain things are crucial & you need to remember them. They are:

• Do thorough research before applying for an educational loan.
• Compare loan schemes of different lenders on portals like Afinoz.com
• See if your requirements match with the requirements of the bank or NBFC.
• Read all documents carefully, never assume anything.
• Try to understand all the terms & conditions properly.
• Make sure you submit all the relevant documents.
• Do not submit any false information or indulge in foul play in an attempt to fast-track your case.

Courses eligible for the education loan

There are many courses that are eligible for an education loan. Here are some of them:

Courses in India

• Graduation courses like BA, B.Com, B.Sc., etc
• Post Graduation courses like M.Sc., M.Com, Ph.D., etc.
• Professional Courses like Engineering, Medicine, Law, Veterinary, Management, etc
• Courses like ICWA, CA, CFA, etc

Courses Abroad

• Post Graduation Courses like MCA, MBA, MS, etc
• Graduation courses offered by reputed universities

Please note that this is not an exhaustive list. It’s just an indicative list that shows you the kind of courses which are eligible to get an education loan. To know in details also read Courses Eligible For Education Loan in the blog section of Afinoz.com.

Repayment of education loans

Repayment of an education loan is different. Most of the time, payment can be postponed on the principal and the interest until the student is out of school, college or university. It’s recommended to keep paying down the interest throughout the loan period so that interest is not compounded – but this is a question of means. Also, note that there is an income tax deduction available for interest paid on educational loans. Also, read save taxes on your education loan in Afinoz’s blog section.

Repayment typically begins anywhere from six to twelve months after you leave the institution. The student may have many options for extending the repayment period, while an extension of the loan term will likely reduce the monthly payment, but it will also increase the amount of total interest paid on the principal balance during the life of the loan. If you want to prepay the loan then try to ensure that there should not be any prepayment charges on your loan. This means if you repay the loan ahead of schedule, thereby saving on interest payment, you will not be penalized with a prepayment fee as this is a great way to reduce the interest costs.

Repayment period

Repayment period of education loan depends upon the duration of the educational course and might vary from 2 to 6 years. It basically depends upon the agreement between you and the lender.

In some cases, the repayment starts right from the time when the course ends, while some lenders provide a moratorium of 6 months or 1 year after completion of course. You will need to clarify all these queries before applying for the education loan to avoid getting a shock later.

Tax benefits

Repayment of any type of education loan is eligible for tax exemption under Section 80E of the Indian Income Tax Laws covering the entire sum of money combined with interest and fines if any. And to avail this you will have to get the interest paid statement from the respective bank or NBFC and present it while filing income tax returns. Also, read save taxes on your education loan in Afinoz’s blog section.

Start applying for Loan

Afinoz has partnered with some major Banks and NBFCs to provide you customized & hassle free education loans. Call us, go to our site, and suggest your need, this could be the first step after reading this post, and we shall be more than happy to serve you. Email us at info@afinoz.com for any query, assistance or request.  

Education Loan Provider in India 

Avanse Education Loan	InCred Education Loan	Bank of Baroda Education Loan
HDFC Credila Education Loan	PNB Education Loan	SBI Education Loan
Allahabad Bank Education Loan	Syndicate Education Loan	Axis Bank Education Loan