An education loan is a gateway to higher education which leads to securing a good job which will help you to better your prospects for quality life in the future. Many NBFCs including Tata Capital offer education loans to you and thousands of other students to further your careers. Typically, lenders offer education loans under the personal loan umbrella as they also come under the category of unsecured loans.
Higher education is a priority for the government in order to improve the chances of quality employment. Thus, even the government accords special status to education loans providing many benefits such as lower interest rate, collateral-free education loans and even tax benefits.
Availing an education loan is quite easy and involves a simple process. If you have admission to a higher education course in any of the institutions approved by the lender you can apply for education loans.
If you are wondering how to go about, you can follow these steps outlined below to apply for an education loan.
You must remember that education is a serious matter and you need to plan well. You choose the course of study you want to pursue and shortlist the educational institutions. You then check with a few lenders whether these are on their approved list. If they are, then begin the application process and apply for admission. Typically, the admission process starts one year ahead of the course commencement, which may include admission tests and the like. Make sure the course you have chosen is the right one for you.
You need to ensure you are eligible for education loan. The typical eligible conditions from a lender such as Tata Capital are
- Indian nationality
- Age between 16 and 26 years
- Academic record within minimum limits set by the lender
- Income source for parents or yourself
- Need for collateral security if the loan amount is above Rs 4 lakh
Once you have ascertained that you are eligible you can proceed to apply.
Estimate the amount of finance required
Most institutions give the breakup of tuition fees, living expenses, books, computer time and other expenses. You can add up all these to arrive at the total funds required. This could be higher if you are seeking admission in an overseas institution.
Obtain admission letter
Once you have applied to the institutions you will receive an admission letter from that institution. Collect the same to be submitted along with your application for education loan.
Understand the repayment process
The education loan has terms beneficial to you. For instance, you pay simple interest on the education loan amount during the course of study. If you choose to carry forward this interest it will be added to the loan amount and this sum will be treated as the new loan amount. Use the personal loan EMI calculator to calculate the EMI payable by inputting the loan amount, interest rate and tenure. You can change some of the parameters and see how it affects the EMI figure. Education loan qualifies for tax benefits and you need to comply with requirements to avail them.
Collect the documents required
The lender specifies the documents required to be submitted along with your application for education loan. These include
- KYC documents
- Admission letter from the educational institution along with breakup of costs
- Formal visa application if studying abroad
- Attested copies of marks sheets and relevant certificates
- Collateral documents in the event your loan amount exceeds Rs 4 lakh
- Income proof of parents or guarantor
- Relevant documents to prove that you have the permission to study if you are in employment
Make sure all the documents are current and up to date.
You can apply for the education loan online or through the branch. When you fill in the relevant details on the online application form you will receive details about the education loan indicating the amount of loan approved. You can then submit your application along with all the supporting documents. The lender may seek additional information/documents as necessary which you need to provide. The final sanction letter will be issued to you with the detailed terms and conditions of the education loan. Once you accept you will sign the official contract. Remember that the funds will be released based on the admission details.
From the foregoing it is clear that the way to apply for an education loan is to understand the loan process thoroughly, choose the course you want to study, estimate the expenses required, collect the documents you need to submit and then apply online to a lender such as Tata Capital and then follow through till the education loan is sanctioned.