Student Loans: Your Ticket to a Brighter Future

An analysis by the IMARC Group tracking the growth in the Indian higher education market, expects it to exhibit a growth rate of 10.30% during 2022-2027 (a spending outlook that reflects anticipated inflation in tuition fees as well as living expenses).

Rising enrollment of students and increasing literacy rates are the two main factors driving the Indian higher education market. This can be attributed to the growing demand for employees with higher education degrees who can adapt to the rapidly changing business environment in the country.

Why take student loans?

India has one of the largest young populations in the world, and as educational costs rise, so does the demand for student loans.

Using family savings, borrowing from friends and family, selling assets like land and gold, or taking out a student loan are some common ways of funding higher education in India. It was once thought that only those with middle-class incomes opted to use student loans to pay for their education. However, with the benefits of student loans becoming more widely known, and banks, NBFCs, and other financial institutions offering doorstep services, many affluent families are also opting for student loans.

Exclusive benefits of taking out student loans

Student loans can be a valuable tool for paying for higher education and can set you up for success in the future. Student loans have several advantages, such as:

1. Access to education: Student loans give students the funds they need to pursue higher education, which may give them access to more career options and financial opportunities.
2. Tax benefits: There may be income tax deductions available for student loan interest, which could help to lower the overall loan cost.
3. Building credit: Repaying a student loan responsibly can help establish a solid credit history, which can be beneficial when making applications for new loans or credit cards.
4. Flexibility: Tuition, books, and living expenses are just a few of the expenses related to education that can be covered by student loans.
5. Preservation of personal savings: By taking out a student loan, students can keep their personal savings for other expenses like a down payment on a home or a car.

Overall, student loans can help students pay for their higher education and pave the way for a better future overall. Be aware that it’s important to comprehend the loan’s terms and conditions, and that you should have a repayment plan in place before you graduate.

Also Read: 5 Best Tips To Get The Best Education Loan Interest Rate In India

Everything you need to know about student loan

You can easily obtain a student loan in India from banks, NBFCs, or other financial institutions. Student loans can help you move closer to your dream career, in addition to offering several other advantages that will allow you to focus on your studies without worrying about money. To make responsible and effective decisions about funding your education, you must fully understand the types of student loans, the application process, disbursement, and repayment procedures.

1. Types of student loans in India:

1. Based on courses:

• Higher secondary student loan
• Graduation and post-graduation student loan
• Loans for professional/certificate courses

2. Based on collateral security and/or guarantee:

• Secured student loans: A collateral or security is typically required to obtain this loan. The loan amount is usually quite high, and the security can be either movable assets (such as FDs or LIC Insurance) or immovable assets (such as non-agricultural land or a house).
• Unsecured student loans:

A loan that is offered without any security is known as an unsecured student loan. Typically, the loan tenure and loan amount are smaller compared to secured student loans.

2. Loan tenure

The timeline for processing and disbursing student loans varies according to the norms of the bank, NBFC, or the financial institution (lender). However, in most cases, the lender will notify you of its decisions within a few days to weeks after receiving your application, assuming it is complete in all respects. Loans for students are typically disbursed directly by the bank to the educational institution, either in full or in part, based on the institution’s fee schedule and the student’s requirements.

3. Interest Rates

Interest rates vary among banks, NBFCs, and financial institutions from which you choose a student loan. The interest rate depends on factors such as the loan tenure, CIBIL rating, repayment history, type of loan (secured or unsecured), and collateral offered.

 4. Eligibility criteria

Typically, all lenders will check the following criteria to approve a student loan:

• The applicant should be an Indian citizen
• The applicant should be between the ages of 18 and 35
• The applicant should have a good academic record
• The applicant should have secured admission or be seeking admission to a recognized university or institution
• The courses eligible for education loan are generally provided by the lenders

5. Documents required

The following documents are generally required by the lenders:

• Your mark sheets of 10th, 12th, graduation or any entrance exam given for the course
• KYC documents
• Admission Letter from an approved university/college
• Fee Structure of the course
• Co-applicant KYC and income proof documents

6. Repayment and Moratorium period

The student loan amount for higher education will be repaid to the lender through easy monthly installments (EMIs) over the course of the loan’s term. The loan can be paid back using the Electronic National Automated Clearing House (e-NACH) or post-dated checks (PDCs). Banks typically grant a moratorium period of six months to one year following successful course completion before you are expected to start repaying the student loan in India. NBFCs do not provide a moratorium period, and instead, the amount will be repaid by your parents or guardians so that you can focus on your studies.

7. Expenses covered

Traditionally, student loans in India cover the total tuition fee as well as some additional costs. Here are some broad categories typically covered by student loans in India:

• 100% of college tuition fees payable
• Accommodation charges
• Exam and library fees
• Books and equipment, including a computer
• Traveling expenses abroad
• Other reasonable expenses required to complete the course

The goal of Varthana student loans is to make education more affordable for you, regardless of the institution you decide to attend. Varthana is prepared to offer a customized student loan, whether you’re planning to attend a small or well-known institute in India. Access to education, chances for career advancement, and a higher earning potential are some advantages of the loan. Your successful career and your ability to pay back the loan on time are two possible returns on your investment. Apply now!