Top 5 Benefits of Education Loan

Top 5 Benefits of Education Loan

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Top 5 benefits of education loan

In just the past two years, we have seen learning consortiums and coalitions taking shape, with diverse students seeking a way to transform their dream into a reality. But quality education may not be met due to the rising education inflation.

According to a report by the National Sample Survey Office (NSSO), the average cost of general education in private institutions increased by 175% while the same for technical and professional education rose by 96% between 2008 and 2014. These expenses include course fees, books, transportation and coaching, among other things.

If you are one of the aspirants looking forward to get into a dream college, chances are you’ll need to get into the specifics and understand your education loan needs. Fortunately, education loans are easily available to a large number of students who are facing a financial crunch.

According to a report by credit bureau CRIF HighMark, bank disbursement of education loans increased by 9.25% between the year 2017 to 2018. A carefully chosen education loan can become the best financial aid for higher education, it could be the solution whether you want to pursue a management course, engineering or any other diploma course.

But first, you need to get into the basics and understand it as quickly as you can so you can focus on what really matters – getting admission and excelling in your studies.

You can apply for education loan in a public sector or a private bank or even a non-banking financial company (NBFC). But before we tell you the benefits of education loan, keep a few things in mind to avoid financial complications in the future.

Things to remember while selecting an Education Loan:

  • Your academic record increases your chances of receiving the best interest rate on a loan. Loan approval is influenced by the chosen institute/course, the loan amount, and other factors.
  • You should always keep the documents ready. Personal documents such as proof of residence and the admission letter from the institution must be there in the first instance.
  • The turnaround time varies across lenders but it is typically required for pre-sanction inspection and verification of co-applicant, residence and educational institute. Make sure you have at least two months before you need the loan amount to be disbursed.
  • Lenders provide a multitude of loan options. Nevertheless, it’s important to compare the options.
  • Research each lender’s eligibility criteria and then apply for the option that works best for you in terms of costs, interest rate, tenure, etc.
  • When you apply for a loan, it is absolutely essential that you repay the monthly installments on time.

Also Read: Student Education Loan in India: Pros and Cons

 

What are the benefits or advantages of taking an education loan?

An education loan not only helps you pay for your higher education, but it also has a number of other advantages. Read further to know about the top 5 benefits of education loan.

1. Easy Availability

You, with the help of your parent, guardian, or a third-party guarantor, apply for education loans or student loans. The loan is easy to avail and your parents don’t have to liquidate valuable assets to cover education expenses. They can eventually preserve that money for long-term financial goals like buying land or a flat, your marriage, etc.

2. Expense Covered

The education loan not only covers the cost of the course but also pays nearly the entire cost of education. The education loan will cover the following expenses:

  • Tuition fees and hostel expenses
  • Exam, library, and lab fees if applicable
  • Any refundable fees paid to the institute
  • Cost of uniforms, books and other essentials
  • Travel expenses

3. Best Interest Rates

Interest rates play a significant role in determining whether or not to take out a loan. Education loan interest rates are generally lower in India as well, particularly from public sector banks.

4. Keeping Your Savings Safe

Taking out an education loan benefits your or your parents’ CIBIL score because timely repayment of EMIs builds the required score and allows you to easily obtain a loan in the future such as a home loan, car loan, and so on.

5. Self-reliance

The most beneficial aspect of an education loan is that it teaches you to be self-sufficient in your studies. The loan also has the added benefit of relieving the financial burden on your parents.

Eligibility Criteria

Every bank or NBFC has its own set of eligibility criteria for education loans, but here are a few that are common-

  • The applicant must be of Indian origin.
  • The applicant must have the documents confirming admission with them at the time of application.
  • The applicant should be between the ages of 16 and 35.

What are the documentation requirements for an education loan?

  • Two passport size photograph
  • Age proof
  • Identity proof
  • Residence proof
  • Bank account statement for past 6 months
  • Papers pertaining to the applicant’s eligibility for any scholarships, as well as an admission confirmation letter
  • Expense for the course
  • Mark sheet of test
  • Foreign exchange permit copy

Varthana education loans can be availed by either parents, students, or spouses to fund higher education in India. It covers the cost of studies and other expenses. However, before you even get approval for the amount, make sure you’re ready to pay it back every month, on time. It’s a good idea to try and ensure that you have at least a rough plan and strategy in place for repaying your loan. Apply now to get access to Varthana education loans benefits.

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