For many underprivileged students in India, the cost of higher education can be a significant financial burden. With the rising costs of tuition, textbooks, and other expenses, it’s no surprise that many students are turning to student loans to help finance their education. However, despite the benefits of student loans, there are still many misconceptions and concerns about taking on debt to pay for college.
In this blog post, we explore the topic of student loans and why they can be a smart investment in your education and career. We’ll take a closer look at the benefits of student loans, including the ability to access higher education and improve your earning potential, as well as the different types of loans available and how to choose the right one for your needs. Here is how you can apply for Varthana Student Loan
Recent data shows that the demand for student loans in India has been steadily increasing, with a report from the Reserve Bank of India, dated March 25, 2022, showing that the outstanding education loans of all banks were Rs 82,723 crore as of March 25, 2022.
This was a significant increase from the previous year, when the outstanding amount was Rs 78,823 crore as of March 2021. This indicates that more and more students are recognizing the value of investing in their education and using loans to help finance their academic pursuits.
Hence, student loans can be a smart investment in your education and career, if you use them wisely and responsibly. This article is to help students like you and your families make informed decisions about your education and financial future.
The types of student loans India provides
- Undergraduate student loans
- Graduate student loans
- Career student loans
- Loans for Parents
- Loans for Upskilling, reskilling, vocational courses and executive programs
Undergraduate Student Loans
These loans are available if you have already completed secondary education and want to pursue a three-to-four year course to improve your job prospects.
Graduate Student Loans
Avail this type of loan if you want to pursue advanced degrees or higher education at colleges and universities across India.
Career Student Loans
If you want to attend undergraduate career-oriented programs at technical and trade schools and colleges across the country, you can avail this type of loan.
Read: What Credit Score Do I Need for a Student Loan?
Loans for Parents
This type of loan is available for your parents to help you cover education expenses such as tuition fees, living expenses, books, uniforms, and other related costs. Adult relatives who want to enroll their children in secondary schools, military elementary schools, private, or non-public schools across the country can also avail this loan.
Loans for Upskilling, reskilling, vocational courses and executive programs
In the wake of the pandemic, the importance of upskilling and reskilling programs has increased. These courses can give you the perfect head start in your career and take it to great heights. You can take this type of loan to fulfill your academic aspirations.
Why take student loans?
For most Indian parents, funding their children’s education is a top priority. Options for financing higher education include using family savings, borrowing from friends and relatives, selling assets, or taking out a student loan. Previously, it was believed that only students from the middle-income group used student loans to support their education. However, with the benefits of student loans becoming more apparent and specialists offering doorstep services, many unprivileged families are now choosing student loans and taking advantage of specific benefits, such as
- Getting the opportunity to take financial responsibilities
- Preserving family savings
- Building a good credit history
- Accessing the best repayment options
- Covering a wide range of expenses
- Having no loan burden
- Pursuing dream courses in the college or university of your choice
Hence, student loans have clear advantages over not opting for one.
Also Read: 7 advantages of taking a loan for higher education
Who should opt for a student loan and why?
Student loans are available to all students, as quality education is important for everyone. You can apply for student loans with the help of your parents or guardians as co-applicants.
Benefits of student loans
- Accessible to all: Student loans are available to any student, including those from underprivileged backgrounds.
- Applicable to various courses: Student loans cover a wide range of courses, including graduation, post-graduation, certificate courses, and vocational courses in India.
- Easy to obtain: Student loans are readily available and are considered a priority product by all banks as per RBI’s guidelines.
- Flexible loan amounts: The loan amount can vary from Rs. 40,000 to Rs.10 lakh depending on the course, college, and financial institution.
- Facilitates education completion: With the rising cost of education, student loans are necessary to avoid academic setbacks.
- Additional benefits: Student loans cover expenses such as library fees, laboratory fees, tuition, examination costs, hostel fees, money for books, instruments, uniform, and travel expenses.
- Convenient repayment options: Student loans offer easy repayment options, making them a great advantage for you. If you are still wondering how to get a student loan after 12th, you can find more information on Education Loan in India here.
Conditions to apply for student loans in India
To apply for a student loan, certain basic requirements must be met. The conditions are as follows:
- The rate of interest depends on various factors, such as the loan amount, type of loan, loan tenure, the student/co-borrower’s future income, loan repayment history, and more.
- A co-applicant, who can be either a parent or a guardian, is required.
- The maximum loan amount that can be availed is determined based on the course, type of loan, eligibility criteria, creditworthiness, and loan repayment history.
- The loan payment tenure is determined by the loan amount, course duration, EMI amount, and other factors.
- The co-borrower, who is the student’s parent or guardian, must provide the necessary KYC and income-proof documents to obtain the student loan.
- The loan amount is repaid to the lender in monthly installments over the loan term, either through the Electronic National Automated Clearing House (e-NACH) or Post-Dated Cheques (PDCs).
- If the loan is not repaid, the co-borrower’s credit history will be affected.
Important tips before applying for student loan
Know how you have the ability to access higher education and improve your earning potential before you apply for student loan in India:
- These loans enable students to pursue higher education that may otherwise be unaffordable for them, especially for those from low-income backgrounds.
- Higher education provides opportunities for better employment, career advancement, network building, and skill development.
Note: In a review of the literature going back 60 years, the lead article in the latest Global Education Monitoring Report found that each additional year of schooling raises earnings by about 10% on average.
- Higher education also leads to higher earning potential, as studies show that college graduates earn more than those with only a high school diploma.
Note: On average across OECD countries, young adults (25-34 year-olds) with tertiary education earn nearly 40% more than their peers with upper secondary education.
- Higher education also has social and environmental benefits, such as poverty reduction, good citizenship, health improvement, and climate awareness.
If you’re seeking financial support from any bank or NBFC, you need to demonstrate that you or your guardian have the financial means to repay the loan on time. This applies to both independent students and those who rely on a guardian for financial support. It’s not necessary for applicants to have a professional job to provide the required financial proof; individuals who are self-employed or work in the business sector can also apply for Varthana education loans. The goal is for the bank or non-bank financial institution to have confidence in your ability to repay the loan.
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