HOW TO GET THE EDUCATION OR STUDENT LOAN

        HOW TO GET THE EDUCATION OR                               STUDENT LOAN

Student loans also known as Education loans or higher education loans are financial aids provided by the Private financial institutions, Banks and Government organization to help the needy but otherwise eligible students to attain higher education in reputed professional
institutes. It is designed to help students pay for college tuition, books, and living expenses. Unlike other financial aids like scholarships, grants and stipends, a student loan must be repaid by the recipient although with some ease than the other loans. Most of these loans are to be repaid after the completion of the course of education.

Broadly student loans can be classified into two main categories i.e. Government loans also known as federal loans (in USA) provided by Government banks or other government financial institutes and Private loans i.e loans provided by private institutions.

Usually Government loans are preferred by the Students largely because of lesser rate of interest. Besides these loans are highly subsidized by the Governments to encourage students for higher studies, More over these loans require the interest to be paid after completion of education and that too in easy to pay installment. Students or their parents may also consider obtaining an education loan from a private institution. But before going for this option you
should carefully check the reputation of the financial institutions and look for those institutions giving loans at competitive interest rates. A thorough research on all the terms and conditions regarding the payback etc should be done before going for such loans.

Most large public sector/nationalized banks like State Bank of India and private sector banks like ICICI and HDFC etc. offer educational loans for students to study in India and abroad with varying condition. Students can approach these back with some initial knowledge
about the various schemes and their pros and cons and strike the right deal for them.

Details of student education loan provided by State Bank of India (one of the largest Public Sector bank of India)

Purpose for which a student can apply for education loan are:-
1. Tuition and other fees

2. Maintenance costs, books & equipments, etc.

3. Cost of passage (for studies abroad)

4. Caution fund/building fund/refundable deposit.

Eligibility for apply Student education loan

1. Should be an India National.

2. Secured admission to professional/ technical courses through Entrance Test/ Selection process

3. Secured admission to foreign university/ Institution. Maximum amount of education loan:
Although educational loan is subject to the need of the individual repaying capacity of the parents/ students yet there are following margins and ceilings.

1. Studies in India - Maximum Rs.7.50 lacs

2. Studies Abroad - Maximum Rs.15 lacs
Margin :

• Upto Rs.4 lacs: No margin
• Above Rs.4 lacs

1. Studies in India: 5%

2. Studies Abroad: 15%

Student Loan rate of Interest

State bank of India apply lowest interest on the students loan provided by it. Amount of Student education loan Interest Rate

Loans upto Rs.4 lacs 12.00 %p.a.
Loans over Rs.4 lacs 13.00 % p.a

While interest is not required to be paid during moratorium period, payment of the same before start of repayment would entitle you to concession in interest rate applied during the 
repayment holiday Repayment of loan:

Repayment Holiday - Course period + 1 year or 6 months after getting job, whichever is earlier.
The loan to be repaid in 5-7 years after commencement of repayment Prepayments permitted without any penalty
Details of education loan provided by HDFC Bank (one of the leading Private Sector bank of India)
Purposes for which a student can apply for education loan are:-
HDFC gives loans to student partly meet their educational expenses / costs for pursuing specific higher educational courses at institutes approved by HDFC.

Eligibility to apply for student educational loan
1. Loans are given to students who are citizens of India. The student should have a consistently good academic record, and admission to an approved Educational Institute for pursuing a recognized course.
2. Students should have an earning parent / guardian as a co-applicant to the loan.
3. Applicant should be student of select leading national educational institutions.

Amount of education loan:

• HDFC provides Student Education Loan up to a maximum limit of 90% of the total cost of the course or Rs.2,00,000 whichever is minimum.
• This loan would generally cover expenses incurred towards the course fee, library charges, hostel and mess charges, cost of books and equipment.

Student education loan Rate of Interest

• HDFC bank applies a flat rate of 14% p.a on the student’s loan provided by it.

Repayment schedule of education loan

• The period of the loan is determined on the merits of each case but normally would not exceed 5 years. The repayment can also be accelerated on completion of the course, considering the earning capacity of the student.
• Once completed the education and joined a job it is the turn to repay your debts as early as possible. It cannot be considered sensible to take loans for a couple of years and keep on repaying it for next 10-15 years and it is very clear that one cannot escape the educational loan in any scenario.
•  Thus paying off the student loan as early as possible will be sensible so as to maintain your credibility and avoiding worries in future.

Consolidation of education loans -

•  refinancing of all present loans in full with a new loan taken at a low fixed interest for a new term - thereby extending the term of the loan from 10 to 30 years easy installments can be a smart move towards paying the debts in an easy manner. However, by extending the term of a loan the total amount of interest paid is increased but it can be compensated by making more than the minimum payment each month to cut the repayment period down and reduce the amount of interest paid.