One of the most vital questions that you may wonder about is the amount of the educational loan. In general, you can get up to 4 lakhs of educational loan for higher studies without any collateral.
Under education loan scheme, you can get a maximum of 15 lakhs for studies in India and more 25 lakhs for abroad studies.
When you take education loan up to 4 lakhs, only the student and the parent have to sign the document and no collateral are necessary. However, if your loan amount is between 4 lakhs and 7.5 lakhs, you will have to provide third party guarantee to the bank. If the loan is above 7.5 lakhs, you will have to furnish the bank with collateral documents. These are documents of any securities like NSC which the bank can sell to recover the amount if you fail to pay.
How to apply for an educational loan for higher studies?
In order to apply for an educational loan, you will have to prepare a number of documents beforehand. The process goes as follows:
Once you have determined to study at an institution and completed the process of admission, then you will have to concentrate on taking out an educational loan. Here are the documents which you should keep ready:
You will have to provide a proof of admission to the selected recognized institution.
Proof of your consistently high academic performance along with the last mark sheet will need to be produced. The cut-off marks generally differ from general students to reserved students.
You need to produce a schedule of fees.
Depending on the amount that you are applying for, you will need to produce income statement, statement of assets and liabilities etc.
If you are going to study abroad, you need to produce your passport with a valid visa also.
Your education loan will cover a number of things in addition to your tuition fees. These include hostel fees, exam fees, library fees, purchasing books, travel and other expenses for educational projects.
After all the documents have been submitted and verified, you will have to appear for an interview. It is best to know as much as possible about the course and the institutions that you have chosen.
It takes around 15 days for an educational loan to be sanctioned.
Once it has been sanctioned, you will get a promissory note which you will have to sign.
In most cases, banks pay the institution directly and or to you.
You should check the repayment clause. In most cases, repayment starts six months after the end of the course or as soon as you get a job – whichever comes earlier.
Interest rates on educational loans depend on a number of factors. In general, they vary between 10% and 15% rates of interest.
You can claim tax deduction on the interest of the education loan. However, no deduction can be claimed on the principal.