About Education Loan

Like the famous chicken or egg situation, most students/parents are often faced with a situation; as to what process needs to be tackled first – the admissions or the educational loan? Most banks require confirmed admissions before granting the approval letter for the education loan, whilst most universities prefer students with the assured funding.

Also, many colleges do not grant much time between the admissions and the fees payment, which often leaves very little time for loan application and processing and hence making you run around for funds last minute. Every student has aspiration to join a certain institute and course. However, many students just drop the idea of pursuing the course in a certain country or in a certain institute due to the uncertainty about available funds to pay for that higher education.

Advantages of Early Application

  • Increases the chances of getting admission to your dream university since there is fund assurance
  • Allows you to know your loan eligibility in advance
  • The preferred way to declare ‘Assured Funds to Universities/Colleges/Embassies
  • Assures no last minute surprises specially during Visa / fee payment time

Repayment Options

Like for all other loans, you have to pay interest on your education loan too. But unlike other loans, education loan provides the option of a moratorium period or a 'repayment holiday', which means, the borrower can suspend repayment of the loan till the education course for which the loan was taken is completed.

An education loan typically has three repayment options:

  • Education loan with repayment holiday. Many banks stipulate repayment within one year after completing the course or 6 months after getting a job, whichever is earlier.
  • Interest alone is paid during the period of course. After the course completion, you start paying the actual EMI (principal and interest).
  • You start repaying the loan through EMI immediately after loan disbursement, in which case you could get the loan at an interest rate lower by about 1 per cent.

The repayment conditions vary from bank to bank. So, talk with as many banks as possible to get the repayment option that suits your requirements.