Every student sees the dream of studying abroad. Due to the financial problems and shortage of money, now this dream will not be incomplete, for this the banks give an option of education loan to the eligible students. Given that the fees of foreign colleges are much higher than the domestic institutes, the banks give a considerably high amount of education loan to the prospective students. Learn more about education loan :-
College fees are increasing every year for studies abroad. If you talk about the undergraduate engineering course, the fees are 5-10 lakhs. For masters like MBA etc it could be anywhere between 7 to 20 lakhs. The fees for private colleges for five and half years of medical course are up to 25-40 lakh.
What is needed for education loan?
(1) Co-application for education loan is mandatory, whether it is a parent or someone else.
(2) Third party and guarantor will be required for Loans of 4 to 7.5 lakhs.
(3) For loans of more than 7.5 lakh, the bank will ask about collateral (security).
(4) The loan formation starts after 6 months of completion of the course.
(5) If the student remains abroad, the bank will take a loan repayment from the co-applicant.
Documents needed for education loan?
Before giving loan, the bank asks students to show identity cards, accommodation certificates (both of the students and of the person who guarantees the repayment of the loan), admission letter, outline of fees (expense statement), photographs and academic certificates. For loan, the student has to show the income certificate of co-applicant (guarantor) of his application, because the loan amount is fixed on the basis of his income.
Students studying abroad have to show the letters of the university’s department head, visa paper, travel paper and GMAT, GRE or SAT scores. Some banks also look at age and give loan to students 16 to 30 years old only.
How to apply for education loan?
You can fill online form for education loan and also apply offline by going to a bank. The documents along with the form will be required to be deposited in the bank. The bank will check applications and documents and decide whether you will be given a loan or not.
What expenses are covered?
The loan covers the cost of tuition, exam fees, lab fees, uniforms, libraries and hostel fees, arrival expenses, book and other essential equipments are also covered.
What is the condition of the loan?
Before sanctioning loan, the bank checks that the university in which the student is studying is a valid university or not. The bank also sees whether the student will get a job after doing the course or not. Apart from this, the credit history of the student is also checked. The bank also gathers full information about the property given as collateral in high loan amounts.
What is the interest rate?
The interest rate for education loan is 11.50 to 14.50 percent per annum. These interest rates depend on the loan amount. For good institutes, the bank also offers a discount of 25 basis points. Many private Banks give 25 basis points discounts to Female students also.
Relief in tax.
(1) If you have taken education loan, you can claim deduction under Section 80E of the Income Tax Act.
(2) Deduction of income tax will be done on the loan taken by the individual only.
(3) The same amount will be deducted which the individual is depositing as an interest. The deduction will not be available on the amount given as principal amounts.