Most nationalised and private banks offer educational loan schemes. These loans vary on the amount loaned and other parameters depending on the specific requirement of every student. Education loans are offered to any Indian citizen willing to pursue college or research in India or abroad.
The loan amount is decided and sanctioned only when the admission to the course (for which the loan is being requested) has been secured. Though it is relatively easy to obtain an education loan, there are cases when students and their parents have been unable to obtain one and thus lose out on opportunities of further studies. This guide aims to help you out with the basics of an education loan:
Choosing a bank
Though the rates of interest and other aspects of a loan vary from case to case, every bank has a pre-defined education loan structure where they mention the various clauses under which they provide the education loan. You are suggested to collect brochures and do your research extensively before shortlisting the banks where you want to apply for the loan. Try talking to friends and relatives with previous experience of obtaining education loan. Another emerging idea is to talk to a career counsellor who can suggest banks for you. But there remains a high possibility he will suggest one from which he earns a commission.
Choosing the Guarantor
Whenever you apply for an education loan (or any loan to be specific) the bank will require you to have a personal guarantor (or two in some cases). The guarantor is someone who guarantees that you will be paying back the loan on time and failing to do which the guarantor will take care of the shortfall. Keep in mind that only individuals are regarded as guarantors by the bank. Try to convince a high posted government job holding relative or someone with financial security and abundance to be your guarantor. The bank will do a background check of the guarantor. So ensure that he or she has no financial blotches from the past.
Be very careful to read through each and every clause of the loan agreement before you go ahead and sign the documents. There might be clauses with hidden costs incurring to your loan repayment. Also ensure that the terms of repayment suits you as well as your guarantor before you finalize the deal. In case you have any query don’t hold back to ask them to clarify it in detail.
Whatever might be the bank you choose for obtaining the education loan, they will require you to produce supporting documents for each and every aspect. These include documents of your previous academic performances (like mark sheets and certificates), letter or document confirming your admission to the course, residential and identity proof (both yours and your guarantor’s) and other documents supporting the income of your family and guarantor (like Income Tax report, salary receipt, etc.). Also remember to carry any other document that you might think is relevant.
An educational loan is a very important step in your life and one that will ensure your success or failure in the future. A rogue educational loan agreement can play havoc with your future career opportunities. So be patient and choosy while going for an education loan.