Education loan is a type of loan provided for the expenses incurred by students for their education. The expenses incurred for education include books, tuition fees, accommodation, internet, and many other expenses. All of these expenses can be covered through an education loan. Financial organizations, banks, and NBFCs provide education loans to cover the expenses from primary education to higher education.
Financial organizations provide loans in two types, secured or unsecured. If you take a secured loan, you are required to keep some property collateral such as a house or car. In addition to this, if you take an unsecured loan, you are not required to provide any collateral details. Based on the profile of the loan recipient, all loan providers provide education loans at different interest rates.
Education loans is very helpful for students who want to pay their tuition fees to study in good educational institutions. This loan is given for both domestic and abroad locations for education expenses. After taking the loan, students can complete their studies without any worries. The repayment of the education loan starts after the completion of the course through EMI.
Types of Education Loans
Education loans based on course
This type of education loans is given based on the course such as graduation, post-graduation, higher education. The period of all these courses is 2 to 5 years. Education loans is deposited semester-wise directly into the institution’s bank account by banks and finance companies.
Education loans based on location
Location-based education loan is taken by those students who choose a domestic or abroad institution to complete their studies. As compared to domestic institutions, students have to spend more to complete their studies from international institutions, so these education loans are very helpful for their expenses such as books, tuition fees, accommodation, internet, etc.
Education loans based on collateral
Through collateral-based education loans, you can finance your studies in your preferred institution. To avail of this loan, you can use agricultural land, residential property, gold, and fixed deposits as collateral.
Education loan can be taken for graduation, post-graduation, b.ed, apart from this, you can also apply for education loan for professional courses like law, medical, engineering and MBA. The maximum age limit for applying for an education loan can be anything. The bank from which you take the loan, then you have to submit the course structure and fee structure of that college along with the loan application.
Some loan providers can cancel the education loan with their specific conditions. In this condition, even if you have given some loan money, your education loan can be cancelled. But in such cancellation by banks and finance companies, you do not get the full amount of the repayment deposited by you. Some amount is deducted as penalty by the finance companies. Different financial organisations have different penalties.
When a student wants to complete his studies from a good college, he takes a loan for that. The repayment rules for education loans are slightly different from other loans. In this, the student is given a loan to complete his studies. Repayment of an education loan can start after the completion of 3-4 years of the student’s course or from 6 months to one year after the completion of the course. This is done so that the student can complete his studies without any tension of loan repayment.
Both Unsecured and Secured loans are given by finance companies. In Unsecured loan, you get a loan up to 4 lakhs whereas in secured education loan, you get an amount of more than 4 lakhs, so you can get into more trouble if you do not repay the secured education loan as compared to Unsecured loan. If you do not repay the unsecured education loan, a legal notice will be sent to you from the finance company and you will be declared a defaulter, whereas if you have mortgaged any collateral to take a secured education loan, the bank will recover the loan amount by selling your asset.