It's the time of the year when many students await the results and process of their admission in a desired university. In recent years, many students are interested in pursuing their higher education abroad.
With an increase in the cost of higher education and rupee volatility, pursuing a desired vocation at a reputed university is difficult. Education loan can help students and parents who cannot fund the amount completely.
When is the right time to apply for education loan?
In India, students can only apply for education loan once they receive their offer letter or admission letter from the university. Banks will process the loan only if the student is having admission letter from the university.
In the mean time, when applying for a particular university, students should be well versed with the bank's education loan process and should keep ready all the documents required. The process of disbursing education loan will take time so one should be prepared as they will have less time from the university.
Difficulty is when some universities abroad asks for proof of finance during admission, as many banks in India disburse the amount only after the confirmation of the admission.
Only, Credila from HDFC allows students to apply for education loan before receiving admission letter.
What are the documents required?
For abroad studies if the amount you are looking is higher, be ready with proof of admission, collateral security, KYC, Income Proof, Mark Sheets, schedule of expenses.
Experts suggest that it is better to avail loan from the reputed banks which are recognized by the embassy.
Interest rates varies from 12-16 per cent depending on the banks and your credit score. Interest rates on education loans for girl students is cheaper. Also there are many private institutions which specially provides education loan.
How to choose the bank?
Choose the bank based on the process which should be hassle free. Repayment option, and interest rates should also be the main criteria for choosing the bank.
Students studying abroad should consider various aspects such as tuition fee, hostel fee, travel expenses, etc before applying for the loan amount.
Usually, banks disburse the loan amount to university directly and other requirements will be sent to your account on regular basis.
Tax Benefits on education loan
Tax benefits under section 80 (E) of Income Tax Act 1961 are available. Note that they only cover the interest component of the loan.