New Delhi: Over the course of the last two decades, the cost of higher education has been surging at a rapid rate. The competition to get a seat in premier college has expanded not only to merit but also to the tuition fees of the universities and other top colleges. With the advancement in the educational aspirations of the children, almost all the parents are keeping aside a proportionate amount of money from their total earnings as per their respective capacities to save for the higher education of their kids.
Some of the most favourite investment options for parents are to build a sizeable corpus include Public Provident Fund (PPF), Sukanya Samriddhi Account (SSA), unit-linked insurance plans (ULIPs), mutual fund schemes, term deposits (TDs), recurring deposits (RDs), etc.
What is an education loan?
However, in some cases, the money accumulated by the parents is not well enough to meet the total educational expenses such as tuition fees, hostel fees, equipment fees, and other related expenses. In such cases, there is a strong requirement of a credit facility with which the requirement of additional money can be met.
Nowadays, a large section of people is looking to avail several credit facilities from top banks and other financial institutions in order to grab a seat for their kids. Educational loans are the tailor-made credit facility to serve the people who are looking to take credit for educational purposes.
Education loan types
There have been several categories of education loans which are designed to cater to the varied requirements of the aspirants. Some financial institutions are especially accustomed to offer education loan for vocational purposes, whereas some are full-service education loan providers which are open in providing credit facilities for all types of higher education, be it in India or abroad.
Education loans: Interest rates & expenses covered
The interest rates applicable to the repayment of the principal amount is mutually agreed between the borrowers and the lenders before sanctioning of the loan amount. Education loans typically cover all the tuition-related expenses along with the hostel/accommodation fees of the institutions. Some education loans also cover the equipment costs, travelling costs, registration fees and other administerial expenses.
Education loans: Application & conditions
A student can jointly apply for the education loan along with the legal parent or guardian. Banks and other lending institutions have fixed separate upper ceilings on the amount sanctioned in education loan for higher studies in India and abroad. There are several conditions for obtaining an education loan which varies from bank to bank including the time of disbursal of the loan amount, eligibility, colleges covered, courses covered, etc.