Should you take an education loan ?
While applying for education loan in India, followings things should be taken into consideration:
Understanding Education Loan
Education loan, as the name suggests, is a loan which is taken for higher studies. In this loan, you get a moratorium period, i.e, you do not have to pay the EMI till the time you are studying.
But, for that period the interest gets accrued which gets added up in the EMI, which you need to pay after you start earning. So, the loan amount will not be the same at the end of your degree. In fact, it would be more now, because of the interest amount being added up.
You should not take out a loan just for the sake of a degree. Because, a degree from any mediocre college does not guarantee a job.
So, if you are planning to take a loan then you should prefer choosing a good college which will provide you opportunities for financial freedom in future. You should do an extensive research of the college and their placement history, before getting the admissions. Also, research about the market value of the course which you are planning to opt for. Because, all these things will have a direct effect on the type of job which you will get.
Because, as the college placement will begin, you will have the pressure to get at least that minimum amount of salary which can be sufficient to pay the loan EMI. Also, if you are placed in a city different from your residence, then, you need to bear additional rental expenses as well. So, the salary becomes your need. These future consequences need to be borne in mind while taking the loan.
Bank Rules for Education Loan
If you take a loan of less than Rs 4 Lakhs, then no third-party guarantee or collateral is required to be provided to the bank. Now, in case you are not able to pay the EMI, due to any reason which may be – insufficient salary, or not getting a job etc, then the credit rating agencies like CIBIL / CRISIL, may put you in their blacklist.
If your loan amount is more than 4 lac & less than 7.5 lac, then you need to provide a third-party guarantee to the bank.
If your amount is more than 7.5 lac, then collateral security is required to be provided. But, here are some exceptions in which you may get a loan without collateral like if you are getting admission in IIT, IIM or any top college in abroad etc. which has very good placement record and you have got admission due to your bright academic record, then the bank may, under some conditions, waive off the collateral security.
When to Apply for Education Loan ?
You need to apply for a loan after you have taken admission in the college. When your loan gets passed by the bank, then the admission fees paid by you will be refunded and all the further fees like semester fees etc. will be paid by the bank on your behalf.
Where to Apply for Education Loan ?
Taking a loan is a very tedious procedure. So, to make it a bit easier, it is better to take a loan from a bank which is linked to your college.
Repayment of Education Loan
The repayment of loan starts when you get a placement after completing your degree. And, in case you do not get a job immediately, then you get 1 yr after you have completed your degree, to get a job and start repayment.
After analyzing the important points, we can say that taking an education loan depends on many factors like your academic history, your financial condition, the college ranking, the placement history and many more. Also, you need to keep the EMI repayment in mind. Only then the decision has to be taken. So, the decision varies from individual to individual.