Education loans have made the pursuit of academic courses easier, without burdening parent or guardians with liabilities, that we should be bearing.
But before going with the procedure one must be clear about the Eligibility Criteria for getting an education loan in India:
- The student should be an Indian National.
- Age of the Student – 18 to 35 years
- Confirmed admission in a college/university in India by the UGC/Government/AICTE/Appropriate Authority
- Scored minimum 60% (50% for SC/STs) in the examination for admission to graduation courses.
And the Coverage of an education loan mostly includes:
- College and Hostel fee (incl. examination, laboratory, library fee)
- Purchase of books, instruments, laptop.
- Travel expenses for abroad
- Any other education-related expense required to complete the course – like study tours, project work, thesis, etc
Now the application process may vary from bank to bank but there are some fundamental steps to get one:
Step 1: Fill in the loan application form
Like in case of every loan, the applicant has to fill in an application form which may ask for details such as contact details, details relating to academics etc. it is important to fill in accurate information.
Step 2: Personal Discussion
Once the applicant, i.e. the student fills in the form, there is a round of personal discussion wherein he/she may be asked various question relating to the academic performance, the course one has selected, probably the institute etc. At this stage, it is very important to be lucid and clear about one’s selection of course and its future potential of generating income. While some banks are known to hold the academic record important, some may give it a slightly lesser attention. This does not go to say that one needs an excellent academic record. But, make sure that there are answers to those mishaps that could have occurred during the academic life.
Step 3: Provide validated supporting documents
Unlike other loans where the talk of documents relating to say property, might come in at a later stage and may cause delay-documents are a must. In case of education loans, documents relating to admissions are mandatory even before the bank considers the loan application. The bank will verify the enrollment of the student from the concerned institute. One may also require collateral security such as papers relating to property to be mortgaged if the loan amount is above Rs. 4 lakhs.
Step 4: Stage of loan approval or denial
For an education loan, a guarantor is mandatory. The guarantor could be an applicant’s parents or guardians. The bank will run a thorough check of the guarantor and his/her credit history before sanctioning the loan. After completion of the process, the loan may be sanctioned or denied.
Step 5: Borrower’s signature on a Promissory Note
While the parents/guardians are guarantors, the student is the actual borrower of the loan. Once the loan is sanctioned, the student has to sign a promissory note to the bank.
Step 6: Disbursal of the loan
Once the formalities are completed (additional documents and signed post-dated cheques may be required), the bank will disburse the loan. The bank may disburse the college/institute fee directly to the concerned institute.
In the current times, availing an education loan has been made even easier. Now, one can apply for an education loan online. The loan will be sanctioned only in principal and the applicant will have to contact the bank for actual approval and disbursement of the education loan.
Hope this help!
– By Sudarshan Gupta