Our young nation of ~580 million in the age bracket of 5-24 is buzzing with new ideas, new talent & millions of dreams, and you are one of them. Quality education will channelise this talent in the right direction, making you future-ready for emerging trends in the job market. And applying for an education loan in India will help you fulfil your academic aspiration easily. So, here we answer some basic questions about education loans for demystifying this concept.

1) What is an education loan, and how will it help you?

The rapidly increasing cost of education creates a big gap between quality education and your dreams. A study loan in India is specifically designed to bridge this gap by empowering you with the necessary finances, enabling you to get admission to that legendary university of your choice, whether in India or abroad. 

So, what is a student loan? 

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2) What costs does a student loan in India cover?

An education loan ideally covers all the major educational costs. At Avanse Financial Services, we offer a loan for students that covers the holistic cost of education, including tuition fees, travel expenses (airfare for study abroad students, too), accommodations costs, living expenses, cost of learning devices, study material expenses, and other education-related expenses. 

3) Who can apply and what are the eligibility criteria?

Any student with good academic scores can apply for an education loan in India with his parents or guardians as his co-borrowers.

The basic eligibility criteria:

• The student/applicant must be an Indian citizen.
• The student should be 18 years old or above.
• Should have secured admission to a university/institute
• Should be supported by a co-borrower who could be a parent, sibling, legal guardian or a relative.

4) Things you must consider before taking an education loan?

Now that we know what an education loan is, let’s understand the aspects you must research before applying for a student loan. 

• Moratorium period        
• Education loan rate of interest
• Eligibility criteria        
• Application process
• Costs covered 
• Disbursal time

5) What is margin money?

Margin money is a certain amount that you are expected to pay while the financial lender you have applied for the loan from pays the remaining amount. With Avanse Financial Services, you do not have to worry about margin money because we offer 100% finance.

6) What is a student loan collateral?

Collateral is any form of security that you offer to your lender as a guarantee against the loan.

Some types of collateral security:

• Residential property
• Fixed deposit 
• Life insurance 
• Non-agricultural land

7) What is a secured and unsecured loan?

The education loan that requires you to offer collateral is a secured loan. With a secured loan, you can enjoy benefits like quick sanctions and/or a higher loan amount. For unsecured loans, you need not offer any collateral to your financer. 

8) Do’s and don’ts of Education loans

Do’s:

• Ensure that your co-borrower has a healthy credit score to apply for an education loan.
• Apply for a loan amount that suits your repayment capacity.

Don’ts:

• Don’t only compare the rate of interest of the financial institution but also consider the overall benefits.
• Do not apply for a loan with multiple financers because each time your credit score is checked by the lenders, the score reduces.

9) What is the education loan rate of interest and the factors that will affect it?

Depending on the lender, the interest rates will vary. Also, aspects like the co-borrower’s credit history, consistency of your academic scores, study abroad destination, course, the pedigree of your university/institute and other parameters will be considered while computing the final interest rate. However, the education loan rate of interest should not be the only factor in selecting the lender. It is crucial to consider factors like customised financial solutions, customer service, customer ratings and turnaround time to sanction an education loan.

So, these are the answers to some of the most common questions, such as what is education loan, eligibility criteria and costs covered. Should you have more queries, we at Avanse Financial Services will be more than happy to answer them all. We are just a call away!