Completing higher education can be a dream come true, but with the increasing cost of higher education in India, affording it is sometimes difficult. Student loans are especially important in this situation. In this blog, we will go over all you need to know about how student loan work in India, including their features, eligibility, application process, government plans, and how to manage them successfully.
Rising Cost of Education in India
Over the years, the cost of education in India has increased strongly. Education prices for famous colleges can range from ₹20-30 lakhs for a single course, including engineering, medical, and management programs. In addition, expenses such as hostel fees, books, and other living expenses increase the financial load. Many families find it difficult to afford a quality education without outside support. This is where student loans can be beneficial for future learners.
What is a Student Loan?
A student loan is a financial product provided by banks and financial institutions to help students pay for their education. These loans cover a variety of costs, including tuition, living expenses, and certification fees. You can also check these top 10 urgent loan spps for students in India.
Types of Student Loans Available
- Domestic Student Loans: For studies within India.
- International Student Loans: For courses pursued abroad.
Whether you’re aiming for an MBA in India or a Master’s degree overseas, there’s likely a student loan that fits your needs.
Features of Student Loans in India
Student loans in India include a variety of features designed to make higher education easily available:
- Comprehensive Coverage: Includes tuition, books, travel, and living expenses.
- Flexible Loan Amounts: From ₹50,000 to over ₹50 lakhs, depending on the course and institution.
- Affordable Interest Rates: Typically range between 8-15%.
- Moratorium Period: Repayment starts 6-12 months after course completion.
- Tax Benefits: Interest paid is deductible under Section 80E of the Income Tax Act.
Eligibility Criteria for Student Loans in India
Understanding eligibility is crucial before applying for a student loan in India.
1. Age Requirements
Applicants must generally be aged 18-35 years.
2. Educational Qualifications
The student must have a valid admission offer from a famous institution.
3. Admission Criteria
Loans are often granted only for courses approved by UGC, AICTE, or similar bodies for domestic education.
4. Co-Applicant or Guarantor Requirements
A parent, guardian, or spouse is usually required as a co-applicant to secure the loan.
How to Apply for a Student Loan in India
Applying for a student loan is a simple process:
- Research Lenders: Compare interest rates and features of different banks.
- Prepare Documents: Keep ID proof, admission letters, and course cost details ready.
- Submit Application: Apply online or at the lender’s branch.
- Loan Approval: The Bank reviews and approves your loan after verification.
- Funds Approval: Approved funds are transferred directly to the institution.
Government Schemes for Students
The Indian government offers several schemes to ease the financial burden on students:
Central Scheme for Interest Subsidy (CSIS): Interest subsidy during the period of prohibition.
Padho Pardesh Scheme: Subsidy for overseas studies for minority communities.
Dr. Ambedkar Central Sector Scheme: Benefits for economically weaker sections.
Tips for Managing Student Loans
Managing your student loan effectively can save you from financial stress later:
- Borrow Only What You Need Please Avoid taking uncontrolled loans.
- If possible, start early repayment during the moratorium period to reduce interest costs.
- Maintain a disciplined financial balance to prioritize EMI payments.
- Focus on Utilize Tax Benefits and claim tax deductions under Section 80E.
FAQ for How Student Loan Work in India
1. What is the maximum amount I can get for a student loan?
Banks typically offer a maximum of ₹10-15 lakhs for local education and ₹50 lakhs for international courses.
2. Are student loans available for part-time courses?
Generally, student loans are offered for full-time courses. However, some moneylenders may provide loans for professional part-time courses if recognized.
3. What happens if the education loan is not paid?
Failure to repay can lead to legal actions, a damaged credit score, and challenges in availing of future loans.
4. Is it beneficial to take an education loan?
Yes, student loans make quality education accessible and offer tax benefits, but ensure you can manage repayment effectively.
5. How long does it take to pay off student loans on average?
Typically, student loans are repaid over 5-15 years, depending on the loan amount and repayment terms.
Conclusion
Student loans in India are an important financial tool that allows students to pursue their goals without limits on their finances. Students can focus on completing their educational goals and developing a bright future by learning how they work, researching government programs, and intelligently managing repayments.