12 things to know before going for an Education Loan – Mr Neeraj Saxena, CEO, Avanse Education Loans

Here is an interesting read on dos and donts for education loans.

An education loan is an attractive prospect for those aspiring to fulfil their dreams of pursuing higher studies. Though Education finance has been a stepping stone for many deserving students to accomplish their dreams over the years, some common doubts and ambiguities remain over process challenges, repayment, processing fees, course of choice and financing, and so on. Given below are 12 quick points that will help you understand education loans better. This will enable you make the best of this proposition and choose from the best available options in the market. 1. Before opting for an education loan, the first thing to do is to assess your current available funds. Funding through scholarships, for example, would reduce your upfront loan burden considerably.2. Check if the Institute that you have applied to has any association or affiliation with banks or NBFCs for education loans. This affiliation expedites loan processing. 3. Look up for information on your institution, its placement history, average remuneration for campus placements and earning potential after completion of your course.4. After you have decided on the actual amount of loan required, identify a Loan Provider who would not only meet your requirements in terms of the loan amount but also agree to fund your choice of programme. 5. Check the expenses covered within the loan amount i.e. whether the loan covers complete tuition fees and living expenses for the entire duration of the programme. 6. Are you eligible for an Education Loan? This is an important question that needs to be answered. The Eligibility Calculator will help you determine the approximate eligibility value. 7. Explore whether one’s parental income will suffice to meet the eligibility criteria or an additional co-borrower would be required. 8. Do you have sufficient collateral security like House, Flat, non agricultural land or Fixed Deposit, to support the loan? 9. Compare not only the rate of interest but also other benefits in terms of easy repayment options, flexibility to pay from abroad, online customer services etc. from your loan provider. 10. Obtain a checklist from the lender beforehand and prepare all the necessary papers and documents to ensure expedition of the process. Generally, documents required for any education loan are KYC, educational qualifications, proof of income (of parents) and collateral security document copies. 11. Decide the repayment option in consultation with your parents. That is, if you want to start EMI, or simple interest or want to go for moratorium. If you start simple interest payment or Monthly Instalments, it will reduce the burden once you graduate. It is advised not to go for moratorium unless required since it adds to the burden. 12. Know the terms of your loan – what is the interest rate, what is the repayment period, and when precisely will the payments begin.