Guidance on student loans for Indian students
Although students in India have a reputation for being hard workers, today’s students must also focus on other factors to achieve success. To be admitted to your ideal university without having to worry about your finances, you must be thoroughly knowledgeable about student loans. If you plan to pursue an education abroad, you can no longer afford to be oblivious to how they operate in India. It is always advisable to prepare by being aware of all education loan information to make an informed decision when the time comes.
Let’s go over every detail now so you won’t have to worry about how student loans in India work and you can at least visualize a path.
The eligibility requirements are the first and most important thing a student should be aware of regarding the student loan procedure. Not everyone is qualified for all loan programs. You can then make plans with your newfound understanding of the type of loan you require.
Here, we give you a comprehensive list of standards that almost all lenders will adhere to. They are as follows:
- In India, borrowers must be at least 18 years old to qualify for an education loan; if not, their parents will be required to cosign.
- The candidate must be a citizen of India.
- The candidate must possess a current Indian passport (for overseas education loans).
- The acceptance letter must be presented by the applicant to the accredited university. In the case of an international university, it must be included on the lender’s list of universities.
- Your application must be accepted if the course is on the banks’ list. You must review the list of eligible courses because banks do not lend for all courses.
- Additionally, banks will look at your academic history and the results of tests like the GRE, GMAT, IELTS, TOEFL, etc.
There will also be lender-specific criteria in addition to this general set of requirements. Therefore, you must carefully review them before choosing to work with a specific lender.
What is the Indian procedure for getting student loans?
While the application process for education loans varies from bank to bank in India, it largely stays the same. The steps in the procedure are as follows:
- Obtain a rough estimate of the amount of the education loan you wish to take, taking into account the tuition, living expenses, and any other unforeseen costs.
- Ask your lender if they are willing to lend you money for the college where you intend to enroll.
- Compare all of the lenders who are willing to lend you money for your education. Apply as soon as you can because, depending on the lenders, the entire process could take a week to a month.
- After completing these steps, begin by completing the application form.
- Make sure there are no discrepancies at this point by gathering all the documents.
- Once the loan has been approved, collect the loan documents.
- The loan amount will then be disbursed by the bank after you have finalized the loan agreement and signed it.
Important Considerations When Applying for an Education Loan in India
Repayment of a Loan: The terms for repaying student loans in India vary depending on the lender. For public sector banks, the loan repayment period ranges from 10 to 15 years. While it is typically 15-20 years for private banks, it is typically 10 years for NBFCs.
Choosing a Lender: How to quickly obtain an education loan is the next significant issue that may be troubling you. Now, this is where the lender’s function is needed. If all the paperwork is in order, you should be able to receive the loan within a fortnight from private banks and NBFCs. But if you select a PSB, it might take up to three weeks. However, PSBs provide loans with better repayment terms and lower APRs. Therefore, you must pick the lender who offers you the greatest advantages, which varies from borrower to borrower.
Loan Amount: Another query a borrower may have is, “How much student loan am I eligible for in India?” It is a personal decision that is entirely based on your needs, academic history, intended university, financial situation, and lender of choice. For instance, private banks and PSBs both readily lend up to INR 1.5 Cr, depending on your needs. However, there is no cap when it comes to NBFCs, and they focus more on need-based lending.
The moratorium period: also known as a repayment holiday, is the time following the conclusion of your course during which you are exempt from beginning the repayment. Following the completion of the course, PSBs and private banks grant a moratorium period of six months to one year, while NBFCs typically grant a moratorium of six months.
Interest rates: Comparing PSB interest rates to those of NBFCs and private banks, they are low. The highest interest rate is levied by NBFCs and can reach 15%; in PSBs, it typically ranges between 8.5% and 10%. The interest rate in private sector banks ranges from 11% to 12.5%.
A decade ago, getting a student loan for an overseas education was a big deal, but since the introduction of private banks and NBFCs, the borrowing process has become simple. You can now approach finance companies that operate in this field with ease, and they will assist you with everything from document collection to obtaining a forex card. By negotiating the terms of repayment and interest rates, they also assist students in obtaining loans at reasonable rates. So, if you intend to travel abroad, start looking for the procedure right away.