Education Loan Primers
Some ways of funding education without a loan      
Grants and scholarships from charitable institutions: Trusts and charitable institutions funded by corporates, religious organisations etc offer scholarships and grants to exceptional students in select areas of education and research, or because they belong to a certain religion.
 
Special education loan packages from banks      
Many banks have special education loan schemes for meritorious and needy students. Some banks have tie-ups with educational institutes to offer comprehensive student loan packages to save students the procedural hassles in getting the loan sanctioned.
 
Education loans and tax benefits      
Tax benefits are not available in respect of interest paid on a loan taken for any course. The course has to be for full-time studies (no part-time courses covered) for any graduate or post graduate course in engineering, medicine, management, or for post graduate course in applied sciences or pure sciences including mathematics and statistics.
 
Disbursement and repayment      
The fee for all years is normally disbursed to the college/institute directly by the bank. While applying for a loan, the bank will verify the tenure of the course and determine its total cost as applicable at that point of time. Every year, you are required to submit a form to the bank which gives the details of the money required, after which the bank directly disburses the loan to the college/ institute.
 
Interest rates, processing charges and margins of education loans      
The interest rate is one of the most important deciding factors when students approach a bank for an education loan. The interest rate also determines the overall cost of your student loan.
 
Documents you need to submit      
Different banks have different document requirements for granting education loans. But here are some of the documents you will typically have to submit along with your loan application:
 
Before you apply: Does your course qualify for a loan?      
Are you eligible for an education loan? How much loan can you get? What expenses does the loan cover? Do you have to provide collateral for the loan? Here are some important things you need to know before you apply for a loan.
 
Do I have to provide guarantors or collateral      
You need to have a guarantor for the education loan to be sanctioned. If you fail or are incapable of repaying the student loan, the guarantor will have to clear the debt. Usually, most banks require the guarantor to have a net worth and/ or annual income equivalent or more than the education loan amount.
 
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