Education Loan FAQs Students Must Be Aware Of

We have so many dreams in our lives. Among them, most crucial is getting admission to our dream college or course. However, often, money becomes a roadblock when an education loan becomes a hurdle-breaker. But you still have questions in mind. This FAQ will solve all your queries.

What Is An Education Loan?

An education loan is the money that a person borrows from a bank or similar lending institution for the exclusive purpose of pursuing a course in a college or university.

Who Can Apply For An Educational Loan?

A student pursuing a technical or professional course and having an excellent academic record can apply for an education loan.

Is An Education Loan Available For Non-Technical Courses?

Yes, you can avail of an education loan to pursue your BA from specific lending organizations that fund such courses.

Can A Person Take More Than One Educational Loan?

There are no legal bindings to avail more than one education loan, but it is advisable to manage finances sensibly to reduce repayment defaults and debt accumulation. You can take the second loan as a top-up from the same lending organization, but adequate proof of steady repayment is necessary to avail a top-up loan.

Shall I Provide Any Documents For My Education Loan Application?

Yes, of course. However, document requirements immensely depend on the lending institution. However, the most common documents required are listed below:

• Marksheets and passing certificates of previous examinations.

• Entrance test results, if applicable. 

• Identity documents and passport details for abroad courses.

• Proof of admission or letter of acceptance from the educational institute. 

• A detailed list of expenses that are associated with the course, including boarding fees. 

When Does Repayment Start For An Education Loan?

The repayment period starts after the course completion. There is also a grace period after course completion, allowing the player to have a job before starting to pay off the loan. 

What Is The Moratorium Period?

The entire period during which the borrower can't pay any loan installments is known as the moratorium period. In an education loan, this period includes the course duration and a six-month to one-year grace period after course completion.

What Is The Grace Period?

The time post-course completion and pre-loan repayment is the grace period. It differs according to the bank that has disbursed the loan, but is generally between 6 months and a year.

Is Interest Calculation For An Education Loan Complicated?

Not at all. First, there will be a disbursement of your student loan at a specific interest. Now, during the moratorium period, the interest on the loan accumulates. After the moratorium period ends, the student has to pay equated monthly installments for the agreed-upon loan repayment duration. Interest calculation continues on the loan amount until your entire loan amount is repaid. Simple! Even then, if you have any confusion, contact your lending institute.

What Is The Maximum Repayment Duration For An Education Loan?

The loan has to be repaid after the moratorium period, but the entire duration of an education loan doesn't exceed 15 years. It implies that a borrower can have a maximum of fifteen years after completing the course with a grace period for repaying the loan.

Now, pursuing your education at your dream institute is a reality. An education loan has made it possible for you.