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Quality education in India is arguably expensive. The cost of primary education is rising fast, but higher education never falls below the 1 lakh line, be it any course. The cost of most higher education courses is well above an average Indian’s salary. However, education is something that nobody wants to compromise with. This is the disparity student loans aim to remove.

Student loans can be tricky to choose and cumbersome to follow through. This article tries to answer the questions that students and parents might have and help simplify this process.

Student Loan

Personal Loan or Education Loan

The first confusion a borrower faces is whether to choose between a personal loan or a student loan.

  • Interest rate

In general, interest rates for student loans are lower than personal loans, hence easy on the borrower. Under certain conditions, small concessions to the interest rate may also be made in student loans. Such concessions are not available for personal loans.

  • Moratorium period

Moratorium period, or relaxation period, is the period of time provided to secure a job or settle down before being able to repay the loan. This can range from 6 months to 1 year and is available only in student loans.

  • Loan period

Student Loan periods can be as long as 15 years, which make manageable, lower EMIs. On the other hand, personal loans are rarely granted for more than 5 years and combined with the higher interest rate, EMIs become very high.

  • Tax exemptions

Another huge benefit of student loans is the availability of tax exemptions from the day of repayments for up to 8 years. No such tax benefits are applicable on personal loans.

Details

After researching the Best Student Loans and selecting one, there are some important points to remember before applying.

  • The student is considered the main borrower. A co-applicant is also necessary who can you parent, spouse or sibling.
  • The educational institution applied to must be recognized by the UGC or AICTE.
  • A third-party guarantor is mandatory to avail loan for the amounts between Rs. 4-7.5 lakh, while a guarantor is required for loans above Rs. 7.5 lakh
  • Repayments cycles begin after a moratorium period of 6 to 12 months and non-repayment affects the credit histories of both the student and the co-applicant.
  • Insurance is compulsory for completing a course abroad.

Some of the documents to be kept in handy before applying for the student loan:

  • Passport size photographs
  • Letter of admission and fee details from the educational institution
  • Pan card of the candidate
  • Proof of identity

Courses covered under the student loan scheme

  • Diploma, Degree, Graduation or Post-graduation courses from colleges affiliated under the UGC/ AICTE / IMC/ Govt. etc.
  • Pure Sciences, Fine Arts, Hotels and hospitality, Design, Architecture and other courses.
  • Vocational or technical training courses such as nursing, aviation, etc.

As very few banks and specific NBFCs provide student loans for skill-based professional courses, it is advised to weigh in all the factors before selecting one.

In conclusion, it is obvious how significant student loans are in launching students’ careers and helping them in achieving dreams that would otherwise be impossible. Thus, students should take advantage of these schemes and facilities, and focus on making their education and career as qualitative as possible.