Are you considering a student loan to fund the cost of your higher education in India or abroad? If yes, you need to research the banks offering education loans and the associated terms and conditions. You will also need to check your eligibility, collect certain essential documents and apply well in time to ensure the timely processing of your application. Read on to know about the steps that you need to take before applying for an education loan.
- Do Adequate Research
The first step for a student loan is calculating how much you need. This is possible by doing adequate research to find out the fee details of the course that you wish to pursue plus an estimate of other expenses like travel, living expenses and the cost of books, and other essential items. This will give you a good idea about the total cost that you are going to incur when going out of the state or country for your education. Follow this up with research about which lenders offer loans for the courses and institutions that you wish to study. Once you have clarity about the amount you need and the banks that offer education loans, you can go to the next step.
- Check the Eligibility Norms
The next step is to check the eligibility norms set out by different lenders. This includes norms related to your age, the course that you wish to pursue, the institution or university where you are seeking or have gotten admission, and the need to have a co-applicant or consignor. You can use a student loan calculator to find out the EMI for a specific loan amount and duration.
- Collect the Necessary Documents
The education loan process involves the submission of several documents proving your personal and other details besides confirming that you have got admission into a specific course and university. Some banks also require you to submit the mark sheets of your class 10th and 12th results besides the salary slips and the income tax returns of the co-applicants.
- Check the Processing Time and Plan the Timing of your Application
The processing time for a student loan application varies between two weeks to two months. So plan your application accordingly. The processing time depends on the loan amount applied for and the need for collateral or margin requirements. In the case of high loan amounts, lenders require a margin that has to be paid before the disbursement of the loan amount. Awareness about this will help you arrange the necessary funds and then proceed with applying.
- Enquire About the Repayment Cycle and Other Terms
The repayment of most student loans generally starts once the course is finished with some lenders giving a grace period of another six months for the student to find a job and start earning. However, it is advisable to pay the interest component from the beginning. This helps prevent the compounding of the interest and accumulation of the debt amount. Also check about the processing, pre-payment charges, and penalties for delay in payment of EMIs. The education loan interest rate will depend on the course and the institution where you are going to study besides your co-applicant’s credit score and income.
Now that you are aware of the eligibility norms, the terms and conditions associated with the loan, the repayment schedule, and the documents required, you can go ahead with the application process. Fill out the education loan form carefully to avoid any mistakes and submit all the documents to avoid any kind of delays or rejections. The lender will get back to you in case it needs any further information or clarification about your application.