29 Jul 2012

How to get education loan for MBA and other courses?

How to get education loan for MBA and other courses?

Cost of higher education such as MBA may not be affordable for everyone. In such situation people tend to think about the Education Loans.
Just to bring clarity on this topic I am posting the detailed procedure for availing an education loan.

Pre-requisites for education loans: Documents Required
· You need to have a valid admission letter from an institution. This means you should have already been selected in the institution.
· Also get the complete expense details of the course you are pursuing. Before approaching bank find out the total cost of education including tuition fee, hostel fee, books cost etc.
· Mark sheet of last qualifying exam.
· Two of your photographs.
· You should also have sufficient money to pay a part of the total education cost. (around 20% of total education you need to bear, rest all would be paid by bank)

Note: The documents for availing the education loan may vary from bank to bank and the list of the required document can be seen in the education loan application form,

Eligibility to get education loan
All graduation, post-graduation and professional courses are eligible for an education loan. Also the courses that offer a degree or diploma can avail education loans.
These courses could be from foreign universities or institutes approved by the state and central government.

Various Education expenses covered under education loan.
Education loan doesn’t cover only the Tuition fee but various other expenses too which are incurred in the course of your education. Some of such expenses are:
· Tuition Fee
· Hostel Fee
· Cost of books needed during the course
· Cost of computer/laptop if it is mandatory for the course.
· Cost of flying, if the course is in abroad.etc 
In general
Education Loan Amount=Tuition Fee+ Hostel fee + Books Cost+ Equipment cost+ Flight Charges + etc

Security for your loan
This depends on your Loan amount, if your loan amount is less than Rs.4,00,000/- you don’t need to provide a security.
If the loan amount is more then you need to provide security for availing the education loan.
Security means surrendering some form of assets or investment to the bank for availing the loan. Some form of investments and assets that are accepted as security deposit by banks are:
· Government securities,
· Shares ,
· Bank deposits,
· National Saving Certificates
· House property
· Land Property
· Shop etc
In case you are not able to pay back the education loan, the bank will have rights to sell these assets so as to recover the loan amount from you.

Guarantor for your loan
In cases when loan amount is not too big , but still higher than 4,00,000/- then the bank may ask for a third party to act as a guarantor for your loan instead of asking for security deposit.
In case you are not able to pay the loan, the guarantor of your loan will be legally bound to pay the loan.

Repayment of Loan
Until you are pursuing the course for which you have availed the education loan you don’t need to worry about its repayment. The repayment of your loan may start at :
· -some banks ask for repayment to start after 6 months of completion of course
· -while some other banks ask for repayment to start after a year of completion of course
· -there is also option to start the repayment once you have secured a job. (but this doesn’t mean that you can delay repayment of loan infinitely, after a certain period of time you are obliged to start the repayment of your loan irrespective of the fact whether you have secured a job or not)

Repayment Installments
In most of the cases 10 years would be maximum tenure in which you need to pay back the loan after completion of the course.
Perhaps the number of years for repayment of loan also depends on the amount of loan.
If your loan amount is say around Rs.4,00,000/- then probably you may get 5-7 years only for repayment of the loan.
If the loan amount is larger then you may get 10 years for repayment of the loan.

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