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Loans are offered by almost all banks and student loan interest rates are relatively lower than other loans. These loans give all students the equal opportunity to get a good education, irrespective of their financial backgrounds.
Several students every year avail of a student loan to pursue education abroad. However, it has certain challenges and limitations that you must consider. So-
Why do students consider taking a loan to continue higher studies?
1. Attractive rates
Student education loan interests are usually low. Government student loans have an added advantage, which means, you will not have to pay back until you start earning a certain amount. You can also opt for private loans with benefits.
2. Tuition fees
When you plan to study a course in a reputed university, the first thing that you should look at is the course tuition fee. In recent years the costs have increased so much that you will likely need to take a loan. It takes off the burden and you can afford the course you wish to study.
3. Living expenses
Students are mostly relocating for studies these days and the cost of living is something one must consider. If you are planning to study in one of the prominent cities in the UK or the USA, you must remember that a loan is needed for your maintenance.
4. Peace of mind
One of the most important reasons to take a student loan is you can carry on your studies without any worries. The house rent, bills, etc. will be taken care of and a good student loan can also give you long-term finance so that you can focus on your studies.
5. Best investment
Education is believed to be the best investment for your future. Taking a student loan means you can study at a college or university of your choice and be what you want to be. You will not be deprived of the life and career you really want just because you cannot afford it at the moment. A flexible student loan brings you closer to your goals.
Student loan interest rates
- Each bank gives student loans at different rates.
- Most of these loans are federal loans and can range from 3.73% to 6.28% depending on the student’s level of study.
- Bank of Baroda charges 6.75% over a loan of 20 lakh for a tenure of seven years.
- You must remember that if you lend money with a shorter repayment time, you will probably get the lowest interest rate.
- Keep an eye on the discounts that a bank may offer if you fulfill certain criteria.
- Union Bank’s student loan interest rate is 6.8%.
- For international student loan interest rates, you can consider checking loan and finance companies like Ascent, College Ave, and others.
- To use a student loan interest rate calculator you have to know the loan amount, tenure, and interest rate.
- Take the annual interest rate on your loan and divide it by 365 to get the amount of interest on a daily basis.
Eligibility criteria for student loan
The process of getting a loan can be tedious. In the case of domestic loans-
- The student applying must be a resident of the country.
- He/she must have confirmed admission to a recognized educational institute.
- The age of the student must be between 18 to 35 years during loan application.
- Students pursuing full-time courses need to have a co-applicant.
Even though different banks may have their own set of requirements, some conditions remain the same for all courses. Here are a few things a student who is planning to study abroad requires for a loan-
- He/she must have a student VISA at the time of loan application.
- The student must also show that he/she is financially capable of repaying the loan.
For the application process-
- Select the bank and the loan scheme.
- After confirming, contact the bank to know which documents are required to avail of the loan.
- Once you submit all documents, the bank will go through the documents and grant your loan accordingly.
- The student is the main applicant for a student loan. He or she must show the course or degree being pursued to get the loan. While a parent, spouse, or sibling can be a co-applicant, the student alone is responsible for the repayment of the loan.
- The course you are planning to pursue and the university you will attend affect the loan you are eligible for. Banks will give you higher loans if they think your employment opportunity after completion of the course is more. Banks also give preference to popular and reputed colleges or universities.
- While most banks give loans to undergraduate, post-graduate, diploma students, some banks give loans for specialized courses too.
- Loans of a higher amount are given if you have a third-party guarantor. Most banks ask for this, in case the student is unable to repay the loan.
- When you opt for a student loan, you must check and compare the processing charges, late charges for EMI, and others.
- Under the Income Tax Act, you are eligible for deductions on interest after loan repayment.
- Not only students, professionals who are willing to pursue part-time courses to enhance their skills can also apply for education loans.
If you aspire to study abroad and are facing obstacles due to financial difficulties, a student loan can make your dream career a reality. If you need more guidance regarding your study abroad finances, don’t hesitate and get in touch with us now!
We hope you found this blog informative. Don’t forget to comment below and share your thoughts!
Liked this blog? Read: 9 student loan myths you should not fall for
- Can parents take student loans?
Parents can take on student loans to help finance their child’s education.
- What is the difference between fixed and variable rates?
Fixed or variable interest rate student loans can be availed and they are different. Fixed interest rates don’t change over your loan term, but variable interest rates may increase or decrease based on market conditions.
- What are the documents required to apply for an education loan?
To get education loans you will be required to submit some basic documents: address proof, ID card, application form, passport-size photographs, admission letter, income proof of guarantor, and collateral security documents.