Every student has thought of studying and living abroad at some point in their lives, but this desire completely takes a backseat when you think about the enormous burden of expenses or insufficient funds. But, with easy availability and the accelerated process of education loans, this is no longer a far-fetched reality. Read and skim through the entire blog to unlock the education loan eligibility criteria, documents required, and best ways to choose the best education loan that lies in your interest.
What is an education loan?
An education loan is a great financial aid designed to help and assist aspiring students facing hurdles like being unable to pay for tuition, books, living expenses, travel, student housing, exam fee etc. Unlike other financial aids like scholarships or apprenticeships, education loans are supposed to be paid back after a certain period. Compared to all the other loans in the market, these are much with much interest rates and have a long tenure for repayment. Still confused with all the jargon of “interest” and “tenure” Check out our blog on how to get a student loan and then come back to read this!
Types of student loan
There are many types of student loans and possibilities of fulfilling your study abroad dreams. Here is a breakdown of the different types of student loans you can get from your bank or lender.
Based on your level of education
- Undergraduate loans: As self explanatory this can be, undergraduate loans are usually given to recipients who are going to pursue their bachelors degree.
- Postgraduate loans: If you are looking to pursue your higher education and are having some difficulty in raising adequate funds, taking a postgraduate loan is the best route for you. To be eligible for this loan you would have to hold a bachelor's degree from a recognized university.
- Career Development loans: This loan is lent to professionals who are at the peak of their career and want to upscale their skills and expertise. If you are making a career jump by doing an MBA or a PhD programme, then such loans can be a gateway to your dream programmes.
Based on your study location
- Domestic study loans: Applying for an education loan is not only done for international studies, but also for domestic purposes as well.
- International study loans: Studies who aspire to study abroad can apply for this type of loan. Educational loans abroad can be pretty expensive as compared to domestic study loans.
Education loan Eligibility
It is important for students to understand the eligibility guidelines and qualify the same, to be able to apply to their preferred money lending institution/bank for their Education Loan. The eligibility criteria vary for different banks. However, some common factors that are taken into account by all money lending institutions (banks) include:
- The loan applicant must hold a citizenship of the country.
- If the loan applicant is under 18, then his or her parents must apply for the loan on their behalf.
- The applicant must have a strong academic record.
- The applicant must have received admission to a reputable overseas college, university, or institution.
- The applicant's chosen course must be technical or professional since banks favour programmes that prepare students for employment.
- A graduate, postgraduate, or post-graduate credential must be the aspirant's goal.
- A strong academic record enables quicker loan approval.
- Full-time students must have a co-applicant, who may be either a parent, a guardian, a spouse, or a parent-in-law (in case of married candidates). The co-applicant needs a steady source of income.
Documents required for education loan
Before processing your loan application, the bank will require you to provide and testify a few documents that will help to smoothen the process of taking an education loan. Most of the lenders and banks require the following documents but, always cross check with your bank for any additional document requirements, because all banks function and process education loans differently
- A well completed loan application filled with all details
- Any official government ID or proof like a passport, driving license, etc. (Usually asked for age identification)
- An address proof
- A very well detailed breakdown of the cost that you want the bank/lender to cover
- Income Proof (if applicable)
- A valid passport
- All your academic transcripts and certificates
- If you have appeared for any exam like GMAT, GRE, TOEFL, or IELTS. You will have to show the proof
- Acceptance letter from the university you have applied for your course.
- Recent passport sized pictures
- Your previous bank statements
Did you get all your documents in place? Well done! Let’s also understand how a typical education loan process works.
How to choose the best student loans?
With so many lenders and attractive interest rates around, the difficulty of getting the best deal out of a loan is perpetually high. Many people wrong choose student loan plans, that feel like an extra weight on your shoulders. To avoid this, we are sharing some of our tips and insights that will help you selecting the best student loans in your interest
- Check the tenure of your educational loan. Choose a loan that allows a longer tenure to have a less burden of paying higher EMI’s every month
- Check the moratorium period's duration. A moratorium period is a time period during which you are not required to repay the loan to the bank. Student loans often begin repayment a year or two after you complete your studies.
- Choose a lower interest rate loan, as this will save you a lot of money and get you the best deal in the market.
Now that you are well informed about the entire process of an education loan eligibility, documents, process, and factors you should consider while looking for one! The only thing left to do is apply. We understand the anxiety and second thoughts that might be racing through your mind. One of the most prominent is how you would repay this massive debt. For that, you can check out our blog on 5 tips to repay your student loan early , which will help you develop a complete action plan. Team amber wishes you Happy Studying!