Are you confused about how to get a student loan? Keep reading this blog till the end, and we promise to solve all your doubts about how to get a student loan. Due to the expensive cost of tuition and living in other countries, many students are hesitant to explore this opportunity. Student loans can be a great help. Keep in mind that loans are borrowings and must be refunded.
What is a student loan?
A student loan is a specific kind of loan intended to assist students in covering the costs of post-secondary education and related expenses, including tuition, books, and living costs. In comparison to other loan kinds, it could have a much cheaper interest rate and a delayed repayment plan. At the same time, the borrower is still enrolled in school.
Types of student loans
For different types of educational courses, there are different educational loans available. There are two main categories of Student loans:
- Domestic education loans are available for courses within the nation's borders. The lenders will sanction the loan if the student has a guaranteed seat at an institution that satisfies the lenders' standards after the applicant meets various qualifying conditions.
- Education Loans for Abroad Studies- For academic programmes beyond the nation's borders. Like domestic education loans, the borrower must have a guaranteed spot in a college or university on the list of approved educational institutions for the loan to be approved.
In addition, there are a few more categories on which the student loan debt may be further split. They consist of the following:
Based on the course of education:
- Graduate Student Loans: Students who wish to continue their studies at domestic schools would fit under the eligibility criteria to get a student loan. Students who want to pursue postgraduate degrees are expressly qualified for these loans. The students must have finished their undergraduate degree to qualify for this loan.
- Loans for Undergraduate Education: These loans help students with the costs of pursuing undergraduate degrees. An undergraduate curriculum can last three to five years, after which the students have many work prospects.
- Loans for Professional Education: Many NBFCs and financial institutions offered loans to students who wanted to pursue a profession in education.
Based on a guarantee or the security of collateral
- Loan against deposits: Education loans are available in exchange for gold, fixed or recurring deposits, and fixed deposits.
- Loan against property: Banks and NBFCs also provide student loans secured by moveable properties, including houses, apartments, farms, and other lands.
- Loan against securities: The borrower can avail of education loans against debentures/bonds/equity shares.
- Student Maintenance Loan
Where to get a student loan?
Most banks have a list of approved institutions and courses for which the loans may be used. If the programme and institution you are interested in are on the bank's list, you can apply for a student loan. These loans are intended to pay for tuition, housing, and other associated costs. The maximum loan amount that can be approved under the education loan programme is mostly unrestricted, but some banks have their restrictions.
- Payable to a college, school, or institution is the tuition
- University student accommodations
- Hostel and mess fees
- Exam, library, and laboratory fees
- The purchase of study materials, equipment, instruments, and uniforms
- Purchase a computer or laptop at an affordable rate, if necessary, to complete the course.
- Expenses for travel and transit to study abroad
- Fee for admission acceptance
- Any additional costs needed to finish the course, such as those for study abroad, projects, theses, etc.
Student eligibility criteria
Knowing whether you fit under the eligibility criteria to apply for a loan is essential. Each bank has its qualifying requirements for its student loans. The usual qualifying requirements for student loans from banks are as follows:
- The candidate must be a Citizen of the country from where the loan is to be taken
- Should have been accepted to courses with a focus on careers at reputable institutions
- You must be at least 18 years old or above
- Must have a good academic standing
Courses Eligible For Loans
- Under Graduation: Job-oriented professional or technical courses offered by reputed universities
- For Post-graduation: MCA, MBA, MS or equivalent diplomas
Providing security to the bank essentially gives up some investment. The bank has the right to liquidate these assets to recover the funds you owe them if you cannot repay the loan. Generally, you are not required to offer security for loans up to a certain amount (differs from bank to bank). The amount must have a sufficient third-party guarantee. It would be best if you offered 100% collateral security for higher loans in the form of real estate, bank fixed deposits etc.
- The student's parent(s) must voluntarily co-apply with the student.
- Co-applicants in the case of a married individual might be the spouse, parent(s), or parent(s)-in-law.
- A close relative or guardian will be considered a co-applicant if neither parent is still living.
- A citizen of the country should be the co-applicant.
The guarantor will be legally required to make payment in the event of your default. Having a guarantor makes the student or his parents morally obligated to repay the loan, which is why it is necessary. The parent's assurance may also serve as the guarantor. The bank may request a third party guarantee in lieu of security if the loan amount is higher. A student guarantee is required wherever a loan is approved in the parent's name.
Documents required to get a student loan
When seeking any loan, documentation is crucial. Lenders typically require the following documents:
- A letter of acceptance from the school
- Properly completed loan application
- Detailed course cost breakdown
- The applicant's academic record
- Evidence of age
- ID documents such as a passport, driving licence, citizenship evidence.
- Recently taken passport-size photos
- Proof of address
- Signature evidence
- Evidence of income
- Banking statements
Note: Since each bank has distinct requirements for documents, you should check with the bank first.
What makes student loans the best?
- High loan amount
- Longer loan tenure
- No or little additional costs
- More extended Moratorium period (A moratorium period is a time during a loan term when the borrower is not required to make any repayment. It is a waiting period before which repayment of EMIs resumes)
- Flexible choices for repayment
- Interest rate concessions
- The benefit of taxes (subjective)
- Insufficient or no collateral security
- Scholarship adjustment with the loan
- Additional benefits include health insurance and partial payment.
How to pay off student loan?
When you don't have enough money to pay for higher education, it is best to get a student loan. The difficulty arises when you have to pay back the borrowed sum plus interest. There is the chance of falling into debt. We have a blog catering to repaying student loans fast to help you out in the process. After repayment begins, a student loan is meant to be returned in 5-7 years. A maximum of two years of additional time may be given to the student to finish the course if they are unable to do so in the allotted period. You usually have up to 10 years to pay back the entire loan.
Repayment doesn't begin until the course has concluded. The repayment will begin immediately after one to six months from the date of employment if the student obtains work within a year of course completion (time varies from bank to bank). Regardless of your work situation, payback begins if you are unable to find employment within a full year after finishing the course.
How to get a student loan
Now that you know your eligibility criteria, let’s figure out how to get a student loan!
Step 1: Determine whether the bank recognises the course or institution you wish to enrol in. For this you can go to your desired bank, and derive information about the same.
Step 2: Calculate the amount of loan you'll require. Make a rough estimate of the loan amount you'll need, then talk to your family about how much they can afford.
Step 3: Research for various loan possibilities. Get all the information about the loan alternatives by doing an internet search, making calls to the banks of your choosing, or visiting them in person.
Step 4: Compare the choices to determine which is best. Before you choose to get a education loan, make sure you understand all the terms and conditions specified by the bank. Make sure you are very clear about the following:
- Which bank has the most affordable interest rates?
- How long will I be making loan payments?
- How long may I put off paying while I'm in school?
Step 5: Once all of your inquiries have been resolved, and you figured out how to get a student loan, apply and fulfil your dream of studying abroad!
To get a student loan is a difficult process. You must carry out your research, determine how much finance you require and how much you must arrange on your own, and determine whether the programme and university you want to attend are on the bank's list of approved institutions. We hope this blog has helped you figure out how to get a student loan, you’re now ready to fly off the nest!