While the pandemic and
subsequent lockdowns have caused financing options to lose popularity in 2020, study loan remain an exception. According to a CRIF
High Mark report, financial institutions saw a record high demand and disbursal
of Rs.11,000 crore student loans in 12 months, with 3 lakh new applicants
between March and October last year.
Education is the one area
that many people, especially Indians, are willing to spend on. Earning a good
education is seen as one of the chief aspirations of millions, if not a
billion, Indians and it is the one investment that an overwhelming majority of
Indian families will agree on! However, a quality education, whether in India
or overseas, can also be quite expensive and an education loan is one way of
managing the cost.
The growing popularity of
student loans can mainly be attributed to individuals signing up for up-skilling
courses to enhance their employment chances in the post-COVID world.
Many families also faced a
cash flow gap due to the recession, which prompted individuals to seek external
funding to finance their education and to get education loan.
Read on to know more about
the features and requirements of this financial product.
Why is the demand for education
loan schemes increasing?
Most students opt for study loans for higher education due to the following
advantages:
-
They have the option of studying in India as well
as abroad
-
They can enjoy a moratorium period of up to 1
year since course completion, during which they do not need to make any
repayments
-
Specific lenders offer additional rebates on
interest for female students
-
Individual borrowers can also enjoy tax
deductions on interest up to 8 years under Section 80E of the Income Tax Act
However, note that the
last benefit cannot be availed by companies and HUF utilising funds for any of
their members. Also, these tax exemptions are only applicable to funds used to
finance higher studies.
These days the cost of
higher education is very high due to which education loan in India is one of
the highest appreciating domains, and it requires a substantial quantum of
funds. Recently, loan against property for education has emerged as the most
financially prudent solution for numerous individuals who want to fund their
children’s education at some of the top institutions in this country.
Types of courses covered under study
loan schemes
Here is a list
of courses individuals can avail funds for.
●
UG degrees and diplomas: B.Sc., B.A., B.Tech,
B.Com, B.E, B.Ed, L.L.B, B.B.A, M.B.B.S, etc.
●
PG degrees and diplomas: MBA, M.A., L.L.M, M.Com,
M.Res., M.Sc., M.F.A, M.Ed, M.Phil, etc.
●
Certificate job-oriented courses
●
Diploma in job-oriented courses, such as
agriculture and engineering
●
Degree or diploma in navy, army, pilot training,
and air-force training courses
●
Miscellaneous doctoral courses
●
Vocational training under government institutes
●
Specialised training programmes
Students opting for other short-term courses may not be able to secure study loans from most financial institutions. In such circumstances, they can opt for an education loan against property instead.
Who can qualify for an education loan in India?
Besides applying for any
of the courses mentioned above, individuals must be meritorious students and
have Indian citizenship to qualify for a study loan
in the country.
Additionally,
applicants need to provide the following documents for verification.
-
Recent passport-sized photographs
-
ID proof
-
Address proof
-
Admission certificate
-
Latest mark sheets
-
Employment and income proof
-
Visa for education abroad
-
Financial documents
Considering
the COVID-19 pandemic, students have been facing increasing difficulties in
acquiring admission letters, which is a primary cause behind many rejected
applications. Plus, these funds only cover course fees, hostel charges, and
stationery expenses.
To finance a
different accommodation type and travelling costs, individuals can resort to an
loan against property. You must
also know how
to manage your finances better when studying abroad
for effective fund allocation.
Documents Required for
Education Loan On Property:
-
Identity Proof
-
Income Proof
-
Address Proof
-
Bank Statements
-
Property Papers
LAP loan: A better alternative
Below listed are some
prominent reasons that make a loan against property a better way to finance
your child’s education.
●
Higher funds: Due to its
secured nature, a LAP loan offers a high quantum compared to student finance.
●
Faster
disbursal: Comparatively simpler documentation aids in quick loan disbursal
within 72 hours.
●
Competitive
interest rates: Due to the security offered by mortgaged assets, lenders
charge lower property loan interest rate. Given the RBI’s 4% repo rate,
mortgage loan rates have reached an all-time low.
●
Longer tenor: Mortgage fund
creditors offer repayment tenors of up to 20 years, facilitating smaller EMI
payments for better affordability.
●
Pre-qualification: Some NBFCs
also bring pre-approved offers that can help expedite the loan application
process. These offers are available on various financial products, including
loan against property and home loan. Submit your name and contact details to
check your pre-approved
loan offer before applying.
Individuals
can use a LAP EMI calculator to determine their accurate fund requirement,
tenor, and interest scheme for easy repayment. Also, one can enhance savings
with tax benefits on interest payment under Section 27(1).
