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Expenses that could fit in education loan- 26-Feb-2009
The Central Government insists the banks on sanctioning educational loan to the students.
In todays economic conditions though availing of loan may be easy, to obtain educational loan is not that easy. The parents think that their children must study in an institution where good quality education is offered eventhough they have to pay very high fees.
Those who do not get scholarships, depend on bank loan. Though the private sector banks offer educational loans, only public sector banks sanction educational loan largely. Those who do professional courses like Engineering or technical courses alone hope to avail loan. The greatest advantage is that the loan can be repaid after a specific period.
The general rule is that the loan can be repaid a year after the completion of the course or six months after the attainment of the job. However, the interest has to be paid during the studies. They have to pay their EMI interest with part of the principal- after the period of their study. If the students are prepared to pay the EMI during the study period, interest will be reduced. The rules may differ from bank to bank.
The educational loan has a lower interest than personal loan, but a little bit higher than housing loan. If the difference between the interest of Fixed Deposit and Floating interest is only one percent, it is wise to choose the Fixed Deposit interest. If the period of repayment lasts for five to seven years, it is advised to select only the fixed deposit interest
However, in fixing the rate of interest for the Fixed Deposit, banks have confused approaches. Hence, before availing the loan, the students must be cautious. Many banks have special offer for girl students The Banks sanction loan to girl students with less than one percentage interest. Enquire thoroughly and try to understand about the interest rate and the offer given before availing of the loan.
If the banks starts talking about the processing fee before sanctioning the loan, try to avoid it. The Banks give educational loan for the following purposes.
Hostel fee for both college and School,
Examination, Library and Research fees.
Books and Uniform,
Caution Deposit, Building Fund and Refundable deposit
Travel expenses and overseas travel expenses
The Banks offer loan even for the purchase of Laptop and other Technical Instruments. Some banks sanction loan for purchasing two- wheeler. Generally, the Banks provide 80% to 90% loan for Education.
