Higher educational qualification is deemed essential for a promising career. Nonetheless, owing to the rising cost of education in India, it often gets difficult for students or their parents to finance their higher studies, especially at the premier institutions. The Periodic Labour Survey conducted in India revealed that –
- Average spending per student in Rural India is almost Rs.437, whereas it reaches Rs.1,359 in urban India.
- Education cost for graduation is almost Rs.11,845 per student in rural India and Rs.18,485 in urban India.
To tackle the rising cost of higher studies, students or their parents often need to resort to financial solutions like education loans. However, like other loans, individuals need to plan the repayment beforehand to reduce the risks of default. In this regard, they can use an education loan calculator to derive the EMI payable and the total cost of borrowing.
Before applying, individuals also need to know the types of education loans that are available at hand.
Types of education loan available in India
Loans based on collateral type
Generally, education loans are available in two different forms. These are –
It is one of the most popular borrowing options that parents can avail to finance their child’s education. They generally opt for an education loan against property that allows them to access a lump sum by pledging a high-value immovable asset like a residential or commercial property.
Since this credit is secured with collateral, lenders approve a LAP loan with lenient eligibility.
Contrary to a mortgage loan, a traditional education loan is unsecured in nature. Although individuals do not have to pledge any collateral to avail the funds, lenders set stringent eligibility criteria against this advance to reduce the delinquency of this sector.
Moreover, unlike the property loan interest rate, this education loan accompanies a high-interest rate. Hence, choosing to finance your education with a loan against property can prove to be more cost-effective.
However, only knowing what is a mortgage loan is not enough. Consider the following categories as well.
Loans based on locations
Besides knowing mortgage loan interest rates against the secured and unsecured options, individuals also have to consider the following categories –
International study loan
The majority of students opt for this loan to fund their education abroad. However, to be eligible for this fund, students first need to secure admission to the foreign university they want to study in. In this regard, individuals can also opt for an education loan against property to secure additional funding besides the course fees.
However, in this case, they should estimate the EMI payable using a loan against the property calculator.
Domestic study loan
Students who want to pursue education within the country can also opt for a loan for education. In this case, as well, borrowers need to first consider the institutions that are enlisted in the lender’s criteria. Alternatively, they can qualify for a loan against property by meeting simple eligibility criteria.
Before applying, they also need to consider the education loan calculator to estimate monthly installments.
Loans based on courses
Credit requirements can vary with courses chosen by students.
- Individuals can apply for a postgraduate course and require the funds for it.
- Students also avail financing to continue an undergraduate course abroad or within the country.
- Education loan is also available to pursue a professional course.
However, in any case, borrowers need to consider a few crucial things before applying for a loan against property for education.
Leading HFCs offer education loans against property for up to a good quantum. You can use an education loan calculator to determine the borrowing cost. For instance, if you avail a loan of Rs.35 lakh for 48 months with an interest rate of 7.25%, you need to pay an EMI of Rs.85,764.
Select financial institutions also extend pre-approved offers that simplify and expedite the credit availing process. Such offers are available on a gamut of financial products like loans against property, home loans, and others. All you have to do is enter your name and contact number to check your pre-approved offer instantly.
Therefore, to leverage the maximum benefits, individuals need to choose a loan that matches their requirements. They can also compare different interest rates using an education loan calculator to minimize their cost of borrowing.
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