An Education loan is a type of monetary instrument that can be used to pay for college or university education. It can be used to cover tuition, fees, books, and living expenses.

The purpose of education loans is to help students achieve their goals and make their dreams come true. They provide financial support for learners who are planning on attending university or college.

Education loans are intended to help students afford their studies. They are usually granted through the federal government or private sector. The interest rates and terms are generally variable, but the amount may be reduced or increased depending on the circumstances. There are various types available.

BENEFITS OF TAKING AN EDUCATION LOAN

1.The loan amount can vary from minimum Rs 1 lakh to Rs 1 crore, depending upon your area of study. ICICI Bank provides education loans of up to Rs 50 lakh in India and up to Rs 1 crore abroad. Undergraduate and postgraduate education loans are available from ICICI Bank.

2.In some cases, 100% financing is available.

3.Other expenses, such as the cost of a laptop or travel expenses, are covered by the financing.

4.The bank provides a flexible repayment plan. After completing the course, the repayment period for education loans can last up to 12 years.

5.Co-applicant(s) for an Education Loan include parents and siblings.

6.Education loans are easily available.

DOCUMENTS REQUIRED FOR APPLYING FOR EDUCATION LOAN

To be eligible for an Education Loan, students need to submit the following documents:

1.Marksheet and passing certificate of 10th and 12th exams

2.Letter of Admission from the respective college/university

3.The Fee Structure

4.The applicant's and co-KYC applicant's documents

5.In some cases, income proof is required.

Furthermore, no collateral is required for an Education Loan of less than Rs 4 lakh. A third-party guarantor is required for loans between Rs 4 lakh and Rs 7.5 lakh, and collateral is required for loans above Rs 7.5 lakh. Insurance is required when taking out a loan to study abroad.

HOW DOES AN EDUCATION LOAN WORK?

Education loans are provided for the purpose of pursuing an academic degree at a recognized university or college. Those students who apply for an Education Loan do not have to pay the entire amount right away; the repayment period begins months or years after the course is completed. It can also be extended from 5 to 7 years in some cases.

The interest rate varies according to the bank. The bank pays the loan amount directly to the institution/university at the start of the semester. Education loans also cover all other expenses, such as library fees, hostel fees, book costs, laboratory fees, and so on, ensuring that the student does not have to pay any out-of-pocket expenses.

TYPES OF EDUCATIONAL LOAN

Although there are many different types of education loans, they can be divided into two categories: federal loans (backed by the federal government) and private loans.

1.Federal student loans:

Federal student loans are loans provided by the U.S. Department of Education to help students pay for their education. These loans are typically offered at lower interest rates than private loans, and they often have more flexible repayment terms.

Most borrowers first seek federal government financing if they need to borrow funds for education expenses. He/she first step in procuring federal education loans is to fill out a Free Application for Federal Student Aid (FAFSA).

Additional information may be required to complete the application depending on the applicant's status, particularly their parental dependency. In most cases, a credit check is not required as part of the application process. The amount of principal on the loan or loans is determined primarily by the cost of attendance at the school the student intends to attend. When an FAFSA form is submitted, the schools listed on the form collaborate to determine the financial aid package that the student is eligible for.

Various types of federal student loans exist, including direct subsidized, direct unsubsidized, and direct consolidation loans. If offered and accepted, federal funds will be distributed to the designated university to cover the student's academic expenses. If there are any remaining funds, they will be distributed to the student. These funds may be used by a student to cover other expenses incurred while pursuing a degree. If a student is eligible for subsidised loans, their interest will be paid while they are in school. If a student is eligible for unsubsidized loans, the interest on those loans will be deferred as long as they remain enrolled in classes and in good academic standing.

2.Private student loans

In some cases, the federal student loan package that a student receives may suggest that the borrower apply for additional funds through private lenders. Private student loans also include state-affiliated lending non-profits and school-provided institutional loans. These loans will typically have a more standard application process (like what is typical of any private-sector loan). A credit check is usually required when applying for private student loans.

Borrowers can apply for funds directly to private-sector lenders. The approved amount, like federal funds, is influenced by the school a borrower attends. If approved, funds for educational expenses are first distributed to the school to cover any outstanding bills before being sent directly to the borrower.

WHAT TYPE OF DEBT ARE STUDENT LOANS?

Student loans are unsecured instalment debts, which means they don't have a physical asset attached to them and are paid back in a set number of instalments over an agreed-upon period of time.

THREE EFFECTIVE TECHNIQUES FOR MANAGING STUDENT LOAN DEBT

There are several strategies for better managing student debt. Paying off loans with the highest interest rates first, paying down extra principal whenever possible, and looking into debt forgiveness operations are three particularly useful strategies.

HOW DOES ZENITH HELP WITH EDUCATION LOAN?

Zenith offers education loan assistance to help students finance their academic pursuits and achieve their educational goals. Zenith has established partnerships with private financiers such as AVANS, HDFC Credila, and other banks like UNION Bank, AXIS Bank, ICICI Bank, enabling them to assist students in obtaining funding support.