How Education Loans Can Turn Your Academic Dreams into a Reality?

An education loan is a loan that students apply to meet the financial requirements to complete their course. Many loan companies in India offer education loans at competitive rates to help educate the upcoming Innovators and leaders. Different loan companies like Investkraft and financial institutions offer Education Loans to aspirants at competitive rates, to help them make quality education affordable.

For those students who apply for an Education Loan, it is not necessary to pay the amount immediately; the repayment tenure starts from months or years, after the completion of the course. It is important to note that the interest rate varies by bank.

Importance of Education Loan

A student loan is only provided to students who show a possible surety of repaying the loan to the bank. To confirm this possibility, banks cite eligibility norms for applicants. These eligibility norms are meant not only for loan sanction but also for student loan tax benefits and subsidies, which will be discussed in a later section.

What is an Education Loan And How Does It Work?

An education loan is a financial assistance program designed to support students in pursuing their academic goals. The loan is granted based on the applicant's eligibility, ensuring a likelihood of repayment. This aligns with the broader concept of responsible lending.

• Access to Skilled Workforce: By offering education loans, Investkraft supports the development of a skilled and educated workforce. This, in turn, benefits the economy by providing a pool of qualified professionals.
• Long-term Investment: Education loans are a long-term investment. As students graduate and secure well-paying jobs, they can repay their loans with interest. This interest income contributes to the firm’s revenue.
• Diversification: By including education loans in its portfolio, Investkraft diversifies its investments. This helps mitigate risks associated with other financial instruments, ensuring a more stable financial performance.
• Social Responsibility: Investing in education loans aligns with Investkraft’s social responsibility. It helps reduce financial barriers to education, promoting inclusivity and equal opportunities.

How Does an Education Loan Differ From Other Loans?

Education loans differ from other loans in several key ways like - 

Parameter	Education Loan	Other Loans
Purpose	The purpose of education loans is to provide financial support specifically for higher education costs including tuition, accommodation, books and educational supplies. Typically, the lender will directly disburse funds to the educational institution or provide checks specifically intended for educational expenses	Different types of loans serve various purposes. For instance, a car loan is specifically tailored for purchasing a car, while a mortgage is designed for buying a house. On the other hand, a personal loan caters to a wide range of personal needs such as debt consolidation or home renovations
Flexibility	Funding for education is typically limited to specific purposes and may not be used for unrelated expenses. The lender may have some flexibility in certain cases, but generally, the loan must be used solely for educational purposes	They provide greater flexibility in terms of how the borrowed funds can be used since they do not impose any spending restrictions. This means that you can use the funds as per your specific needs, such as for debt consolidation, home improvements or even a vacation
Terms	Education loans usually have lower interest rates compared to other types of loans and longer repayment terms, resulting in more affordable monthly payments. These loans may also offer a grace period, allowing borrowers to defer repayment while they are still in school and for a specific time after graduation	Loan interest repayment terms are influenced by factors such as loan type, creditworthiness and the lender. Unsecured loans like personal loans typically have higher interest rates and shorter repayment terms compared to education loans
Benefits	Potential benefits of loans may include tax deductions on interest paid (depending on location and tax laws), interest rate reductions for academic achievements or loan forgiveness programmes in certain situations	Benefits for borrowers are contingent upon the type of loan and the lender. While certain loans may offer prepayment incentives, lenders usually do not provide benefits specifically tailored to assist borrowers

 

How To Get An Education Loan With The Help Of Investkraft?

Investkraft offers comprehensive support to students seeking education loans for their academic dreams, whether in India or abroad. Their loans cover a wide range of expenses, ensuring financial constraints do not hinder your education. Here’s a guide on the required documents and benefits of obtaining an education loan from Investkraft.

Documents Required To Apply For An Education Loan

• Your address proof and identity proof
• Your college admission letter
• The fee structure of your course
• Income documents like salary slips, bank statements, and Income Tax (IT) returns.

Benefits Of Education Loan

• Applicable for All: Any student who wants to study can apply for an education loan. Even the economically backward sections of society can take education loans from Investkraft and other government education loan providers.
• Applicable for All Courses: Education loans can be used to pursue all types of courses — graduation, post-graduation, diploma courses, vocational courses — whether in India or foreign universities.
• Easily Available: Education loans are widely and easily available at Investkraft. They are a priority product in all banks as per the RBI’s guidelines.
• Varied Loan Amounts: Investkraft can offer loans anywhere between Rs.2 lakh and Rs.22 lakh for studying in India. Of course, the size of the loan depends on the course applied for. To study abroad, the loan amount goes up to Rs.20 lakh.
• Helps in the Completion of Education: The expense curve of education is increasing with inflation and shifting prices. To avoid hindrances in studies, education loans become essential.
• Additional Benefits: Education loans include many additional benefits like caution deposits, library fees, building deposits, laboratory fees, tuition, examination fees, hostel fees, money for buying books, instruments and uniforms, travel expenses for studies abroad, etc.
• Low-Interest Rate for Females: Female students are offered loans at lower interest rates.
• Easy Repayment: Another great advantage of an education loan is that the loan amount need not be repaid immediately. At Investkraft, the repayment tenure can extend up to five to seven years after the completion of the course. This makes it easy for repayment.

How Does Education Loans Work?

Education loans are offered to students or to their parents to secure monetary assistance for quality education in India or abroad and embark on successful career options. The loan amount, offered for a particular period of the course, doesn’t require to be paid immediately. The bank pays the amount directly to the institution at the beginning of the course and covers all expenses, including tuition fees, travel, books, hostel, etc.

The repayment tenure starts at the end of the course. Many good loan provider companies even provide an extra period of 6 months for repayment called a grace period or moratorium period. This period starts after the student acquires a job, or even after a year of completion of the course, whichever is earlier.

Investkraft offers competitive interest rates that vary from one another. Hence, one must thoroughly know the prevailing interest rates in the market and how they are calculated (whether compounded or simple interest) after completing the course. We also offer EMI as one of the options for repayments over a particular course of time. One can easily calculate the EMI amount with the help of an EMI calculator and plan accordingly.

How To Calculate Education Loan Interest?

You can use an education loan EMI calculator to estimate the EMIs you will be required to pay on your loan. Enter the tentative loan amount, tenure, interest rate, and course duration – the tool will instantly tell you the amount of your EMI. 

This is the formula that is used to calculate the EMI of an educational loan.

EMI = [P*R*(1+R)^n]/[(1+R)^n-1]

• P = The principal amount
• R = The rate of interest
• N = The tenure

To calculate the EMI for an educational loan, you can use the following formula:

EMI = [P x R x (1+R)^n] / [(1+R)^n-1]

• P = the principal loan amount
• R = the rate of interest per month (annual rate of interest divided by 12)
• N = the loan tenure in months.

How to Repay Educational Loans?

The process of education loan repayment planning starts even before taking the loan. Anyone who is planning for repayment after taking a student loan or after completing education is likely to suffer financial constraints. Besides basic financial planning, students also need to be aware of banking norms related to a student loan to take timely advantage in terms of repayment.

All the top education loan providers in India like Investkraft have various options for students to manage their student loan repayment. Student loan repayment involves three major considerations namely:

• Education Loan Repayment Calculations: comparison of the amount of each EMI vs. no of EMIs to be paid.
• Education Loan Repayment Modes: how, when and how much loan amount to repay.
• Student Loan Management: tips and hacks to maximize the loan scheme features.

Steps to access this student loan repayment calculator service are:

• Visit the official website of Investkraft.com
• From the menu on the homepage under the ‘Others’ tab click on ‘Calculators’.
• To calculate the student loan repayment EMI amount click on ‘How much do I have to pay’.
• To calculate how many EMIs will be repaid for education click on ‘How long will it take to repay’.

Students can adjust their EMI amount (increase it) to pay less interest and repay the education loan earlier than planned. Or they can extend the study loan tenure (duration) to fit the EMIs into their affordable limits.

Types of Education Loans Available in India

There are various education loans available for different types of educational programmes, including diploma and certificate courses, skill-based courses and studying abroad. These loans cater to the specific needs of students based on the type of education they are pursuing. 

Education loans are broadly categorized based on the location, regardless of the specific course. 

1. Domestic Education Loan: It is specifically designed for educational courses within the country. To be eligible, the borrower must meet certain criteria and lenders will approve the loan if the student has secured a seat in an institute that meets the lenders’ requirements. 
2. Study Abroad Education Loan: To secure a study abroad education loan, one must secure admission to a college or university listed as an eligible educational institution. The loan is specifically for courses pursued outside the country of residence. Similar to a domestic education loan, borrowers need to fulfil certain criteria for approval. 
3. Graduate Student Loans: These loans are available to Indian students who wish to pursue postgraduate degrees at institutions within India. These loans are only offered to students who have completed their undergraduate programme. 
4. Undergraduate Education Loans: These loans play a crucial role in providing financial assistance to students pursuing their undergraduate degree programmes, which typically last for 3 to 5 years. Upon, completing their studies, students are presented with numerous job opportunities in their field of expertise, making these loans a valuable investment in their future. 
5. Professional Education Loans: These loans are available from various banks and NBFCs for students pursuing career education.

FAQs

Q1. What Is an Education Loan?

A. An education loan is a financial product designed to help students and their families pay for the cost of higher education, including tuition fees, books, living expenses, and other educational-related expenses.

Q2. Who Can Apply For an Education Loan?

A. Typically, students who have been accepted into a recognized educational institution and their parents or guardians are eligible to apply for education loans

Q3. What Expenses Does an Education Loan Cover?

A. Education loans can cover various expenses, including tuition fees, accommodation, books, equipment, travel, and other related costs.

Q4. How do I apply for an education loan?

A. You can apply for an education loan through banks, credit unions, or other financial institutions. The application process varies, but it generally involves providing your educational and financial details.

Q5. Do I Need Collateral To Secure an Education Loan?

A. It depends on the type of education loan. Some loans are unsecured and don’t require collateral, while others may require collateral, such as property or assets.

Q6. What Does an Education Loan Cover?

A. It covers the entire course fee (inclusive of the exam, term charges), accommodation charges (hostel, mess) and other related miscellaneous expenses.

Q7. When Will The Repayment Period Start?

A. Repayment generally starts when the course is completed. Some banks offer a relaxation period of six months after securing a job or a year after the completion of studies for repayment. The repayment period is generally between five to seven years, but it can be extended.

The Conclusion

An education loan is an easy gateway for financing one’s educational needs and a good head start to embark on a successful career. It is pretty easy to secure an education loan from most banks and financial lending firms. However, one should make a decision only after prudently weighing all possibilities. One must carefully read all terms and conditions before grabbing the best deal available for an education loan. An education loan from Investkraft provides a valuable financial resource for individuals seeking to pursue higher education.

With competitive interest rates, flexible repayment options, and a commitment to empowering students to achieve their academic goals, Investkraft stands as a reliable partner in the journey toward educational advancement. By facilitating access to quality education, Investkraft’s education loans contribute to personal growth and, ultimately, to the development of a skilled and knowledgeable workforce. This financial support ensures that individuals can invest in their future with confidence, breaking down barriers to educational opportunities and fostering a brighter tomorrow.