Loan is the specific amount of money that is received by the borrower, from the lender and returned after a specific time period. Here the borrower can be an individual, who is in need of the money. Lender is an individual or an organisation, from where borrower receives money as a debt. This loan is provided by the lender, for a particular interest rate and the borrower has to repay this interest rate each and every month from the date of loan received till the end date. The principal amount can be paid by the borrower, before the specified time frame and avoid paying interest rate for the months in between.
The loan provided for the students, so that they can pursue their education without interruption is known as the Education Loan. This is also known by another name known as Student loan. This loan came into existence, when many students are discontinuing their education, due to the factor of money. This loan will be provided to students, who are thinking of pursing a college educations, after successful completion of their higher secondary education. All the banks in India offer Educational loan to the individual, so that he or she can continue his dream, without burdening their parents or guardians.
Step by Step Procedure for Applying for an Education Loan:
Even though the loan procedure varies from bank to bank, there are some common steps that need to be followed, when you are thinking of applying for an Education loan.
- Step 1: Before applying for an education loan, it is important to analyse different organisation about the procedures and the interest rate offered in each and every organisation.
- Step 2: Once that is finalized, an individual is supposed to fill out the application form, from the organisation, which he or she has finalised. In case of Education loan, the applicant will be the student applying for the loan.
- Step 3: When the applicant fills in the application form, he or she will be asked to be present for the group discussion, that will be conducted by the organisation. In this discussion, the candidate, will be asked different questions regarding this academic performance, his goal in life, which institution he is preferring, etc. The academic records produced by the applicant, should be reasonable, even though, there are bad grades in between, he or she has to explain the situation, so that the lender is convinced.
- Step 4: While applying for an education loan, the applicant has to keep in mind that the admission form from the particular institution, in which he or she is interested in pursuing their studies should be presented.
- Step 5: The organisation will verify the student’s enrolment number in the concerned institution before providing approval for the loan. If the loan amount is more than INR 4 lakh, then it is mandatory for individuals to submit a mortgage document to the organisation, so that they can provide a secure education loan.
- Step 6: In addition to this, while applying for an education loan, it is necessary for providing a guarantor name. This can be the parents name or guardians name. Once provided, the bank or organisation will completely run a credit history check, before approving the loan. If the credit history is not satisfying then the bank can reject the loan.
- Step 7: Even though, parents or guardians name is provided in the application form, the student who is applying for the loan is the actual borrower. Once the loan is approved, students has to sign the promissory note to the bank.
- Step 8: Once the procedures are completed, then the loan will be paid in the form of fees to the particular institution.
Documents Required for getting an Education Loan:
These are the following documents that need to be submitted by students to the bank.
- Birth Certificate
- Higher Secondary Exams certificate
- Conduct certificate
- Transfer certificate
- College admission form
- Ration Card
- Aadhaar card
Nowadays, receiving education loan has also been made simple. Individual can apply for loan through online, in the comfort of their home. However, the loan will be approved for the principal amount and for the actual approval of education loan, individuals has to visit the bank, in person.