Higher education has never been cheap. And it won’t be so. There are many students in the world who get an opportunity to go one step higher but are not able to find the money to pay for the expenses that come up. If you are one of those students, then you must do the following steps:
1. Get the estimate of expenses for the entire course of study as well as living expenses.
2. Check all available funds (like stipends, scholarships) from the college, state and interest free loans from government and friends etc.
3. Check your own family funds available.
4. Now the loan amount you need is [(estimate of expenses found in point 1) – (estimate of funds available based on points 2 and 3)]
Banks and other Financial Institutions (FIs) do not hesitate to finance for higher education costs as it leads to good job opening. How do banks and FIs evaluate an education loan application and what are the norms/criteria to be eligible for availing an education loan that you must comply?
First thing is that you must have a good academic track record. Second thing is that you should have got admission to a good course in a reputed institute/university. These are the two most important stipulations that decide whether you get a loan or not. Besides these, if you have a good family background with educated and well-employed persons it helps your loan application processing. Again, if you have security and tangible collateral/guarantees, you have a better chance.
Once the loan is sanctioned, the next stage is disbursal. Disbursal is again divided into two parts – the tuition/exams fees/books etc., are directly paid to the institute/university/book vendors on their raising a demand on you. The second part relates to your living/maintenance expenses. If you are a hosteller, your hostel fees are paid directly and your sundry expenses are given by way of reimbursements. If you are a day scholar or you live on your own, you may get reimbursements on providing proof of payment. These are part of the disbursal of loan.
These disbursals are governed by the following terms and conditions:
1. The first is that you should show consistent good progress in your studies and pass all crucial exams and have no arrears or backlog of exam papers to clear. Disbursements may be stopped and loan recalled if you fail in one of your exams.
2. Though it is not mandatory, banks and FIs always encourage servicing the interest through family – parental/spouse’s earnings or through the income you get from a part-time job.
3. The loan, together with interest (if not serviced before) has to be repaid in easy monthly installments after the course is completed. Usually you get a moratorium period of six months after the course completion to enable you to get a good job and settle comfortably to repay the loan.
Student Loans 