How to avail Education Loan in India?

Proper education is one of the foundation stones for the success of any individual, and must never be abandoned for any reason whatsoever. By availing an education loan, you can get financial assistance during the pursuit of your studies in the following areas:

• Any kind of fees payable to the educational institution like tuition fees, examination fees, lab fees, etc.
• Hostel security, caution money or any kind of institutional fund
• Purchase of laptops or any other electronic equipment essential to the course.
• Purchase of books and uniforms
• Travel expenses (in case of studies overseas)
• Miscellaneous expenses like project work, amount for completion of theses, etc.

While funding one's studies is obviously the main purpose of taking an education loan, there are also many benefits associated with the taxes you would have to pay. Following is a slight brief of the same :

• The section under which one can claim deductions from taxable income is 80 E. To be specific, the deduction is only for the interest paid, and not on the principal amount.
• One would get tax benefit only if the loan is in his/her name and is taken for the purpose of pursuing higher education for self, spouse or children.
• Only full-time courses would be considered for tax exemption. Neither part time courses nor correspondence ones can be exempt under the same.
• One can claim deductions for as many loans he has taken for educational purposes. For instance, if you have taken a loan for self as well as your spouse, you can claim noth deductions from your income, provided it is you who is paying both the EMIs.
• These deductions are only available for a period of eight years starting from the financial year when you start paying the installments.

The total fee for the entire course is usually given by the bank directly to the concerned college, educational institution. The process goes like this, once you have submitted the application for a loan, the bank would verify the estimated expense for the entire course and compare it with the amount you have applied for. It might also be a possibility that the bank may reduce the loan amount on the basis of various grounds. Banks also might charge a remittance fee for payment to education institutions abroad which are in dollars. In case you are unemployed and can't start on your EMIs immediately, your repayment would start approximately six months to one year after your course has been completed, or when you get a job, whichever is earlier, and the interest would be compounded quarterly and added to the principal. Although this option carries a high interest rate, it's beneficial for students who are going abroad or those who are financing their studies by themselves.
Further, education loans also don't attract the pre-payment penalty.
In case you have opted for a floating interest rate loan, you are not allowed to switch over to the fixed rate one. However, you can change your borrower, i.e., the bank from where you have taken the loan, in case you get a better deal, with some part of the loan amount paid by you to the bank which would not be deducted from the amount you have to pay. Many times, people resort to personal loans for educational purposes also, since they want more than the loan amount that has been sanctioned by the bank due to numerous reasons. However, this can prove to be very harmful in the long run, as the interest rate for a personal loan is always higher than an education loan. The repayment requirements are also not as convenient as in case of an education loan. Hence, one must take an education loan for all expenses related to studies. However, in case one does have expenses more than the prescribed loan amount, he should take a personal loan only for the excess amount, and not the entire expense.
Eligibilty :

• Aplicant should be an Indian national
• Applicant should have one parent earning a regular source of income
• Age : 16-26 years
• Studies in India : upto Rs. 10 Lacs
• Studies abroad : upto Rs. 20 Lacs

Documentation :

1. 1. "PNB Sarvottam Shiksha Scheme" - The documents should be got executed by student (the applicant) and the parent /guardian (the Co-applicant).

1. 2. PROOF OF AGE

1. 3. PROOF OF IDENTITY(Applicant and Co-applicant)

• Letter from present College/institution
• Photo PAN Card
• Driving Licence
• Passpory
• Voter's Card

1. 4. PROOF OF AGE (Applicant and Co-applicant)

• Birth certificate
• School leaving certificate
• PAN Card

1. 5. PROOF OF ADDRESS (Applicant and Co-applicant)

• Ration Card
• Utility bills
• Rental agreement
• Passport
• Insurance payment receipt
• Voter's Card

1. 6. PROOF OF INCOME (Self Employed)

• Salary Slips
• Bank Statement
• Form 16
• Income Tax Returns
• Certified Balance Sheet and Profit & Loss Account etc. with Details of Assets & Liabilities of parents or guardian

1. 7. SECURITY/GURANTOR'S DOCUMENTS (for Loan more than 4Lacs)

• Particulars of Guarantors and details of their Assets & Liabilities, wherever applicable; If immovable property offered as Collateral Security - copy of Title Deed, Valuation Certificate and Non-encumbrance Certificate from approved Lawyer of the Bank

1. 8. DOCUMENTS FOR MAIN APPLICANT ONLY

• Proof of having secured pass marks in last qualifying examination
• Letter of admission in professional
• Technical or vocational courses
• Prospectus of the course wherein charges like Admission Fee, Examination Fee, Hostel Charges etc. are mentioned
• Photocopy of Passport & Visa, in case of study abroad
• Any other document/information, depending upon the case and purpose of the loan.

Courtesy and for further information chekout: http://www.paisawaisa.com or http://www.apnaloan.com