Is There a Maximum Limit to The Amount I Can Borrow Through An Education Loan
Is There a Maximum Limit to The Amount I Can Borrow Through An Education Loan.Education remains one of the largest investments that a person will make in a lifetime. But unfortunately, the cost of learning at the higher learning institutions has risen to unforeseen levels through the years and most students end up paying education loans. These loans range from tuition fees, books, accommodation and other miscellaneous expenses including transport for overseas learners.
Reading this article, you will know about the factors affecting the maximum loan limit, that the policy of the banks and financial organizations, as well as the advice on how to manage the education loans effectively.
Understanding Education Loans
Education Loan is a form of Bank’s credit for financing the educational expenses of the students. The loan is typically disbursed to cover expenses such as:
Tuition fees
Books and study materials
Accommodation or hostel fees
Any expenses related to travel, (only for students who are studying in another country)
Laboratory and project costs
Household expenses (in particular)
Education loans are usually taken for a fixed period of the course along with a grace period that enables the course pass out student to seek a job before repaying his education loans. Such grace period may take between six months and a year depending on the specific lender’s regulation.
Determinants of the Amount of Loan Given
The maximum limit of an education loan varies with the course of study, country in which the student wishes to study, the education finance company, and income evaluation of the borrower. Below are some key elements that determine the maximum amount you can borrow:
1. Type of Course
And as was mentioned before, courses demand various amounts of financial involvement. For instance, the financial requirement of a student who is taking a medical course will probably be higher than that of a student under arts or commerce. Therefore, the maximum amount of loan can be determined depending on the course of study.
Undergraduate Programs: The maximum amount of the loan is usually less in the undergraduate courses than in professional or postgraduate ones.
Postgraduate and Professional Courses: Loans given for postgraduate or professional courses such as engineering, medical or management courses has higher limits are because the cost of tuition is relatively higher.
2. Type of study (Domestic or International)
Of course, I mentioned earlier that the institution that you wish to attend is another factor that determines the amount of the maximum loan amount. Education in foreign universities is generally costly than studying in your home country and the banks usually provide more credit to such students.
Domestic Education Loans: Banks allow loan amounts of INR of 10 lakhs to INR of 20 lakhs for students who wish to study within the country.
International Education Loans: For studying abroad, banks provide more loan amount, it can vary from INR 30 lakhs to INR 1.5 crores depending on institution and country choosing.
3. Non-Collateral Loans and Collateral Loans
Education loans can be broadly categorized into two types: as the purchases made with collateral based loans and collateral free or without any guarantee known as unrestricted loans. This dictates the maximum loan amount since the loan amount is dictated by two factors: security and unsecured.
Collateral Loans: For instance, if you have provided property, fixed deposits or any kind of guarantee, then the banks are always willing to go higher and provide upto INR 50 lakhs or beyond for overseas education.
Non-Collateral Loans: Wаньe education loans without collateral, the maximum amount of borrowings is typically relatively small or up to INR 7.5 lakhs for domestic education and INR 40-/-50 lakhs for going abroad or overseas.
4. Lender’s Policies
Every bank or any other financial organization holds its norms and regulation implementing towards the education loans. The government prescribing certain limits can help youth understand how much banks are willing to lend while there is the same limit imposed by the banks depending on the banks. It is important to compare one lender with another in order to get the best deal.
Credit conditions vary from one bank to another and as such you may find some of them having flexible loan amounts depending on your academic, the reputation of the institution you want to apply for and your financial credit records in the event you have any.
5. Income level of the family and its financial standing
As a rule, to approve the loan, banks evaluate the financial standing of the borrower (or another obligee). Reliability, the level of income, and assets have also been found to have a positive correlation with credit access, and, therefore, larger credit. While some banks may offer student specific schemes or subsidies which allows lower income earning families to repay their loans, the same may set higher rate of interest and a limit to the loan amount the student can borrow.
Is There a Maximum Limit to The Amount I Can Borrow Through An Education Loan
Is There a Maximum Limit to The Amount I Can Borrow Through An Education Loan
List of Maximum Loans that Various Banks in India can offer to their customers
Let’s take a look at the maximum loan limits set by some of the leading banks in India:
1. State Bank of India (SBI)
Some of the loans formulated for education by the SBI are: ‘SBI Global Ed-Vantage’ for students studying overseas.
For Domestic Studies: Up to INR 20 lakhs
For International Studies: Maximum of INR 1.5 crores under SBI Global Ed–Vantage Scheme.
2. HDFC Bank
Education loans are provided by HDFC Bank and include loans for courses conducted in foreign countries or within India.
For Domestic Studies: Up to INR 20 lakhs
For International Studies: For loan amounts up to INR 50 lakhs there will be no collateral required.
3. Punjab National Bank (PNB)
PNB Udaan is the name of the education loan program launched for the students to pursue the education in foreign countries.
For Domestic Studies: Up to INR 10 lakhs
For International Studies: Not more than INR 1 crore if collateral is provided
4. ICICI Bank
For students studying in foreign countries, ICICI Bank has provided special student loans.
For Domestic Studies: Up to INR 10 lakhs
For International Studies: For unsecured loans ranging up to INR 50 lakhs you do not need to pledge any security.
5. Bank of Baroda
Education loans are offered by Bank of Baroda, as a secured loan or an unsecured loan based on the loan size.
For Domestic Studies: Up to INR 20 lakhs
For International Studies: Up to INR 1.5 crores
Government Schemes and Subsidies of agriculture are discussed in this article.
In India, there are also some subsidies and schemes supplied by the government to motivate banks to offer education loans. Of these, there is the Central Sector Interest Subsidy Scheme (CSIS) whereby interest subsidies are provided to EWS.
Pradhan Mantri Vidya Lakshmi Karyakram: They can also offer online services to help the students to apply for the education loans as well as scholarships. This makes the loan application process less complicated and offer a chance of choosing multiple banks online.
Financial management advise for education loans
Few people are comfortable with the idea of borrowing huge amount of money for education; nevertheless with proper strategies, you can easily deal with the loans. Here are a few tips:
1. Calculate Your Requirements
Consider all your general expenditure needs before applying for a loan such as tuition fees, accommodation and other bills. Only borrow enough cash that you need to prevent being weighed down by high levels of repayment.
2. Compare Interest Rates
Education loans are offered at different interest rates depending on the bank that an individual is to select from. Always ensure that you make a comparison on the interests you are charged and ensure that you choose the right interest for you.
3. Take a look at Scholarships and Grants
Scholarships and grants can cut your loan-dependency to certain extent. Look at the scholarships offered at that particular college you wish to join and apply for as many as you can.
4. Understand Repayment Terms
It’s important to look at how the loan could be repaid such as grace period, interest rate and equated monthly instalments. Select the schedule of payment that will best fit your financial plan in future.
5. Maintain Good Credit
A person ought to ensure he or she or the co-applicant has a good credit score since this defines loan approval and the interest that will be offered.
Conclusion
However, there’s no determined universal ceiling for Education loans; the actual depends on the course offered, further the area, the lending institution, and if you’re offering security. With these factors in mind and having gained knowledge on them then your educational financial needs will be easily met.
- What Happens If a Student Faces Difficulty in Repaying The Education Loan
- Can Education Loans be Used to Fund Vocational Or Non-Traditional Courses
- Can International Students Apply For Education Loans in a Foreign Country
- What Factors Are Considered When Determining The Interest Rate For An Education Loan
- Can I Apply For Multiple Education Loans For Different Courses Or Institutions?
- Can I Use an Education Loan To Study Abroad
- What Options Are Available For Deferring Education Loan Payments
- What’s The Typical Repayment Period For Education Loans?