Know how to Repay Education Loan Online in India
Education is one of the basic pillars of one’s life. One’s education defines their future. It holds great importance in whether a person will lead a happy life. That is the reason why parents in India invest greatly in their children’s education.
Great importance is given to education even if the family does not have much money to spend. To educate their child, many families or individuals use education loans to cross the financial barrier. Once the course is completed and the student finds a proper job, he/she can then repay the loan to the bank or lender.
What is an Education loan?
An education loan is a sum of money borrowed to finance education at the undergraduate level. These loans can cover tuition fees, living expenses, books and other educational needs when a student is pursuing a degree.
The education loan is deferred while the student is pursuing their degree in college. In most cases, there is a ‘grace period’ of over 6 months after the degree ends. This ensures the student has enough time to get a job and then start paying back the education loan amount with their salary.
How do education loans work?
Students can avail of education loans from banks by filling out a free application form. This form requires them to fill out details such as name, address, bank details, etc, and submit it to the bank.
In India, banks give loans up to INR 4 lakhs without collateral. Beyond that, they would ask for one. Collateral in the form of land papers, house papers, etc. can be submitted to the bank to get a bigger loan amount.
Education loan interest rates in India hover around 6.75% to 12.9%. The State Bank of India, for example, has an education loan interest rate of 6.85%.
Types of Education Loans in India
In India, student education loans are classified into three categories based on the location of education, course and collateral included.
1. Location-Based Loans
Domestic Study Loans
As the name suggests, this loan type is for students studying in India. The university must also be recognised by the lender to take an education loan from them.
Study Abroad Loans
These loans are created to help students bring their dreams of studying abroad to fruition. Similar to domestic loans, the foreign institution must also be recognised by the bank to get the loan.
2. Course-Based Loans
Indian banks also provide education loans based on the course. These are the most popular ones.
Bachelor’s Degree
The most common educational degree in India is a Bachelor’s degree, e.g. BTech or MBBS. This course is done after one’s higher secondary education. This is why a vast number of Indian students take an education loan for financing their Bachelor’s degree.
Higher Education
Many students also do higher studies after their Bachelor’s degree. This is done mostly to broaden their horizons and qualify for advanced roles with better pay packages. Hence, an education loan for higher studies is also quite popular.
Professional Education
Some may also wish to pursue courses like PhDs or Executive MBAs to take their professional career to greater heights. Hence, education loans are vital here as well.
3. Collateral-Based loans
Secured Loans
Education loans which are for higher amounts require collateral to be submitted to the bank. Students can pledge assets like houses, land, and other similar valuable things to obtain an education loan.
Unsecured Loan
Many Indian financial institutions also offer unsecured loans if the student doesn’t provide collateral.
How to repay educational loan online in India
Most banks usually provide a minimum of 6 months as the grace period after the completion of the education loan so that the degree holder has enough time to get a job and start repaying the loan. Upon the completion of the ‘grace period’, the education loan has to be repaid to the bank.
Although the steps of repaying an education loan online would be slightly different for each bank, the basic principle remains the same. Let’s look at how one can repay their education loan online in India.
- Select the BankThe process of repaying the loan online includes choosing the bank that one has taken it from. For this, they must go to the official website of that bank and go to the loan section.
- Provide the Loan DetailsIn the next step, provide all the details of the education loan such as loan number, phone number, and bank account number. After providing the details, one will be asked to provide the required amount against the ‘Amount payable’ on the website. They must fill in the amount of money they want to repay and click on ‘Pay now’.
- Confirm PaymentUpon filling in the details, they will need to enter their internet banking authentication details to start the payment process. They must then choose the amount they would like to pay against their education loan repayment. After clicking ‘Pay now’, the money will be debited from their chosen bank account instantly.
- Receive Online ConfirmationThe payment confirmation will be sent through SMS and email. The same process can be repeated multiple times whenever one wants to make the payment against their education loan.
Tips on how to manage student loan debt.
- Plan a monthly budget and follow it ardently.
- To reduce the principal amount faster and pay less in interest, foreclose the education loan if possible. This will minimize the loan duration and the interest accrued.
- One must plan and understand monthly cash flow and make necessary changes to their budget to repay the education loan on time.