Education loan options

 

In this blog we are going to discuss about complete details of education loan. To complete masters in USA important thing is to manage the funds, most of the students plan their funds by taking loans from the bank. Banks offer different types of loans. Banks have different type of terms and conditions to process the loans.

Once after we get an admission letter from the university, the next step is to show the proof of funds to the university that we have enough funds to study in the university. To show the funds most of the students take loans from the different banks. 

Education loan consists of 2 types. They are

1. Collateral  
2. Non-Collateral.

A collateral loan is given based on the property value, bank mortgage the property until we clear the loan. 

Non-collateral loan is given by considering our parents as co-applicant to be as guarantee for repayment of the loan.

The important things to consider before taking the loans.

• Types of loans Available
• Document required for loan process.
• Rate of interest for different loans
• Processing fee
• Loan disbursement process.
• Options for repayment
• Repayment tenure

Types of loans Available

1) Public Banks

2) Private Banks

3) NBFC’S (Non-Banking Financial Company)

1) Public Banks: In public banks the interest rate is less compared to private banks and the repayment tenure will be more comfortable because the government will be subsidized to student to make comfortable to the students

2)Private Banks: Private banks offers loans without collateral, loan process will be very comfortable and makes very easy to approve the loan amount required. With minimum required documents they provide full amount of loan to the students. Comparatively interest amount will be more than then the public bank. Disbursements process will be done once our visa is approved.

3)NBFC’s (Non-Banking Financial Company): If we cannot secure loan from public and private bank then we can try for NBFC’S, they offer loan for the students without co-applicant and cosigner. Prodigy offers complete tuition and cost of living for graduate students who are willing to study masters in united states. But prodigy offers to only particular universities that are listed in their list. The interest rates are higher than public and private bank.

Reference Video Link 

Documents required for loan process:

To initiate the process for an education loan, certain mandatory documents are collected from both the students and their parents. Based on these documents, the lender confirms whether to approve the loan or not.

Student Documents:

1) Latest Color Photos

2) I20 & Admission letter

3) GRE, IELTS/TOEFL/DET Score sheets.

4) 10th, 12th, Last Degree consolidated Marks Memo and Provisional Certificate

5) Passport, PAN Card, Aadhar Card

IF WORKING

6) Latest 3 months Salary pay slips.

Parent Documents:

If co-applicant is Salaried

1) Latest 1 Color photo

2) PAN Card, Aadhar Card

3) Latest 2 months salary pay slips

4) 6 months salary credit bank statement. (With IFSC and MICR Codes reflected)

5) Employee ID Card

If co-applicant is Self employed

1) 6 Months bank statement of current account

2) GST Certificate

3) P&L Sheet

4) 3-Year ITR

Reference Link 

Rate of Interest for different banks:

1) Fixed Interest Rate: Fixed Interest gives the borrower monthly payments that are predictable because the interest rate is the same throughout the duration of the loan. For people who wish to arrange their finances appropriately and like control, this is appropriate.

2) Floating Interest Rate: Floating Interest changes according to market conditions and changes in the reference rate. This is suitable for those who are flexible with fluctuations of EMIs and believe that interest rates decrease gradually.

Factors that affect student loans

1) Credit score

2) Co-applicant credit score

3) Collateral

4) Loan amount tenure.

5) Country and course of study

6) Existing relationship with lender

Reference link 

Processing fee:

Banks charge a processing fee based on their terms and conditions when the loan is approved. When we request loan disbursement after the visa is approved, they charge a processing fee based on their conditions. Different banks charge different processing fees. HDFC bank charges 1% - 1.5% and some banks does not charge any processing fees.

Loan Disbursement Process: 

Education loan disbursements is the last step to disburse the amount into our bank. Different steps will be followed by the bank based on the collateral and non-collateral. Collateral disbursements will be done by taking our property documents as a mortgage with the property owner's permission and then they make insurance for the property and our loan will be disbursed to the parent’s account. 

Non-collateral loans will be disbursed by taking assurance by our co-applicant signature on the documents and completing the documentation process then they will be disbursed to the co-applicant bank. 

Some of the NBFC’s Which I have Known as Prodigy Finance, directly send our loan amount to universities. Still, there is a condition that we should reach the university location and complete the signature at the university location before they disburse the amount. The remaining cost of living amount will be sent to our bank upon request within 7 – 10 business days.

My experience

I have taken a loan from Prodigy Finance, I will explain what are the important topics you should keep in mind.

1) Prodigy Finance will provide a loan without a co-applicant and cosigner. 

2) To take a loan from Prodigy Finance, the university to which you are going should be listed in their list

3) They give loans to only particular universities, Central Michigan University is listed in their list, so I have taken from Prodigy Finance.

4) It is completely dependent on the student profile, there is no need to provide income proofs from parents and it is completely independent.

5) The complete process will be done online; the only thing is we should provide them with the mandatory details

6) The loan amount will be directly disbursed to the college account; the tuition fee will automatically be deducted from the loan amount and the remaining amount will be sent to our account.

THANK YOU FOR READING THE BLOG, HOPE THIS BLOG HELPED YOU.