INTRODUCTION

Education is an important and necessary step, since this communicates knowledge and skills, so
each and everyone can think for a stable and secure future. There is no doubt that education is the
backbone of a civilized society, but now days, education has become more commercial and in an
effort to ensure the best possible, for the continuation of the training is an expensive affair. But
there come some questions about what about those who want to have a university degree, but do
not have the finances to spend for the degree? To assist pupils and parents like this, lenders have
the education loans plan to provide financial help who wants to borrow and to achieve university
education and want to fulfill their dream or desire. These education loans take care of all
spending on education, on behalf of students and too easily facilitate to the upcoming conditions.
The education loans are easy to reach and are far in the credit market. With these loans you can
actually derive the funds for the cost of registration, inspection costs, and the hostel fees,
expenses for the library, purchase of books, equipment and computers, and personal expenses.
Moreover, these loans are open to everyone and can be used by the students from the good credit
and bad credit. Students who have bad or poor credit can also apply for education loans, but they
must
submit
cosigner
with
a
good
quality
credit
score.
With the help of education loans, the student can now concentrate on their studies without regard
to the financial situation.
Along with growing awareness about the importance of education to succeed in the knowledge
economy, the cost of quality education too is growing fast.Parents too are willing to bear that
extra cost to fund their child's higher education. Education loan is the most cost effective means
to fund your education if you are unable to get a full scholarship or do not have a generous aunt
or uncle willing to sponsor your education.Though most banks do provide education loan, it is
the public sector banks that are in the forefront in providing education loans.
In recent years, a large number of students, especially those pursuing professional courses in
India or abroad, are availing of education loans.According to latest data from the Reserve Bank
of India, education loans disbursed by Indian banks rose 51 per cent to Rs 15,000 crore for the
financial year ending March 2007 from Rs 9,962 crore at the end of March 2006

Till some years back higher education and quality education was not affordable to some
illustrious students because of the financial constraints. There was no any alternative but to jump
in the job market prematurely. And this led to untimely end of budding talents and their forceful
transformation into to the mediocrity. Scholarships were there, but those were so less in numbers
that only luckier few could avail them. But now the scene has changed drastically.
The boom in the banking sector has led to release of large amount of funds for education loans.
Now, education loans are easily available from various banks in India and this change is
encouraging more and more students to take up higher education despite their financial
shortcomings.
For those students wishing to invest in an education that will lead to a fulfilling life and a
rewarding career, educational loan can be a crucial decision. Student loans, distance education
loans, and even private education loans can help make schooling affordable. In turn, affordable
schooling can help students achieve their very best and can lead to real success in later life.

Definition
Money borrowed to finance education or school related expenses. Payments
are often deferred while in school and for a six-month grace period after
graduation.
Educational loans can be termed as a type of a monetary assistance such as
funding, rewards, financing and scholarships, which when borrowed in cash,
have to be returned with some added interest.

It is always advisable to borrow according to the need.

An education loan is a loan taken to help pay for an education, usually at a
college or trade school , but may also be used to pay for private schools or
prep schools as well
An advance of funds to a student for the purpose of financing a college or
vocational education.

While taking an education loan is easy, paying back requires careful planning.
DO NOT DEFAULT
Along with an increase in lending over the years, there has been a sharp rise in the number of
defaults.
A default spoils the credit score of both the student and his parents (usually co-borrower).
If equated monthly instalments , or EMIs, are overdue for 90 days, the bank classifies the loan
as a non-performing asset. The borrowers will not only come in the bad books of banks, if the
loan amount is higher than Rs 7.5 lakh, the collateral will be at risk as well.
REPAYMENT STRATEGY
Repayment starts after a 'moratorium period' or 'repayment holiday', that is, one year after the
end of studies or six months after getting a job, whichever is earlier. The borrower must have a
repayment strategy in place before EMIs start.

MAKE USE OF THE MORATORIUM PERIOD

Repayment does not start immediately. The extra time can be used to build a corpus. "The money
can be either used for partial pre-payment or EMIs," says Rego.
You can also repay some interest during the study period to lower EMIs. The bank starts levying
interest from the time of disbursement at the end of each course year or semester. The amount
keeps adding up, increasing the debt burden.
However, if you pay simple interest on the principal during the study period, your EMIs will be
reduced to a large extent. Many banks also give a 1 per cent interest concession to those who
repay the interest debited during the moratorium period.

TAKE CARE OF RATE FLUCTUATIONS

The interest rate is typically the base rate plus a fixed spread, say 1-2 per cent, that varies from
bank to bank. So, it is a floating rate loan.
If you are earning enough and are able to save some money after paying the current EMI and
other expenses, use the spare money to create a buffer in case of any increase in interest rate.
"A sufficient surplus should be maintained (at least three instalments) so that EMI servicing
continues unhampered even in the event of a spike in expenses," says V N Kulkarni, chief
counsellor, Abhay Credit Counselling, a trust sponsored by Bank of India.
SHOULD YOU PREPAY?

Considering that prepayment involves paying a penalty, you need a proper cost-benefit analysis.

WHAT IF YOU DON'T GET A JOB?

Banks extend loans based on the capacity to repay. This is usually based on the employment
potential of the student after completion of the course. However, what if the market is down and
the borrower fails to get good income or a job?

Some banks allow loan deferment, but they are hard to convince. "For exceptional and genuine
cases where the student is not getting a job due of macroeconomic conditions, lenders may
consider extending the repayment period," says Bhonsle of Credila Financial Services.
Usually education loans have tenures of five-seven years. However, as per the guidelines, the
tenure can be extended up to 10 years for loans up to Rs 7.5 lakh and 15 years for loans above it.
An extension of the moratorium period is allowed in case the student takes up higher studies
immediately after completing the course.
"The commencement of repayment will be shifted to six months from employment or one year of
completion of the course, whichever is earlier, without treating the change as restructuring. This
will be irrespective of whether the student has taken fresh or top-up loan for higher studies or
not," says Ravishankar S, general managerplanning and development, Lakshmi Vilas Bank.
Banks also give an extension if the student is unable to complete the course on time for reasons
beyond his/her control. The maximum extension in such situations is two years.
Webliography -http://businesstoday.intoday.in/story/tips-to-manage-your-education-loanburden/1/189393.html
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Need an education loan?

The criteria to get an education loan is actually quite simple and basic.
The first one is that you must be a citizen of India.

Also, you cannot say you are tentatively/ probably going to get entry into a course. You should
have already got admission. Once you secure admission to the course you wish to pursue, you
are free to approach a bank or financial institution to avail of funding.
Picking the right education requires a certain amount of research.
Here are a few questions you must ask when looking for an education loan.
1. How much will I have to pay?
Whenever you take a loan, the bank or financial institution will not fund the entire amount of
your education. You will be expected to fund a part of it.
Let's say your fees total to Rs 10 lakh (Rs 1 million). The bank may offer to give a loan of 80%
of the amount (Rs 8,00,000); you will have to put in the balance 20% (Rs 2,00,000). This is
referred to as the margin amount.
If the loan amount is not too large, the bank may offer to fund the entire amount.
2. What is the loan amount?
There will always be a maximum amount that is given as loan.
For instance, the maximum loan amount for studies abroad may be capped at Rs 20 lakh (Rs 2
million) by the bank. If your tuition fees amount to Rs 30 lakh (Rs 3 million), you obviously
have to cough up the balance on your own.
3. Do I have to pay any processing fees?
Some banks may charge a processing fee, others may not. If they do, check whether it is a fixed
amount or a percentage of the loan amount.
Let's say you are doing a course abroad that costs Rs 30 lakh. The bank is only going to fund Rs
20 lakh and will charge you a 1% processing fee. That will be another Rs 20,000 over and
above the Rs 10 lakh you have to scout for.
Or, let's say, your course fee amounts to Rs 20 lakh and the bank funds 80% of the amount. Rs 16
lakh (Rs 1.6 million) will be picked up by the bank. You will have to come up with Rs 4,16,000
(Rs 4,00,000 margin amount + 16,000 processing fees).
4. What is covered under the loan?
The cost of education is not just your tuition fee; it includes the other expenses that go along with
it.

For instance, if you are travelling abroad, you will need money for the airfare. There may be
hostel fees to be considered. The course you are doing may make it mandatory you have a
computer of your own. You will also need to buy books and/ or equipment.
It would be wise to list all that your course entails and come up with a total cost. Then talk to
your bank and see what exactly the loan covers.
5. Do I have to provide any security?
This all depends on the loan amount. Generally, if the loan amount is upto Rs 4,00,000, you will
not have to provide any security. If it is more than that, you will have to.
What does providing security mean? It is some form of investment that you surrender to the
bank.
It could be government securities, shares (but they must be approved of by the bank), bank
deposits, National Saving Certificates or even house property. These are handed over the bank. If
you cannot pay back the loan, the bank has the right to sell these assets and recover the money
you owe them.
6. Do I need a guarator?
In some cases, if the loan amount is not too high, but higher than Rs 4,00,000, the bank may ask
for a third party guarantee (instead of security).
The rationale behind having a guarantor is that it puts a moral obligation on the individual taking
the loan to repay it.
Should you default for whatever reason, the guarantor will have a legal obligation to pay up.

7. When do I start repaying the loan?

As long as you are studying, you will not have to worry about repaying the loan. This starts only
once the course for which you have taken the loan is over or once you start working.
Some ask for repayment six months after the course is completed while others put it at a year.
You could even get the option of being allowed to repay the loan only after you have secured a
job.

This, however, does not mean you can delay repayment for years. There will be a limit. For
instance, if you do not secure a job within a year of completing the course, then repayment starts
irrespective of whether or not you are employed.
8. How long do I have to repay the loan?
Generally, you will get up to a maximum number of 10 years to repay the loan.
This will also depend on the loan amount. The higher the amount, the longer you get to repay. If
your loan amount is less than Rs 4,00,000, you may probably get a maximum of five or seven
years to repay it. If it is a larger amount, it will go up to 10 years.
9. What are the documents required?
This will vary depending on the bank in question. When you are given the education loan
application form, you will also be given a list of the documents you need to give the bank.
Basically, you will have to give proof that you have been selected for the course and the schedule
of fees.
The mark sheet of the last qualifying examination will also have to be produced.
Keep a couple of photographs ready.
10. Will my course be eligible for a loan?
All graduation, post-graduation and professional courses are eligible for a loan.
Courses that offer a degree or diploma are also valid.
These courses could be from foreign universities or institutes approved by the state and central
government.

BENEFITS
How Students Can Benefit From Educational Loans?
Loans for Education Can Help Ensure Better a Job after Graduation

In today's job market, college education is often a basic requirement. Loans can help students
pay for the education they need in order to get jobs that are well-paying, fulfilling, and offer a
real future. Student loans can be a real investment for future.
Loans Designed for Students Can Give Students More Options
Without a loan, students would often be forced to select the most affordable school. Obviously,
those from affluent backgrounds might have an easier time selecting the best schools, or
selecting the schools that they really wish to go to. With loans, each student can decide which
school to attend, regardless of initial cost.
Traditional Lenders
Many traditional lenders -- such as banks and other financial institutions -- offer loans to
students. In some cases, these loans closely resemble the federal or school loans in their
low interest rates and convenient repayment terms. However, not all loans offered by
traditional lenders fall into this category. It is up to students to find the best loan
alternative for them by carefully comparing several traditional lenders.

Generous Repayment Terms

Loans designed to help students pursue an education recognize that students should spend their
school time studying, not working to repay a loan. For this reason, many loans created for
students allow students to pay back their debts very gradually and only after graduating. This
means that students can focus on their studies rather than on their loans. In fact, most loans
designed for students give students the opportunity to put off repaying their debt until six months
after graduation. This gives students a chance to settle down and find a job before repaying their
debts.
Loans created for students recognize the fact that students have not had time to build up credit
rating. For this reason, applications for student loans are simpler and more streamlined. The
qualifications for such loans are also usually more lenient.

Types of Education loans

Many Various Student Loan Types are Available

Since there are so many students, each with separate needs, there are a number of loans designed
to help students pay for their
education. Many of these loans are designed specifically to help students with their unique
money issues. There are loans created by private sources, by the government, and by schools.
Many feature very low interest rates. Some are need-based and some are not. No matter what a
student's financial needs, there is likely a loan available that can help the student meet their
educational goals.
Following are the types:
1. Student Loan
2. Federal Perkin Loan
3. Distance Education Loan
4. Education Grants
5. Special Education Grants
6. Alternative Education Loan
7. Signature Loan

1. Student loan
The student loan is usually the best choice education loan for a student whose parents cannot
pay for his or her education. While the student remains in school, interest on this type of
education loan accrues and is paid for by the government. When the student stops attending
school, the education loan is usually paid off in payments. These payments can be quite large if
the loan is large, so students should borrow only what they need.

A student loan is designed to help students pay for college tuition, books, and living expenses. It
differs from other types of loans in that the interest rate is substantially lower and the repayment
schedule is deferred while the student is still in school.
Sallie Mae acts as a secondary market for student loans. The money from a Sallie Mae loan is not
actually lent to the student or their parents by the government. Once the loan has been
completed, the lender will then sell the loan back to Sallie Mae in order to free up their funds to
help additional students.
There are many types of student loans out there.
Types of Student Loans
The first place to start when looking for education loans is to understand the types of student
loans. They fall into two main categories
Private loans and Consolidation loans.
1. Private Loans
Private student loans are those offered by private institutions, such as a company or a school.
Often students who do not qualify for federal aid can get a loan through a private program. A
common type of private loan is a work study program for students, especially grad students. This
gives the student a low interest rate on the loan in return for working for the college, university,
or company.
Since private loans are offered by many different institutions, it is hard to say what the interest
rate is on each loan. The best tip to finding a fair loan rate on a private loan is to advise you to
shop around for the lowest interest rate on private student loans that you qualify for. This is
probably going to be the best loan for you!

2. Consolidation Loans

Consolidating your education loans allows you to combine several loans into one. By taking out
this type of loan, you effectively pay off your current student loans. In exchange, you have a new
loan with a new interest rate. In many cases, you'll enjoy smaller monthly repayments and low
rates when you choose to consolidate. If you have been struggling with your bill payments,
consolidating your education loans can make a lot of sense. Consolidation loans for student debts
are simply designed to make repayment easier. These types of loans reduce the risk that you will
have to default, and therefore these loans can be instrumental in helping you save your credit
rating.
Applying for student loan consolidation is as simple as filling out a form. Many private lenders
make online forms available for you, allowing for easy application. When you apply for a student
loan consolidation, you enjoy many benefits:

Education consolidation loans give you low interest rates - as low as 4.75% or even better
in some cases. This can reduce your monthly bills and can save you thousands of dollars
over the years it will take you to repay your debt.

Student consolidation loans provide you with smaller monthly bills. In some cases, you
can reduce your bills by 51% or more, giving you more money for necessities.

Student consolidation loans have easy applications many companies boast no credit
checks and low or no fees. You can easily consolidate your federal and private education
loans with private lenders and organizations.

When students have too much education debt, they are often looking for a way to lower interest
on student loans and keep the same loan schedule. One option is to get a consolidation loan that
has a low interest rate.
The consolidation loan will average the interest you are paying on all of your loans put together.
This lowers your overall interest rate. You can keep the same payback schedule, or you can
receive more time on your consolidation loan.

2. Federal Perkins Loans

A federal Perkins loan is a loan that you can use for your college education, either graduate or
undergraduate. It is a low interest rate low, usually having an interest rate of around 5%. Perkins
loans are available to students who are considered as having "exceptional" financial needs when
it comes to funding their education.
How to Get Federal Perkins Loans
Federal Perkins loans are available to students who are considered eligible by their university's
financial aid office. You cannot directly apply for a federal Perkins loan. To be considered for
federal Perkins loan application, you must first file the Free Application for Federal Student Aid
(FAFSA). This document will be reviewed, and if your income is within the right parameters,
you will be required an amount of money through the federal Perkins loan program. This money
will be paid back when the education is completed.
Each school that participates in the program is given a fixed amount of funds that they can award
to eligible students each academic year. This gives the institution the responsibility of
determining the amount of need that will give the student the Perkins loan option. As such, there
is no set amount of money that is considered enough need. Each year, the neediest students will
be awarded the loan.
Repaying Federal Perkins Loans
When you receive a federal Perkins loan, you will be required to sign a promissory note that
states your agreement to repay the loan according to the specified terms. You need to understand
that this document is legally binding, and you must repay your loan. The money is borrowed
directly from your university, and is repaid to them, rather than to a private bank. You can
include Perkins loans in a consolidation loan, but the interest rate on Perkins loans is so low, this
is not usually recommended.

Grace Period
The grace period is nine months from the time of graduation, or from the time of discontinuing
your education. During this time, there is not any interest applied to the loan. After the grace
period is over, you must begin to pay your loan back, and interest begins to build.
Repayment
Repayment is usually in the first quarter after you leave school, which comes to around twelve
months from your graduation. This provision gives recent graduates time to gain employment to
help pay back their loan.
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3. Distance Education Loans - Get Ready for Education at Your Doorstep

Distance education is more popular than ever today. It allows students to study remotely, without
having to attend classes at a university. This allows students from all walks of life to pursue a
college education without disrupting their family or work life. While there is no doubt that
distance education makes education more accessible to many, students often find that they
require distance education loans in order to pay for their remote education.
Distance learning education loans are more available than ever before. Students can now turn to
a number of sources in order to get the money they need to succeed in school.

4. EDUCATION GRANTS
Grants and scholarships are money that is available to students from the federal government,
private benefactors, and organizations. The purpose of grants and scholarships is to encourage
students to study at a higher level and in order to encourage specific types of projects and
research. For example, an organization may set up grants specifically to encourage students to

research specific environmental issues. Unlike loans, grants and scholarships do not need to be
repaid. Plus, scholarships and grants are also a great honor -- they can be included as a
distinction on your rsum. You may find that having certain grants and scholarships on your
resume makes you more qualified for some jobs after graduation.
What are the Different Kinds of Grants Unavailable?
Whether they come from private donors, organizations, or the government, there are many types
of grants available:
A. Grants Available to Students Pursuing Higher Education
If you're attending a doctorate program, a master's program, or certain types of professional
programs, you likely qualify for various grants. This is because both the government and private
organizations wish to encourage people to pursue higher education. The more people pursue
higher degrees, the more qualified professionals there are in society.
B. Grants Available to Students Pursuing Research
A number of grants are available to help students with specific types of research. For example, in
the sciences there are a number of issues that certain organizations and governments see as
crucial. In order to encourage students to actively work on these areas of study, organizations and
governments make grant money available. In order to apply for this type of grants, you often
need to prove not only that you are working on a specific research project, but you also need to
fill out an application and a proposal that outlines how useful your project and research will be.

5. Special Education Grants

Special education generally refers to students who are differently-abled. However, it can also
refer to students who require special education needs in other ways. For example, students with
emotional difficulties that make it difficult to study may qualify for certain types of special
education grants and loans. Students who are not able to attend regular classes for a specific
reason may also qualify for special education loans and special consideration when pursuing a
college degree. If, for example, you are hospitalized, you may qualify for special aid. Special

education grants exist from a number of sources. These types of aid do not have to be paid back
but allow students to pay for their education.
Grants for special education should be sought out earnestly by those were qualified for them.
When it comes to grants, special-education students do qualify for both regular grants and
special education grants. Students will want to apply for both types of grants to ensure that they
get the funding they need

Qualifications
If you have trouble with school because of the physical, emotional, or mental challenge, then
chances are pretty good that there are financial aid options available for you. Some types of
special-education scholarships or grants are designed for people with specific types of
challenges. Others are simply earmarked for anyone who faces special challenges when pursuing
an education.
Depending on the grants or scholarships to apply for, you may find that you require additional
application materials. Often, you will need to provide a doctor's note or some other confirmation
of your condition. You'll often also be asked to describe how your condition affects your ability
to function.

6. Alternative Education Loans

Alternative education loans are also known as private education loans. These loans are simply
amounts of money lent by private lenders. They may be offered
by banks, private companies, or other financial institutions or persons. The loans are attractive to
distance education students because they are so flexible. You do not need to be a full-time
student, in many cases, to qualify for some form of loan. You often do not need to be a United

States citizen in order to apply for such loans.You can also apply this type of education loan to
any school you attend.
Alternative education loans are low cost loans that are available to qualified students who need
more financing than that which is allowed for in government financial aid programs. They are
also available for those who choose not to take advantage of government lending opportunities.
They should be pursued by those who have pursued all loan and grant options to the fullest.

What Are Alternative Loans Based On?

The terms of education alternative loans are based on several factors. Usually, the lending
institution will lend the money on a per-year basis. This allows the student to have the income
each year, helping with budgeting. The interest rate and fees of the loan are usually established
by determining the credit worthiness of the borrower. Often the parents, as co-signers of the loan,
are also considered. The repayment terms are usually between fifteen and twenty years, and the
alternative loans are not eligible for federal loan consolidation programs. Typically the lender
will require the student to be a student at least on a part-time basis.
There are bad credit alternative education loans out there, but it is important to read all fine print
carefully. Often those seeking alternative education loans with poor credit scores will pay for it
with fees and interest. One alternative is to get a co-signer with excellent credit. This will often
bring down the fees and interest. Keep in mind, though, that your co-signer will also be
responsible for loan repayment should you fail in your responsibility.

7. SIGNATURE LOANS
Sometimes referred to as an unsecured loan, signature loans are financial agreements made
between a lender and a borrower that requires no collateral. Unlike other loans in which the
borrower pledges property or some other assets as security for the loan, the signature loan is

extended on the basis of the borrowers good name, his or her credit rating, or a combination of
the two. Signature loans are available for both individuals and businesses.
One of the advantages of obtaining unsecured signature loans is that none of the assets of the
borrower are committed or pledged for the life of the loan. This means the debtor is free to use
all assets in any manner he or she sees fit. This includes selling off assets in order to comply with
the terms of the unsecured loan
Typically, the paperwork necessary to establish signature loans is less complicated than with
other loan types. This also helps to move the loan process along at a quicker pace, as there are
fewer details to address. In some cases, it is possible to obtain a signature loan in a matter of
hours.
There is even the possibility of obtaining signature loans when the current credit rating is not the
best. Signature loans for bad credit are somewhat more difficult to obtain; however, if the lender
is familiar with the borrower and is confident the loan will be repaid according to terms, the
debtors current credit status may be overlooked.
Bad credit signature loans do not necessarily have to be obtained from a loan agency or banking
institution. A personal signature loan from a relative or acquaintance may help the debtor through
a temporary financial reversal. As with any financial agreement, it is a good idea to lay out the
terms and conditions for repayment in a clear and concise manner. This helps to minimize the
chances of any misunderstanding on the part of either the lender or the borrower during the life
of the loan

SOURCES
Sources for Education Loans - It is no Big Difficulty
If you're looking for loans for education, you may be surprised at all the different ways that you
can get financial aid. The truth is, there's no single source for student loans and for financial aid.
Each student will have to seek out and research a number of sources in order to get the best
financial aid package possible. Whether you rely on private education loans, government
education loans, education direct loans, scholarships, grants, or other sources, you will likely
need several sources to find all your college funding.
1. Financial Institutions
If you're looking for education loans, financial institutions can provide you with flexible and
competitively priced loans. In fact, many educational institutions, including Wells Fargo and
Sallie Mae, offer special loans designed especially to meet student needs. These loans often have
low interest rates and long repayment terms. In many cases, you can wait to begin repayment
until after your education is complete or until after you're no longer attending school full-time.
This allows you to focus on your studies rather than on your debt while you're still studying.
2. Banks
Banks today offer number of financial solutions, including loans, to their patrons. In fact, banks
today even offer special student loans, which allow students to defer repayment until after school
is finished. In addition, many students find banking services such as student credit cards and
personal lines of credit, to be a flexible way to arrange for emergency loans or short-term loans
during their degree.

3. Colleges and Universities

Colleges and universities offer their own financing solutions. You will certainly want to speak to
the financial aid office of any school you're considering attending. Once you begin attending a

school, one of your first stops on campus should be to the financial aid office. Colleges and
universities often offer number of bursaries, grants, and scholarships to their students. These
forms of funding, some of which are need-based and some of which are not, do not have to be
repaid. Unlike a loan, you can simply use the money and never have to repay it. Sometimes, you
can have your entire education paid for through college scholarships grants and bursaries.
Many colleges and universities also allow you to pay off your student fees and tuition gradually.
If you work part time while also attending school, this monthly payment program may help you
afford school. Some larger colleges and universities may be able to help you arrange for loans for
education as well. Plus, your financial aid office will be able to help you learn about money and
proper budgeting, which can help ensure that you make the most out of every dollar you borrow
or get for your education.

4. Grants
Grants are amounts of money that are awarded for specific work related to education. Often,
grants or given away for specific projects or research endeavors. In most cases, grants are
reserved for graduate students, professional students, and some older undergraduate students. To
apply for grants, you often have to submit a project proposal, rsum, as well as an application.
However, you will not have to repay grants back. Some grants also very generous, allowing you
to find your research work and attend school.
5. Bursaries
Bursaries are given based on financial need. They do not have to be paid back. Often, bursaries
are financed by alumni and by organizations. Their purpose is to help finance students with
financial need. Some bursaries are also specifically designed to help students with unexpected
financial difficulties. If you can prove that you have financial need, speak to your schools
financial aid office. They will be able to tell you which bursaries you qualify for.

6. Scholarships
Scholarships awards of money that are made to students. They range from very
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small to very large. Some cover the entire cost of your education. Not only to scholarships not
need to be paid back, but they also are important distinction. Being awarded scholarships is an
honor and looks wonderful on your rsum.
You should apply for every scholarship that you qualify for. Not only will it help you to pay off
your schooling, but it may help you get a job. Many scholarships are based on academic ability.
However, there are scholarships awarded based on specific abilities or other qualifications. Your
school likely offers a number of scholarships and many private scholarships also exist. It is
estimated that millions of dollars of scholarship money goes unclaimed each year in the United
States. For this reason alone, seeking out and applying for scholarships dramatically increases
the chances that you'll be able to pay for your education.
If you're looking for loans for education or for financial aid, you obviously have many places
that you can turn to. Not only are there literally millions of scholarships available, but private
education loans, government loans, grants, bursaries, and other forms of funding exist. If you
begin early, research financial aid thoroughly, and apply for every form of financial aid that you
qualify for, you should be able to find enough money to attend the school of your dreams. Often,
when it comes to financial aid, persistence is key.

IMPORTANT POINTS TO BE NOTED BEFORE APPLYING FOR

EDUCATION LOAN
Following are a few points you need to check while applying for an education loan.
Repayment options
Like for all other loans, you have to pay interest on your education loan too. But unlike other
loans, education loan provides the option of a moratorium period or a 'repayment holiday', which
means, the borrower can suspend repayment of the loan till the education course for which the
loan was taken is completed.
An education loan typically has three repayment options:

Education loan with repayment holiday. Many banks stipulate repayment within one year
after completing the course or 6 months after getting a job, which ever is earlier.

Interest alone is paid during the period of course. After the course completion, you start
paying the actual EMI (principal and interest).

You start repaying the loan through EMI immediately after loan disbursement, in which
case you could get the loan at an interest rate lower by about 1 per cent.

The repayment conditions vary from bank to bank. So, talk with as
many banks as possible to get the repayment option that suits your requirements.
Interest rates
Interest rate on education loan is usually lower than a personal loan but slightly higher than a
home loan.
Some banks offer a 'fixed' rate of interest while others offer 'floating' rate of interest on education
loan. If the difference between fixed and floating rate is only about 1 per cent, it is advisable to
opt for fixed rate as education loans have shorter repayment tenures of 5-7 years.
Many banks do not offer genuine fixed interest rate where the interest rate remains fixed for the
full tenure of the loan.
They, typically offer a fixed rate loan with a reset clause. This means the bank will have the right
to revise interest rate after 2 or 3 years or whenever the bank feels it necessary to increase
interest rate. So make sure that you take a genuine fixed rate loan. If it is a fixed rate with reset
clause, a floating rate may be a better option.
Finally, the choice between a fixed and floating rate is dependent on the risk appetite of a loan
taker, that is, you. If you are totally risk averse and do not want to face the prospect of your EMI
or repayment tenure shooting up in the event of an upward movement of interest rate, then you
should definitely go for a genuine fixed rate education loan.
However, if you strongly feel interest rate will go down during the loan tenure and are willing to
take a risk on that count, you can perhaps opt for a floating rate loan.
Many banks, especially public sector ones, have special schemes for girl students. Some banks

offer 1 per cent lower interest rate for girl students. So check with your bank about all special
schemes.
Processing fee
Many banks do not charge a processing fee for education loan. So if your bank asks for a
processing fee, you might be able to persuade the bank to waive it off for you.
Prepayment fee
Again, in almost all cases, banks allow foreclosure or pre-payment of the education loan without
charging a penalty if the borrower makes the payment from her/his own sources.
Banks charge a pre-payment penalty (usually up to 2 per cent of the outstanding loan amount) if
the loan is transferred to another bank.
Expenses covered by education loan
The definition of expenses which education loan covers differ from bank to bank. The amount of
education loan sanctioned is in relation to the expenses that you will incur wile pursuing the
course. The most common expenses covered include:

Fees payable to college/school/hostel

Examination/Library/Laboratory fees

Purchase of Books/Uniforms

Caution Deposit/Building Fund/Refundable Deposit

Travel Expenses/Passage money for studies abroad

Besides the above mentioned, there may be other costs incurred for the completion of the course.
Like the cost of instruments, lap top and other aids necessary for completion of the course.
Some banks like SBI also offer loans up to Rs 50,000 for two-wheelers as part of education loan.
Banks provide about 80 per cent to 90 per cent of the cost of education as education loan. But the
important factor to check here is the education expenses that are recognized by your lender.
If part of your education (course fee, for example) is funded through a scholarship, you could
still get a loan to cover the balance expenditure.
In such cases, most banks include the scholarship amount as part of the total cost of education.
This way you could end up financing the entire cost of your education through loans and
scholarships.
Lastly, it is always advisable to check with as many banks as possible before finalizing your
lender to get the best deal.