Many students harbour dreams of pursuing higher studies; however, they often require financial support for the same reason. Banks and NBFCs or Non-Banking Financial Companies finance higher education for students to help them afford their higher studies. They help students by offering them a higher education loan. These loans can truly prove handy and allow you to protect your family’s assets. Unfortunately, there are many myths that exist about educational loans. These myths often stand in the way of students getting the right funding that that need. To help you get access to the right information, we have listed down 4 myths about education loans and revealed the truth behind them. Let’s take a look –
1. Education loan only covers the course tuition fees of a student
Students believe that education loans cover tuition fees of their course only. They think that education loans do not cover the cost of sustaining a decent lifestyle in a city away from their hometown if they need to relocate there to study a course. Of course, this is not true. Study loans in India cover the course tuition fees of a student as well as the overhead expenses of studying that course. For instance, education loans cover library fees, exam fees, and cost of books, stationery and laptop and so on.
2. A student has to contribute margin amount towards their higher education
Students believe that lenders always ask them to cover 5 to 10% of their higher education costs if they intend to study abroad. While this is true, it is so only in some cases. Non-Banking Financial Institutions or NBFCs are known to cover 100% costs of a student’s higher education. In other words, they do not expect a student to pay margin money.
3. Education loan is offered only after a student is admitted in a university or college
Students believe that they are offered study loans in India only when they get a seat at a university. This is not true. NBFCs offer education loans to students who need funds to get a visa to study abroad. In other words, NBFCs offer pre-visa loans, pre-admission loans, and certificate of availability of funds to students who need money to secure their chance of studying abroad.
4. Interest is charged on an education loan as soon as it is sanctioned
Students believe that lenders charge interest on education loans as soon as those loans are sanctioned. Actually, lenders charge interest only when the loan amount is disbursed. They disburse the loan amount in small steps every semester or year. And interest is charged only on the amount that is disbursed up to that particular moment.
Now you know what are the facts about education loans for students are, and rumours that muddle your understanding of them. We wish that you get a seat at a university or college of your choice and also secure funding for the same. Please consult a financial advisor before you get a higher education loan for yourself. Have a nice day!
