Education has become very costly over the years and studying at a premier higher education institute usually requires huge amounts of money. If you don’t have a scholarship covering most of your education and living costs, studying at one of the top institutes becomes a distant reality for many. One way to meet the high fees and living costs is by taking an Educational Loan from banks or other financial institutions.
What are Education Loans?
Education Loans are financial assistance provided by financial or banking institutions to help students cover the cost of their education. These loans cover your tuition fees and living expenses. In some cases, Education Loans also cover your health insurance and travel expenses while you study at your preferred college or university.
Can I get an Education Loan without interest?
Education Loans are usually offered with lower interest rates. However, having said this, there are no banks or financial students that provide an interest-free Student Loan or an Education Loan at 0% interest.
While Education Loans without interest in India are not a possibility, you can get affordable Education Loans to pursue your higher education aspirations without putting a dent in the pocket of your parents.
Some banks and financial institutions provide loans without any collateral and also provide a moratorium period on interest to ensure that you can easily repay your Education Loan.
How to get affordable Student Loans?
Education Loans, also known as Student Loans, are typically offered by financial institutions, government agencies or private lenders. For instance, Axis Bank provides Educational Loans that can cover up to 100% of the total cost of education at affordable interest rates. You can avail of unsecured Education Loans of up to ₹75 lakh. The repayment period on these loans can go as long as 15 years and there are no part-payment or foreclosure charges.
Here are some ways to get an Education Loan at affordable interest rates -
- Secured Education Loans: These loans require collateral to secure the loan amount and are thus available at lower interest rates. If you fail to repay the loan, the lender has the right to take possession of the collateral to recover the outstanding amount.
- Subsidies and schemes: The government offers several benefits for taking Student Loans via various schemes. These benefits could be in the form of subsidies, moratorium on interest periods, and income tax rebates, among others. Using these subsidies and schemes, you can get loans at lower interest rates.
- High credit score: Maintaining a high credit score is important to get any type of loan at a lower interest rate. So, if you or your parents have a high credit score, you can get Education Loans at low interest.
- Prestigious institutions: Banks generally tend to offer Education Loans at lower interest rates to students selected at prestigious institutions because they are likely to land high-paying jobs and can easily repay the loans.
Avail instant Personal Loans for your education fees
If you don’t want to take an Educational Loan or are not eligible for one, you can opt for a Personal Loan. In comparison to Educational Loans, Personal Loans are easier to obtain and require minimal to zero paperwork. Axis Bank provides Personal Loans worth up to ₹40 lakh at interest rates starting at 10.65% p.a. These loans can be taken for a tenure of a minimum of 12 months and a maximum of 84 months.
Also Read: How to select the right Education Loan for you?
Conclusion
You cannot get an Education Loan at a 0% interest rate. However, you can still fulfil your aspirations to study at a prestigious education institute by taking an Education Loan at low-interest rates. You can also consider taking a Personal Loan for your education fees in some cases.
FAQs
Q1. Is Education Loan interest-free?
No, you cannot get an interest-free Education Loan anywhere in India. However, you can get Education Loans at lower interest rates, provided you meet certain conditions.
Q2. What will happen if I don't repay my Education Loan?
Defaulting on an Education Loan can impact your credit score negatively. So, if you don’t repay your Education Loan, you may not be able to take another loan in your entire lifetime. The lending institute could also drag you to court for not repaying the loan. Moreover, in the case of a secured Education Loan, the lending institution will recover its costs from the collateral.
Q3. Who is eligible for an Education Loan?
Any student willing to study at an institute of higher learning is eligible for taking an Education Loan. But do check the Education Loan interest rate before taking an Education Loan.
Q4. How to pay an Education Loan without interest in India?
You are required to pay interest on Education Loans. However, if you’re running low on funds, you can request the lending institution to provide a moratorium on the interest for some time. Another way is a government subsidy for Education Loans. Certain Education Loans by government also provide Education Loans with a moratorium on interest rates.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
