Quality education frequently comes with a price tag that is surging quickly with the passage of time. In such a situation, educational loans come to be the assistance technique for men and women unable to afford such higher expenditures. Hence, most students in search of good quality education finish up with a student loan.
However, authorities say, numerous instances, the sanctioned loan quantity is not adequate to cover the price of expenditures.
Ankit Mehra, Co-founder and CEO, Gyandhan, says, “Students, particularly those looking for financing overseas education, wonder if they can avail of two education loans from different lenders at the same time. Some even wonder whether they can opt for a personal loan on top of their education loan to meet short-term expenses. While there is nothing on paper that necessarily prohibits them from taking two education loans, lenders typically are not keen on extending an education loan if the student has an existing one.”
Also, hold in thoughts, for tax positive aspects, only one loan can be classified as an education loan.
Industry authorities say opting for a individual loan to meet extra expenditures is entirely fine as lengthy as one does not violate any terms of the current loan agreement. A borrower could even have to sign an affidavit stating other debt obligations on the borrower or may possibly have to inform the lender of any extra loans that he/she may possibly take or have taken.
Mehra adds, “If the borrower makes false statements on either of these fronts, the loan could be cancelled and the borrower could face other penalties as well. The key here is to communicate the correct information.”
Note that, banks also look at the fixed obligations to earnings ratio (FOIR) when taking into consideration individual loan applications. The best FOIR for individual loans is in between 40-50 per cent. In very simple terms, the fixed month-to-month obligations of the borrower should really not be more than 40-50 per cent of one’s total month-to-month earnings.
With a substantial majority of applications going on-line due to the pandemic, authorities say students are now enrolling in on-line applications and brief-term courses and searching for educational loans to fund these. Mehra says, “Traditional lenders in India have largely stayed away from funding these online programs and short-term courses. In such cases, NBFCs and emerging fintech players like GyanDhan are carving out a niche for themselves by offering zero per cent EMI loans.”
An education loan definitely has made greater education – inside India and abroad – inside the attain of thousands of Indian students who have been hitherto unable to fund their greater education. Experts say it is crucial that students recognize all the nuances of the education loan on present just before signing up for the identical.