We have all heard the age old saying that the path to a great career and successful life is paved through a quality education. Holding a higher education degree opens up many career avenues and helps you secure your financial future. But with the ever-rising cost of college and university fees, students and parents have no choice but to take on an education loan to fund higher studies. Education loans cover a host of expenses related to higher education such as the tuition and examination fees, hostel fees (if applicable) cost of books and apparatus, conveyance charges and so on. Here’s the education loan procedure you need to follow.
Do your research and choose the lender
Before you begin with the loan application procedure, you need to get the admission offer letter from the school you wish to attend, finalise the lender and then visit them online or in person. Let’s say you choose bank of Baroda as your preferred lender.
Fill the loan application form
If you apply for the loan online, you can find the loan application form on the lender’s website. As per the instructions of the Department of Financial Services, Ministry of Finance, Government of India, all education loan applications (including applications received by Bank in physical format) are to be applied through Vidya Lakshmi portal, i.e. https://www.vidyalakshmi.co.in/Students
Appear for the interview round
The procedure to take education loan continues with the interview round. Whether you apply for the loan offline or online, the bank may call you to appear for a personal discussion. The student wishing to study further is considered as the principal loan applicant, which is why he/she must be present for this discussion. The bank generally asks student applicants some basic questions regarding their overall academic performance, the degree they wish to pursue and the school they wish to attend and so on. They also ask questions regarding the possible income that can be generated from their chosen field. Based on the information provided by the applicant, the bank decides whether or not to proceed with the loan.
Provide the documents
The bank also asks you to provide some documents as part of the Bank’s education loan procedure. You need to submit the admission offer letter provided by your chosen university. The bank will also do its due diligence and verify your enrolment.
The bank approves the loan
After verifying your credentials, your student loan may be approved. The student’s one of the parents/guardians are listed as co-borrower or guarantors and the bank also checks the guarantor’s /co-borrower’s credit scores before approving the loan. Additionally, the applicant must also sign a promissory note and other prescribed loan documents, assuring the bank that the loan will be repaid within the stipulated tenure.
The last step in the education loan procedure is loan disbursal. After all formalities are completed, the bank disburses the loan amount directly into the bank account of the university the student wishes to attend. Disbursement can be done partially (–semester wise) or fully, at one go.
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