When it comes to education loans, several myths can mislead students seeking financial assistance. These misconceptions can result in poor financial decisions and unnecessary hurdles for those trying to fund their studies.
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Wednesday01 Jan. 2025
It’s crucial to understand the facts behind these myths to make informed choices. In this section, we’ll clarify some common misunderstandings about education loans and provide reliable information to help you navigate the loan process with confidence.
- Myth: Education loans are available only for mainstream courses.
Fact: You can secure a student loan for a wide variety of courses, ranging from popular fields like STEM and MBA to unique programs such as Sound Engineering and Music Production. Education loans are also available for vocational training, skill development, and reskilling courses.
- Myth: Education loans can be used for just tuition fees
Fact: Most Education loans cover the entire cost of education, which includes tuition fees, travel expenses, accommodation, living costs, learning devices, and other related expenses.
- Myth: Education loans are given only if students provide collateral.
Fact: There are both secured (with collateral) and unsecured (without collateral) education loans available. You can choose between the two based on your financial needs and preferences. These days there are many NBFCs like Propelld that provide easy education loans without any need for collateral.
- Myth: You don’t need to repay an education loan while studying.
Fact: Most student loans have a moratorium period when you don’t need to pay EMIs. However, paying small amounts like simple or partial interest during this time can help. It reduces your loan burden and builds good money habits. After the period ends, you can repay in easy EMIs.
- Myth: A low-interest education loan is the best option.
Fact: Many students mistakenly choose a study loan solely based on low interest rates. However, it’s essential to conduct thorough research when considering an education loan. Look into various aspects such as turnaround time, customer service, covered costs, features, and benefits, among other factors.
- Myth: Everyone can get an education loan.
Fact: While education loans are tailored for students, you must meet the eligibility criteria set by the financial institution you choose. There are some fundamental requirements that vary across the loan providers and these must be met to get an education loan.
- Myth: Education Loans need a high credit score
Fact: A good credit score can help when applying for an education loan, but it’s not always necessary. Lenders usually look more at the student’s grades and the school’s reputation. Also, if you have a co-borrower with a steady income, it can help you get the loan even if your credit score isn’t high.
It’s important to know what’s true and what’s not about education loans. Clearing up common myths helps students make better choices for paying for their education. Whether it’s knowing which courses can get loans, how to pay them back, or what you need to get a loan, having the right info helps you find the best option.
Always research, compare lenders, and understand the details before choosing a loan. This way, you can focus on your studies without worrying about money.
NBFCs like Propelld can be a great choice when you are looking for an education loan.
Why Propelld?
The following are the primary benefits of Propelld.
| Particulars | Details |
| Max Loan Amount | 50 Lakhs |
| Collateral | Not Required |
| Moratorium | Available |
| Processing Time | 10 Times Faster than Banks |
| Disbursal Time | 7 Days |
| Approval Rate | Higher than Other Banks |
| Special USP | Marks Based Approval |
| % Financed | 100% of Fees |
FAQs About Education Loans Myths
1. Can I get an education loan for non-mainstream courses?
Yes, education loans cover various courses, including unique fields like sound engineering, music production, and vocational training.
2. Do education loans only cover tuition fees?
No, education loans can cover the entire cost of education, including tuition, travel, accommodation, living expenses, and learning tools.
3. Are education loans only given with collateral?
No, there are both secured loans (with collateral) and unsecured loans (without collateral), depending on your financial situation.
4. Do I have to repay the loan during my studies?
Most education loans include a moratorium period where EMIs are deferred. However, interest accrues, and making small payments like simple interest is advisable.
5. Is a low-interest rate the only factor to consider?
No, consider other aspects like customer service, processing time, costs covered, and additional features when choosing a loan.
6. Can anyone get an education loan?
No, applicants must meet eligibility criteria, such as course approval, admission to a recognized institution, and sometimes a co-borrower.
7. Is a high credit score mandatory for an education loan?
A high credit score helps but isn’t mandatory. Factors like the student’s academic record, the institution’s reputation, and a co-borrower’s income are also crucial.
8. Are education loans only for studying abroad?
No, education loans are available for both domestic and international studies, covering courses at recognized institutions worldwide.
9. Can I use an education loan for skill development programs?
Yes, many lenders provide loans for skill development, vocational training, and short-term certification programs.
10. What is the repayment tenure for education loans?
Repayment tenure typically ranges from 5 to 15 years, depending on the loan amount and lender terms.
11. Is prepayment allowed for education loans?
Yes, most lenders allow prepayment of loans without penalties, enabling you to save on interest.
12. Can I apply for an education loan without a co-signer?
Yes, some lenders offer loans without a co-signer, especially for students admitted to reputed institutions.
13. Do interest rates differ between lenders?
Yes, interest rates vary across lenders, so it’s advisable to compare options before choosing a loan.
14. What documents are needed for an education loan?
Common requirements include proof of admission, income proof of the co-borrower, identity documents, and course details.
15. Are there tax benefits on education loans?
Yes, under Section 80E of the Income Tax Act, you can claim deductions on the interest paid on education loans.
