We all finish schooling and then plan to enter a college. School life was pretty simple with probably studying in one school. There were hardly any times when you had to take major decision.
The turning point comes when the person has to take a decision that will shape the career forever. This is when a person plans to further continue the studies and enter college.
There are so many colleges almost all over the world that offers almost all the courses that we want. There are both public and private universities exist together all over. We consider a number of aspects while making our decision.
One of the aspect that might not be the most important one but yes it a main factor which is the fees.
Everybody cannot afford to pay large sums of money that is demanded in the form of fees by some colleges and universities. But this cannot become a factor that will determine whether we study the particular course or not.
A solution to this problem would be to approach a bank and seek education loan.
Like there are loans like housing loan, business loans, vehicle loan, similarly there is the education loan.
This covers the tuition, living, books and examination fees of a student. As compared to the other forms of loans, the interest rate here is comparatively low and also the repayment period varies. The repayment period would be determined by the duration of the course itself.
So there is not one bank that is offering this facility. All the banks offer a service like this. Understand that the bank is doing you no favour by giving you this option. In return to the money that it is giving you now, it is charging you interest for the time period when you do not pay the amount.
Because it is a loan, there are some terms related to it that should be understood very clearly.
1. Principle amount
The principle amount is the amount that is being sanctioned in the form of loans by the financial institution.
It is not always the case that a person gets a 100% loan for education. Generally a person gets around 80 % of the amount in the form of loan. The amount of loan that is sanctioned by the bank will be determined by the following factors:
• What is the policy of the bank?
• What are the limits specified in the bank rule book?
• How much is the course fee?
• What is the duration of the course
2. Interest rate
One thing that has to be very clearly understood regarding the interest is obviously the interest rate and also understand that in most of the cases, the interest is on cumulative process.
This means that the interest would be charged not only on the principle amount but also on the interest amount of the past period.
The time is the duration in terms of years in months that is given to the borrower for the loan repayment. If the repayment is done in full in the time period, then there is no default.