'What if I default on my education loan?'

In an online chat with Get Ahead readers July 8, financial expert Anil Rego answered their queries on education loan. Here is the chat transcript

Madhumita Ghosh: Do I need to produce a guarantor for education loan?

Anil Rego: Yes, a guarantor is required for education loan.

Vinu Murthy: I want to apply for a loan of Rs 12 lakhs. What documents will I need?

Anil Rego: Following documents along with loan application are required. Offer letter from the respective college, course fees details, details of the guarantor (which may even include his/her ITR) and details of the respective asset if the same is attached for the purpose of security reasons.

Imran Farooqui: What is the current interest rate for education loan in India?

Anil Rego: Current interest rates on education loan in India are 11 per cent onwards i.e. minimum 11 per cent. However the rate differs from bank to bank, for the tenure taken and the loan amount.

Simon Xavier: Are there special benefits for girls?

Anil Rego: There are certain banks who may offer benefits like lower interest rates for girls... for example loan offered to girls will carry a lower interest rates by up to 50 bps (0.5 per cent).

Megha Nambiar: Sir I want to do engineering in the US. How can I apply for an education loan? What is the maximum limit of education loan for post graduate studies?

Anil Rego: The process for applying an education loan for oversees education remains the same. However additional documents may be required considering its an oversees course. however limit sanction will depend on the details and the proofs submitted and also after verifying the credentials of the guarantor

umar khan: what should i do to be sure my loan is not rejected? pls

Anil Rego: Make sure all the required documents are submitted well before time and the details which are furnished is 100 per cent true. However banks follow a due diligence process in order to decide whether a particular loan can be sanctioned or not

Satish Pulli: What happens if I'm unable to get a job and repay?

Anil Rego: Repayment starts either after 6 months from getting the job or after 1 yr from the completion of the course. If a person is not able to repay the loan the guarantor will be required to repay on behalf of you.

Amit srivastav: If I apply for a loan do I need to submit any of the income proofs or IT file or bank statement???

Anil Rego: The person who is a guarantor in the loan will have to submit his/her ITR details or income proofs along with details of bank account/statement

Amol chille: 1) Edu Loans For Premier Institutes like IITs,IIMs NITs draw low interest Rate is it true? 2) Simple Interest or Compound Interest is calculated for the moratorium period?

Anil Rego: Yes, few banks do offer lower rates on loan for some of the premier institutes. During the period of education the interest rate calculated is Simple Interest Rates and once the EMI starts the interest rate applicable is Compounding rate

Rafiq Qureshi: If I want Education Loan from bank I want to have any account in that bank or Not?

Anil Rego: Many banks offer loan benefits even without having a pre existing account with the bank. Thus it may not be necessary to hold an account with a bank while applying for the loan

Jaykar Kajale: I would like to know the following details:1) Can I take a personal loan in case of educational loans i.e. can I take a loan without submitting any guarantee?

Anil Rego: You can take a personal loan and use the proceeds to pay for the education cost. However in case of personal loan the rate of interest will be quite high and also you may not get the benefit of moratorium period as is available in case of education loan

chandekar muley: Dear Sir, My brother has completed his Engineering with the help of Educational Loan.Now,he wishes to go for further studies, So, My question is that can he further get the facility of educational loan?

Anil Rego: In case if he has not cleared his previous loan then there are thin chances of getting a fresh loan. However if the existing loan is taken care by someone i.e. EMI is been paid on time then a banker may consider to issue loan for such course

Revant Chole: I am planning to repay all amount of education loan of 4 lakhs (UBI) in this financial year. Should I repay the whole amount at once or pay by EMI, so as to get tax benefit.

Anil Rego: If the interest rate on your loan in quite high then it would be advisable to prepay the loan. Ideally one should make a comparison of benefits than one will receive from prepaying the loan v/s continuing the loan. However after repaying the entire loan the savings can be channelised towards investment in order to create wealth/corpus.

Sunil Ahsen: Is it required Collateral for education loan?

Anil Rego: There are banks who consider collateral only if the loan amount is above certain limits as specified by the specific banker. Thus it is advisable to check the same with a particular bank w.r.t the limit upto which collateral may not be required

Nitin Badesha: I STUDENT OF PGDBM 2nd semester. I have paid the fees of first year by cash. Now I want education loan. My city is Azamgarh (U.P). Can I get loan from in Ghaziabad (U.P.). Tell the branch also.

Anil Rego: There are cases where students apply for loan during the second year. However acceptance of the loan application will differ from bank to bank.

Nitish Chandak: My son is doing 3rd year BE in electronics and Tele communication. Sir Pl advice the formalities for the loan

Anil Rego: Following documents along with loan application are required. Offer letter from the respective college, course fees details, details of the guarantor (which may even include his/her ITR) and details of the respective asset if the same is attached for the purpose of security reasons.