4 'Facts' about Education Loans in India that are actually just Myths
While exploring your education financing options, you’re bound to hear a gazillion opinions on funding your higher education the correct way. And while a good chunk of what you hear will be good advice, unfortunately, you are very likely to come across some many education loan myths, which are considered facts by the general public.
In this article, we’ve debunked four such prominent education loan myths, to help you make truly informed decisions about funding their higher studies:
Myth 1: People who take student loans are ineligible for Scholarships
Scholarships and education loans share the same purpose; to enable you to pay your education fees. Often, they even share the same restrictions on what you can use the money for. The only thing that separates them is that you have to pay back a loan
It is true that academic performance plays a significant role in determining both scholarship amounts/eligibility and loan terms. However, the conditions for availing them also involve multiple other unrelated factors. As a result, you can never be ineligible for a scholarship if you’ve taken an education loan. Since, you are on an education loan, you should seek as many scholarships as you can. Every rupee in scholarship helps ease your education loan burden.
Myth 2: There’s more loans and scholarships available for study abroad.
Today, countless scholarship opportunities and a thriving market of education loans exist for study abroad aspirants. The emergence of these resources has been interpreted as a scarcity of similar opportunities for students who wish to study in India. However, this is not the case. The reason behind the surge of study abroad loans and scholarships is the boom in Indian students studying abroad in recent decades.
Myth 3: Education loan terms are uniform for students going to any university
Each student has a unique profile and each lender, their own criteria for sanctioning an education loan. Before sanctioning an education loan for a particular student, banks look at program relevance, learning outcomes and projected salary alongside financial details. As a result, decision on loan sanction, amount, and other loan terms are directly influenced by the program a student attends.
Because there’s no one single formula for sanctioning student loans, loan offers differ vastly for applicants. The best way to know which one suits your needs is to compare and analyse multiple offers from as many lenders as possible.
Myth 4: A cosigner is compulsory for Education loan
Co-signer requirement has long been considered an indisputable feature of all education loans in India. It is widely believed that any education loan is impossible without the availability of a cosigner, who can take the responsibility to repay. But surprisingly, this too isn’t true!
Although quite rarely, banks can waive off your co-signer requirement. However, this is only done in certain circumstances. In most cases, this only happens when you’re enrolled in a highly reputed program with a great learning outcome (we’ve observed this disproportionately includes executive PGDM programs).
The eligibility criteria differs between banks and so does the lIst of programs for which such a waiver is available. Again, it’s best to check with as many lenders as possible, so that you avoid missing out.
There are numerous myths associated with education loans which mislead people into false decisions. However, you can prepare yourself to make well informed decisions through proactive consultation and assessment of multiple offers.