Guide to Help Parents While Taking Education Loan for Kids

With education inflation pegged at a whopping 10% between 2012 and 2020, it is fair to say that the study expenses are becoming unbearable for Indian parents. From handling the tuition and exam fees to funding the post-course costs, parents often find themselves struggling to cope up with these regular expenditures. 

No matter how expensive it gets, quality education is always of prime importance. Therefore, as a solution, individuals inevitably find their inclination towards education loans, which help them to acquire funds to meet such expenses and plan their child’s future.

All about education loan

From the basic course fees to additional expenses such as hostel and exam fees, books and other miscellaneous charges, education loan generally cover most of it. Students planning to study both abroad and in India can apply for this particular loan by submitting necessary details as asked from the lender. However, the sanctioned amount can vary from one financial institution to another, including the sanctioned amount, as the foreign education costs are typically higher. 

Despite its various advantages such as collateral-free nature, education loans also come with certain limitations. These are:

  • Excessive document requirements: The documentation procedure is comparatively lengthy and stringent since financial institutions usually focus on the paperwork while scrutinising the applications. 
  • Repayment tenor: While availing a sizable amount to support your child’s education, you might expect the repayment tenor to be a lot more flexible so that managing other liabilities gets easier. Education loans usually come with shorter tenor, which inevitably increases the EMIs as well as a financial burden. 
  • Loan guarantor: Some of the lending institutions have additional requirements when the loan surpasses a certain amount. Parents often need to act as guarantors on such credit. 

In such cases, education loan against property comes as an ideal alternative to choose the best American universities to pursue your undergraduate degree and support the education expenses. 

How LAP loan is better

Due to its secured nature, borrowers have to mortgage an immovable property to avail funds from financial institutions. Even though the availed amount is based on the property’s market value, with the affordable mortgage loan rates, handling the monthly instalments becomes comparatively easier. 

In case you decide to finance your education with a loan against property, the following are some additional benefits you can expect:

1) Quick approval

The document requirements are not too stringent in case of mortgage loan, and also its secured nature automatically ensures lower risk of repayment defaults. Therefore, the approval process does not take much time and requires only a few simple steps to complete. 

2 ) Flexibility to use

In case of education loans, the sanctioned amount often directly gets transferred to the college or university where one is pursuing the course. However, loan against property comes with no end-use restrictions feature, which facilitates complete freedom when it comes to its usage. 

3) Pre-approved offers

Top financial institutions are coming up with different loan schemes, and pre-approved offers to make financing a lot more convenient. Since these offers are available on different financial products like loan against property, home loans, etc., choosing LAP over education loans inevitably seems like a better option. All you need to do is check your pre-approved offer by submitting necessary details like name and contact number to get such deals. 

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Other than that, borrowers can also expect flexible repayment tenor to handle the EMI charges conveniently. However, it is advisable to check the exact amount you will be paying each month using a LAP EMI calculator in order to smoothly manage other liabilities as well.

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  1. The education of their children is a critical goal for almost all Indian parents. However, while providing the best education is priority, not many parents may actually be able to meet this goal. This is because the cost of education has been spiralling over the years, with education inflation pegged at a whopping 10%.


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