Education and Career Forum

Do the student or parent must the loan interest immediately after sanction of that loan? or any time lag is available?

Education loans have become the most important source of income of the banks from its customers. With the increase in the education standards and the facilities provided by various institutes, the fees structure has also seen a considerable increase. As a result more and more students are opting for education loans which has not only helped them in pursuing various courses of their choice but also increased the level of education standard of our country considerably.

There are various norms behind education loans. One such norm states that if a student who has taken the education loan gives the interest amount for the entire study period then he/she will get a subsidy of reduction in the interest rate after the study period by one percent. Hence, if you or your parents keep on paying the interest every month to the concerned bank, then at the end of your study period, the interest rate charged by the bank will be 1% lesser than the normal rate of interest for the education loan.

Hence it is not necessary to start paying the loan interest right after you start taking the first installment of the loan. You can pay it at the end of your study period when you get a job. But in that case you will not receive any subsidy of one percent reduction in the rate of interest.

Government has launched a scheme to provide full interest subsidy during the period of course and one year or six months after getting job. You can ask the manager to accept the unused amount and re-consider the EMI amount too. Unfortunately, there cannot be any waiver applied in your case other than the above mentioned government policies. Education loans mainly depend on the worthiness of the borrower. Bank interest varies between 12 to 13 per cent annually. Incase of India, you can get a loan of Rs 10 lakh approximately while for abroad studies, Rs 20 lakh can be granted. Some banks can provide loans amounting Rs 1 crore against residential property like land.