Should I take an education loan at graduation level?

Should I take an education loan at graduation level?

I have appeared 10+2 this year and awaiting results. I want to do BBA from a good commerce college in Kolkata; Xavier’s being my first preference. I shall be appearing their entrance tests and quite confident about getting a seat. However, their fee structure seems to be scary and that would burn a hole in my parent’s pocket which I want to avoid. Would it be wise to avail an education loan for my studies? Please provide the details for the same.

First let me congratulate you for being so thoughtful about your parent’s budget. However, I would not advise you or anyone to go for an education loan at the graduation level. The rate of interest is quite high and would burn a hole in your pocket as soon as you start earning if not your parent’s. My advice is that education loan should be taken only for post-graduation programs and not at the graduation level. If you are ready to deal with the high rate of interest, I have mentioned below is the detailed information.

The norms and interest rates offered by different banks are almost the same as they all have to follow encoded rules of the Reserve Bank so it is absolutely useless to go comparing. After you apply for an education loan, the bank will take into account the capability of the borrower based on personal discussions with the student, family's possessions and annual income, the nature of the course and reputation of the institute. Mostly loans up to Rs. 4 lakh have no collateral or margin and the interest rate will not go over the Prime Lending Rates (PLR). For loans above Rs. 4 lakh the interest rate will be PLR plus 1 percent. Interest rate on more than Rs 4 lakhs start from 11.5% per annum to 12.5 % per annum depending on the kind of security you provide to the bank, like deposits in accounts and property of parents. The repayment starts after you have finished the course or started work, to be repaid over a period of 5 to 7 years.