Challenges for MS and MBA aspirants aiming for top universities abroad are boundless. Often education loans add to your list of worries, particularly with several misconceptions going around. Here, we debunk a couple of such myths:
1. Sanctioned Amount vs Disbursed Amount
Educational loans are different from other loans in that the interest need not be paid on the entire loan amount sanctioned, but only on the amount that you actually utilize. The sanctioned amount is the amount that is allocated by the bank at the beginning of your venture. However, the interest is required to be paid on only the money that you actually utilize, and only for the period that you borrow the money for.
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For instance: If you are sanctioned a total amount of 30 lakhs, but end up disbursing only 7 lakhs for the 1st semester, the interest starts accruing on these 7 lakhs only. For the 2nd semester, if you disburse another 5 lakhs, the interest starts accruing on 12 lakhs (7 lakhs + 5 lakhs) from this point onwards. Further, if you need only 20 lakhs for all the semesters put together, the remaining 10 lakhs is not your concern – only 20 lakhs is the principle that you owe to the bank.
We recommend that you opt for a higher loan amount at the start as the unutilized amount does not cost anything, especially when you get your loan processed at GyanDhan, because unlike our rivals, our loan processing fee does not change with the loan amount.
2. Margin Money
Usually, banks expect the borrowers to pull in a little bit of risk for themselves. They require that up to 15% of the expenses be taken care of by the student’s own sources viz. personal funds or scholarships. Such an amount is termed as marginal money. For instance, if the fee for the first semester is 7 lakhs and the margin is 20%, the bank would pay 80% of it and the remaining 20% is to be borne by you.
Part of our mission at GyanDhan is to ensure complete transparency in education loan terms. Should you have any other questions about education loans, feel free to write to us or leave a comment below! Also, if you are planning to take an education loan via SBI then we have launched a new service of door pickup of documents (at zero cost) which will reduce your time and effort substantially.
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