Disbursement and repayment of education loan

Are you wishing to apply for the education loan and don’t know about the disbursement and repayment of the education loan? Then, this article is written for you with all the details of the disbursement and repayment procedures of the education loan. The terms and conditions for the disbursement and repayment of the education loan is little easier than the other types of loan.

The education loan is the best financing supporter for those students who are financial not strong. This loan is provided by the bank with the aim of making the costly education within the reach of a common man. For making the education loan available to every student, government has set certain criteria and rules for the disbursement and repayment options of education loan. For clear understanding of the subject, I am explaining each topic separately below.

Disbursement or sanctioning of the education loan

The main difference in the disbursement of the education loans is that disbursement of the same is made diractly to the institute instead of giving the amount directlt to the applicant. Government has made following set of rules for the disbursement of the education loan by the bank. Here is the list of regulations which should be followed by the bank in disbursement and sanctioning of the education loan.
  • The loan amount sanctioned as per delegation of powers should be disbursed by the nearest Bank branch to the place of domicile.
  • Without the concern of next higher authority, no application of the this loan should be rejected.
  • The disbursement of the education loan should be made directly to the institute in installments. Also, the loan amount sanctioned for the books, instruments etc. should be given directly to the vendors.

Repayment of the education loan

Student has to start the repayment of the this loan after either six month to a year after the course or after getting the job (whichever is earlier). The education loans taken by the student have to be paid within the 5-7 years after the start of the repayment of the same.
If a student is not able to complete the course in the due time then Bank can also provide him the extension of maximum two years for the repayment of the same. The simple interest calculated during the study period should be added to the principal amount after the completion of the course.
Also, if a student pays the simple interest during the study period then he should be given a rebate of 1-2% in the total rate of compound interest.

Rate of interest on education loan

Most of the banks provide these loans at a compound interest of 10-13.5 % per annum. During the course of study only simple interest is charged rather quarterly or half yearly. Also, a penal interest of 2% can be charged for the loan amount of above 2 lakhs for any overdue amount or overdue period.

For eligibility criteria of education loan you can also read this article- Education loan definition and eligibility criteria

Related Articles

Define Education loan, eligibility criteria

If insufficient funds or poor financial condition is shattering your dream of higher education then you just need not to worry. Now, most of the commercial banks in India are providing the education loan to complete your whole education. To apply for the education loan you have to fulfil certain eligibility criteria which are set by each bank for providing you the education loan.

Information on different types of loans

Loan is the term used for the financial assistance provided by the bank or any financial company to fulfil your all money related needs. Nowadays, banks provide different types of loans and you can opt from them according to your will and need. Here I am giving the detail of various types of loans available in the market.

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