Of course, in the case of the untimely demise of the parent, the child not only gets the sum assured on maturity, but the interim premiums are also waived. The return from such policies is relatively low (even after taking into account the bonuses declared), barely covering the inflation rate. So, it is possible that you may end up with a shortfall if education costs increase at a higher rate than average inflation levels.

Scheduled Caste/ Scheduled Tribe students get privileges, in terms of eligibility and margin money, for educational loans. For example, the eligibility criteria for them may be a pass class instead of a first/ second class. And sometimes, the margin money is nil, or lower than the normal amount. However, only nationalised banks offer these privileges. Even in the case of nationalised banks, it?s a good idea to check with them beforehand.

The course has to be for full-time studies (no part-time courses covered) for any graduate or post graduate course in engineering, medicine, management, or for post graduate course in applied sciences or pure sciences including mathematics and statistics.

If you have opted for a floating rate loan, you cannot switch to a fixed rate option mid-course. However, you can transfer your loan from one bank to another, if you find a more attractive offer. Normally, one per cent of the outstanding loan amount is charged to the borrower in the case of a loan takeover. You need to work out whether the amount you save by switching to a lower-cost loan is more than the switching cost.

The margin money is calculated from time to time on the outstanding balance of the loan. You will be required to bring in this margin money on a year-to-year basis, as and when the disbursements are made on a pro-rata basis.

Some banks require all or any of the following as pre-sanction documents for education loans. These should be furnished along with the completed application form. The relevant information of both the guardian and the student should be given when the student loan is jointly taken:

If you're an employed person and want to better your prospects, you can avail of a loan to get additional educational qualifications and/ or receive training in modern technology in India/ abroad. Are you eligible for an education loan? How much loan can you get? What expenses does the loan cover? Do you have to provide collateral for the loan? Here are some important things you need to know before you apply for a loan.

When the education loan amount is greater than Rs 1 lakh, banks usually prefer students who have life insurance policies equivalent to, or more than, the education loan amount. This is nothing more than a security feature and also forms part of your collateral. If something unfortunate happens to the borrower, the bank does not lose money and can recover the outstanding amount from the insurance policy.

If part of your education (course fee, for example) is funded through a scholarship, you could still get a loan to cover the balance expenditure. In such cases, most banks include the scholarship amount as part of the total cost of education. This way you could end up financing the entire cost of your education through loans and scholarships.

SBI offers education loans of size ranging from Rs 20, 000 to Rs 15 lakh. The average ticket size of a domestic education loan is Rs 2 lakh to Rs 3 lakh, while that of an overseas one is Rs 10 lakh. The tenor ranges from five to ten years. Repayment usually starts from one year after completing the course or six months after securing a job, whichever is earlier.