The schooling scenario in India is such that almost 8 crore children are enrolled in private schools as opposed to the western culture where a majority of the kids study in public schools. Studying in a good-quality private school in India can cost a couple of lakhs easily. Though it is a pinch in the pocket for several middle-class families they opt to take a loan for school for their child. In this article, we will attempt to understand why education loans are so popular in India and help you choose the right method to fund your child’s education.
Why do parents take a loan for school for their children?
As a parent, there will be multiple aspirations and dreams about providing only the best for your child. Right from the chocolates they eat, the toys they play with to the clothes they wear, parents aspire to provide them with the best. Among all of the above, providing high-quality education right from the start is of utmost priority to all Indian parents. Despite the government capping school fees at a nominal rate, most private matriculation, CBSE, ICSE schools charge exorbitant fees in the name of donation. Parents too don’t mind shelling out those extra thousands as they do not want to compromise on quality and the atmosphere their children are brought up in. Even if they somehow manage to gather money and enroll them in a prestigious school, later on, if they fall short of funds to pay term fees, pulling their child out of school will not be an option. This is why most middle-class Indian parents turn to a loan for school for their children.
Funding your child’s school with education loan
There are several banks and Non-Banking Financial Institutions (NBFCs) that provide instant, personal, gold and education loans to parents to fund their children’s educational ambitions. Unless it's for higher education, parents don’t have time to save up in mutual funds or fixed deposits for their children’s school expenses. That is why they resort to short-term loans or school loans to meet the funding requirements.
The most popular means of funding school fees and donations is taking an education loan. An education loan is generally applied for by students for higher education purposes and studying abroad. However, parents can also get education loans to pay school fees for their kids which are also called a school fee loan or a school loan. An education loan is preferred over a personal loan as the rate of interest is comparatively lower. The eligibility requirements to take school loans are:
- The borrower is an Indian national
- The child has gotten admission in a government-recognized school
- The child is enrolled in any class from nursery to class XII
The benefit of school fee loans is that it does not require any collateral as security and can be repaid in 12 to 15 installments as EMI. A loan for school can be used to pay donation amounts, term fees, caution deposit, examination fees, textbook/notebook purchases, to buy a laptop, etc. The terms and conditions are up to the discretion of the individual lending institutions.
Taking a gold loan for school education
You might think it is an unconventional mode of funding a child’s school education, but you will be surprised to know the number of people taking a gold loan for school education. It is easily one of the most preferred methods of borrowing owing to its ease of application and minimal risk factor. Gold can be applied online and offline where you pledge the gold jewellery you have and seek a suitable amount of money as loan against that gold. The money to be lent will be evaluated by the lender according to his/her company’s LTV ratio, gold rate, gold purity among other factors.
Taking a gold loan for school reduces your tension of paying formidable EMI with high interest rates, as gold loans are secured loans with relatively low interest rates. It is recommended that you do ample research and find out institutions that offer gold loans at low interest rates and lenient repayment options.
Rupeek, an RBI certified NBFC is one of the best gold loan companies in India which provides a high Loan -To-Value ratio for an extremely low interest rate starting at just 0.49% per month. Some of the stark features of taking a gold loan at Rupeek are:
- Easy online loan application process
- Doorstep gold evaluation service
- Minimal documentation with no processing fees
- Flexible and easy repayment options
You can sit back and be relaxed after taking a loan with Rupeek as your gold will be secured safely in our partner bank vault. An overdraft facility is also available with Rupeek Quick, where you can withdraw more money than what you have in your account. Rupeek will provide you with an overdraft limit towards which you will have to pay interest like any other loan. You can now fund the best-quality school education you always aspired for your children without having to mount on debt.