Educational loans are issued to pay for studies in higher and secondary educational institutions, in refresher courses and trainings. Usually, a low interest rate is provided for education loan programs, but there are also disadvantages here.
Education loans are not very popular in Russia, although in many Western countries they are used by the majority of students. Budget places and free education allowed not to think about where to get money for education. Nevertheless, Russian banks offer lucrative lending programs that can be used by citizens of the Russian Federation.
Loan for education
In a general sense, this financial service is a long-term bank loan that can only be spent on education-related expenses. It is issued to schoolchildren preparing for admission, and students of higher and secondary educational institutions.
The borrower must be at least 18 years of age. A loan can be issued from 14, but only with the written consent of the parents. General conditions of provision:
- issued only in rubles;
- rate from 12% to 20% per annum;
- up to 10-11 years.
If the borrowed funds will pay for study abroad, the borrower must be over 21 years old, and the interest rate will be much higher. The loan is most often issued by non-cash means: the money is immediately transferred to the educational institution. If payment is made not immediately for the entire period of study, but by semester, it is necessary to regularly prove to the bank that you have received an education.
The loan amount is equal to the full tuition fee specified in the contract. It can vary from 10,000 for continuing education courses to several million (for example, for an MBA).
With a long-term loan for a large amount, banks provide a deferral for repayment for the period of study. Thus, the first payment will need to be made only after graduation, and before that, only interest will be paid.
To lower the interest rate, you can use the government subsidy program.
Pros of loans for education
The main advantage of educational loans is the ability to remove the unbearable financial burden for the time of study and devote all the time to education. The bank itself will transfer the required amount to the educational institution and you do not have to worry that the deadlines will be missed.
Banks provide loans for education on favorable terms. Among the main advantages:
- the interest rate is 1.5 times lower than the standard one;
- there are no commissions;
- a large loan amount that will cover up to 90% of the cost of training;
- government subsidy programs that can lengthen the deferral and reduce the rate;
- unlike most loan programs, funds are issued even to minors and without work experience;
- attraction of co-borrowers is allowed.
Cons of educational loans
Thus, an educational loan is a convenient and affordable way to pay for studies at a good university. But this program also has its drawbacks. First of all, potential borrowers are stopped by overpayment. In addition to the cost of training itself, you will also have to pay interest to the bank.
In addition, the disadvantages of an educational loan include:
- long term for making a decision (15-20 days);
- a large number of required documents that the borrower must collect himself. This, in addition to a passport, a training agreement, certificates confirming the solvency of the guarantors, etc.;
- careful and careful consideration of the application, in the process of which both the chosen university and the prospects of the profession are taken into account;
- you may need guarantors (most often, parents play this role) and collateral (real estate, car, securities, etc.);
- studies will have to be taken even more seriously - an unsuccessful session will result in loss of money and fines.
Educational loan programs vary from bank to bank. Some financial organizations cooperate only with a narrow circle of universities, which usually includes the most prestigious and expensive institutions. Certain difficulties can be caused by the fact that loans are issued at the place of registration.
Has a downside and a deferred payment for the period of study. Interest continues to accrue, and the main body of the debt is not extinguished. The result is a large overpayment. It is worth taking an educational loan only if you are fully confident in your chosen profession and your strengths.
