How to get the right education loan

"Neither a borrower nor a lender be," William Shakespeare had written in Hamlet. Trying to go by this today, however, seems an impossible task.
Whether it is for buying a house or a car or pursuing higher studies, loans are common today. With college fees increasing every year, many have no option but to opt for education loans. For undergraduate engineering courses, the fees could be Rs 5-10 lakh, while for a five-year medical course at a private college, this could go up to Rs 50 lakh. For post-graduate courses such as those on management, fees could be more than Rs 10 lakh.
Ajay Bohora, chief executive, Credila Financial Services, an HDFC Ltd company, says, "We have been noticing a surge in the number of students going abroad for undergraduate studies. Many students have started opting for the US for undergraduate studies," he says.
Banks offer loans of up to Rs 10 lakh for courses in Indian colleges and up to Rs 20 lakh for studies abroad, according to Indian Banks' Association norms. But for post-graduate courses in premier management colleges in India, such as the Indian Institutes of Management, banks offer loans of up to Rs 20 lakh. While the size of a loan depends on the course and the college, the ticket-size of student loans in India ranges between Rs 2 lakh and Rs 22 lakh, the average ticket size being about Rs 5 lakh, says Bohora.
These loans cover fees for tuition, examination, library, laboratory and hostel; money for purchasing books, equipment, instruments and uniform; travel expenses for studies abroad; caution deposit or refundable deposit, etc. In some cases, there are limits on some of these items. The loan also pays for expenses on study tours and project work.
Conditions for sanctioning a loan
While sanctioning a loan, a lender will check if a student has actually secured admission to a course, the quality of the college and the course (whether it is recognised by the University Grants Commission or the All India Council for Technical Education), if the student has the ability to secure an appropriate job after the course and the credit history of the co-applicant or guarantor. In case the loan is backed by collateral such as property (in case of high-ticket loans), lenders also consider the value of the property.