Thursday, 23 April 2015

Education loans made easy: know the rules

Banks in UAE have simple and easy rules for education loans. Here’s a lowdown on what to expect.

The UAE has many premium institutions for primary and higher education, but education costs are prohibitive here. However, the Government is focussed on attracting as many students as possible – both UAE citizens and expats – towards education, and to this end, it has already made the process of applying for an education loan in UAE quite simpler.
The UAE is one of the few countries in the world where leading banks have tied up with universities and colleges to offer students convenient tie-ups that ease the application process. Also, these loans attract a lower interest than say, a personal loan that one would apply for to finance his child’s education.
This is what one needs to know while applying for an education loan in UAE:
Do parents qualify? Based on whether the parent of the student has enough financial wherewithal to repay the loan, the bank will start its preliminary fact-finding into the suitability of the applicant. Fortunately, many banks do not insist on parents transferring their salary to them to avail of the education loan. Also, banks offer extremely easy repayment options for those who do not qualify in the high-income bracket. The Government mandates that parents with incomes as low as Dh 7,000 may also qualify for education loans in UAE.
Part or full loans. Unlike earlier days, parents can avail for an education loan in UAE in two ways: a part or a full loan. A part loan is always an attractive proposition, since it is easy to dispose of and the tenure is shorter. However, applicants must check the interest rates and if these are higher than the rates for full loans, it is better to apply for a full loan and foreclose it by paying a small fee.
How much amount can be expected? This depends on the bank in question, the student’s requirement and the tenure for the loan. Normally, banks will grant a minimum of Dh 10,000 and a maximum of Dh 1,50,000. Most loans are offered over a period of 60 months, with a maximum 16% interest.
There may be discounts with the loan. Some banks offer handsome discounts on tuition fees – the highest component of the yearly fee – which is a boon for students. However, this discount is normally given only for the first year of the loan.