Students can get education loan in different ways. One of the common ways is through the students’ parents or relatives. Other options include loan providers such as banks and financial institutions.
The eligibility criteria for education loans are different for the different options. Therefore, it is very important that the student understand the eligibility criteria and the provisions for the different education loan options. Students can choose the loan option that is most beneficial for them, and they should make sure that they meet the eligibility criteria for that loan option. Education loans are a type of loan provided by the public loan provider or private loan providers to people who wish to pursue higher studies.
Most private loan providers have educational loan specialists that are able to provide education loan information. They are often better trained to do so than a typical lender. Some private loan providers may charge a higher interest rate and provide smaller loans than public or personal loan providers. In this article you will discuss the difference between public and private sector banks
Private Loan Providers: Banks, credit unions, and others that lend money to students, generally to finance the student’s higher education.
Public Loan Providers: Government-provided loan programs that offer loans to students and parents to help finance higher education.
Differences between private and public banks
Here is the difference between public and private banks:
|Public Sector Banks
|Private Sector Banks
|Any change in REPO rate comes in immediate effect to the customers.
|The change in REPO rates does not change any interest rate.
|They do not charge levy on any prepayment charges
|You need to pay 2% of the remaining loan amount as they do not want to loose the interest money
|Pre Payment Period
|There is no such condition. The borrower can repay the complete loan amount whenever they arrange it
|The borrower cannot repay the loan before completing the 6 months of the loan
|The processing fee charged by the bank range between 0.5% to 1% of the total loan amount
|Private banks charge upto 2% of the loan amount
|The policies are more transparent
|The policies are more profit driven
The public and private sectors banking have few differences which are discussed above. The comparison between the public and private sector banks and the education loan providers make you job easy to choose a bank for the loan to study abroad.