Securing Additional Education Loans: What to Do When You Already Have One Pending
Managing multiple loans can be challenging, especially when it comes to securing an additional education loan. If you currently have an outstanding loan with a bank and contemplate getting another loan to support your educational journey, there are some important considerations to keep in mind.
The Challenges of Securing a Second Education Loan
No bank will grant a second loan if there is an outstanding balance on a previous loan, even for purposes like pursuing further studies or covering increased tuition fees. This rule applies under most circumstances, and it is designed to ensure that borrowers stay financially responsible and manage their debts effectively.
Circumstances Where an Additional Loan May Be Possible
However, there are a few scenarios where you might still be able to secure an additional loan, despite having an outstanding balance:
1. Course Fee Increases During the Tenure of the Course
If the course fees have increased during your tenure, you can apply to the same bank that sanctioned your initial loan for additional funds. This allows you to cover the extra costs without resorting to a second loan from a different bank.
2. Upgrading to a Higher Degree
If you initially took a loan for a lower degree, such as a BTech, and now want to pursue a higher degree like a Master's without seeking employment in between, the same bank that already gave you the first loan may finance the additional degree. This can also extend your moratorium period, providing you with more flexibility in repayment.
State Bank of India: A Viable Option for Education Loans
State Bank of India (SBI) stands out as an excellent participant in the education loan space. They offer highly competitive rates of interest and a comprehensive education loan scheme that caters to a wide range of educational needs.
With features like flexible repayment options and generous moratorium periods, SBI's education loans are particularly attractive to students. However, make sure to assess your creditworthiness and ensure there are no existing defaults on your loans, as banks consider this information critically when evaluating new loan applications.
What Happens if You Have a Defaulted Loan?
Unfortunately, if you have defaulted on one loan from Bank A, you cannot approach Bank B for a new loan. Your credit history, as recorded on the CIBIL report, would reflect this default. A defaulted loan affects your creditworthiness significantly, making it difficult for other banks to consider your application favorably.
It's crucial to maintain your credit score and avoid any defaults to keep your options for future loans open.
In conclusion, while securing a second education loan when you have an outstanding loan can be challenging, you still have options. Seeking additional funds from the same bank, whether due to course fee increases or upgrading to a higher degree, can be a viable strategy. Always ensure that your credit history is clear and consider banks known for their student loan programs, such as SBI, to maximize your chances of success.