Education Loans to study in India and Abroad - Overview

Loan
Scholarships and Education loans are a boon for students, belonging to the weaker sections of the society, who are unable to further their education for some reason or the other. The scholarship is an incentive as well as encouragement for students, who are talented, but do not have the means to study further.

Despite the higher academic merit, thousands of students face financial difficulties, in many ways now. The scholarships and educational loans play a vital role to realize the dream of students by facilitating financial assistance. All national banks and private banks provides financial support to deserving and meritorious students for pursuing technical / professional higher education in India as well as abroad. If all the documents are ready to get bank loans it takes only 15 to 20 days, officials said.

Education Loan Types

Credit facilities are being provided in the name of "Education Loans for studies in India" for students who continue their higher studies in India. Students will receive a loan of maximum ten lakh rupees under this loan. Financial aid to study abroad is facilitated through 'Study Abroad' loans. Under the scheme, students who take out a loan, must submit securities such as land documents under collateral security.

Courses Eligible 

Loans are available for all the courses that have Intermediate or +2  as qualification. Students who applied for a loan in India must have admitted to a University / Institute recognized by UGC, AICTE, MCI etc.

Disburse directly to Institutes

It will be made in stages directly to the College / Institution / Hostel. Payment of air fare, books, equipment, Computer etc. will be made directly to authorized travel agent / supplier. Hostel charges for students studying abroad will be remitted as per prevailing RBI guidelines at the time of remittance. However, in deserving cases wherein caution deposit / fees for the 1st year has already been paid to the institution the same may be reimbursed.

Nominal Securities

Some of the rules have been simplified in the case of education loans guarantees to the banks. For loan amounts less than 4 lakh rupees, a co-obligation of parents/ guardian/ parent-in-law/spouse is sufficient. However, they are to be borne by some margin money. If students have already received a scholarship, the amount may be shown as margin money that Manilow some weight. For amount above Rs. 4 lakhs and up to Rs.7.50 lakhs a co-obligation of parents/ guardian/ parent-in–law/spouse together with collateral security in the form of suitable third party guarantee is required. For above Rs.7.50 lakhs a co-obligation of parents / guardian / parent-in–law / spouse together with tangible collateral security of suitable value, along with the assignment of future income of the student for payment of installments is required. This may vary slightly from bank to bank.

Favourable Interest Rates

With respect to Interest rates for education loans usually banks act in favor of students. Currently, the education loans interest rate in national banks is around 12.5-13.5% (base rate included). Some concessions are offered in the interest calculation. Female students will be a given 0.5-1% reduction in the interest rate. Interests rates are revised by the banks from time to time. Applicants are advised to check thoroughly the terms and conditions of educational loan scheme of respective banks at the time of application.

EMIs

The loan repayment will commence one year after completion of course. Loan to be repaid in 15 years after the commencement of repayment. In case second loan is availed for higher studies later, to repay the combined loan amount in 15 years after completion of second course. The accrued interest during the moratorium period i.e., One year after course period completion or six months after getting job, whichever is earlier and course period is added to the principle and repayment is fixed in Equated Monthly Installments (EMI). If full interest is serviced before the commencement of repayment; EMI is fixed based on principle amount only.

Students Academic Performance Review

Banks conduct a thorough review of candidate's academic performance before education loan is granted. All the banks have adopted rules that a minimum of 60 percent of marks is required for the loan to be granted. Even after the loan was granted banks keep an eye on students academic performance. Further payments by the bank will be made only after considering this. So students should keep this in mind.

Special loan schemes

Some banks introduced special loan schemes to students (Indian Nationals)  for pursuing higher education in Premier Indian Institutions such as IITs, NITs, IIMs, NIFT, XLRI, ISBs etc. These schemes offer special features like
  • 100% Financing
  • NO Processing Fee
  • Quick sanction at Designated Campus Branches 
  • Repayment period of upto 15 years after Course Period + 12 months of repayment holiday

Banks like SBI, Punjab National Bank are offering these special schemes.

Private Banks

In recent years, private banks have also come forward to provide education loans. Banks such as HDFC, ICICI have been offering loans to students with impressive structures. Some leading institutes have patnered with private banks to provide financial aid to admitted candidates.

Expenses considered for Loan

  • Fees payable to college/school/hostel
  • Examination/Library/Laboratory fees
  • Purchase of Books/Equipment/Instruments/Uniforms, Purchase of computers- essential for completion of the course 
  • Caution Deposit/Building Fund/Refundable Deposit
  • Travel Expenses/Passage money for studies abroad
  • Any other expenses required to complete the course like study tours, project work etc

 Documents required for Education loan

  • Copy of admission letter of the Institute along with Fees schedule, marks sheets / pass certificates of S.S.C, H.S.C , Degree courses
  • Proof of identity: Passport or Voter's ID card or driving license or PAN card or government department ID card
  • Proof of income: Latest salary slip showing all deductions or Form 16 along with recent salary certificate
  • Proof of residence: Bank account statement or latest electricity bill or latest mobile or telephone bill or latest credit card statement or existing house lease agreement
  • Bank statement or Pass Book where salary or income is credited (last 6 months)