After HSC, many middle class parents settle for a course which does not have a lot of fees. Even after the graduate programs, students are forced to take up the job as they cannot afford higher education. This scenario is now changing with various banks giving educational loans to students in India. You must read this resource and make all your documents ready and you will get an educational loans.
Educational Loans in India – Courses for which loans are given
1. School education – primary, secondary and higher secondary education is given educational loans.
2. Various graduate programs – BSc, BE, BTech, BCom, BA
3. Various post-graduate programs – MSc, ME, MTech, MCom, MA, MBA
4. Various doctoral programs – PhD
5. Certificate courses of recognized institutes approved by the Government
6. Specialized programs like CA, ICWA or CFA
7. Diploma or degree program certified by UGC, AICTE, government or ICMR in India.
8. Applicant planning to go abroad for MS or MBA is also given educational loans.
9. Rankers in IIT-JEE, AIEEE and CAT are given various benefits in the educational loans if they opt for professional courses in IITs, NITs or IIM
Educational Loans in India – Eligibility
For eligibility of a candidate for an educational loan, he must be within the following criteria
1. A candidate must be a citizen of India.
2. A candidate who is not a citizen of India must be admitted to an Indian Institution for professional or doctoral courses through their entrance exams.
3. The courses for which the candidate is applying for an educational loan should be offered by colleges or universities approved by UGC, AICTE, IMC and government or any other equivalent reputed institutes in India.
4. The candidate must have a good academic record and a good behavioral conduct record throughout his academicals life.
Educational Loans in India – Amount of the loan and security
The amount of the loan and the security structure for most of the banks is almost same for all the banks in India offering educational loans. It is as follows
1. For education in India, a maximum of Rs. 10 lakhs education loan is given
2. For education abroad, a maximum of Rs. 20 lakhs education loan is given
Educational Loan Structure and security
1. For an educational loan amount of less than 4 lakhs, there is no margin. For this amount, no security is also needed. The student just has to present a 3rd party as a guarantor.
2. For a loan amount above Rs. 4 lakhs, there is a margin of 10% for Indian education and a margin of 15% for education abroad. Security needs to be submitted for a loan of Rs. 4 lakhs and above. A margin is an amount that the student must be able to pay for the education purpose. For example if the student has an educational expenditure of Rs.10 lakhs for Indian education, the student must be able to pay Rs. 1 lakh and the bank will give a loan of Rs. 9 lakhs.
3. For a loan of Rs.7.5 lakhs and above, a material security must be given. Material security such as property papers, gold or fixed deposits may be submitted. Loans against FD are very common these days.
Educational Loans in India – Expenses covered
The educational loan is eligible to cover the following expenses only. The educational loans should not be used for any other purpose other than the following requirements. If found guilty of doing so, the borrower may be filed a police complaint and is subject to any legal action taken.
1. Tuition fees
2. Hostel fees
3. Travel expenditure
4. School, College fees
5. Books purchasing
6. Library fees
7. Instrument fees
8. Some banks also provide a maximum of Rs.50000 for purchasing a two wheeler for travelling around the premises of the college.
Educational Loans in India – Some of the banks and their Rate of interest
There are two types of rate of interest for education loans –
1. Fixed rate of interest – The rate of interest on the educational loans remains fixed throughout the period of the loan repayment.
2. Variable rate of interest – The rate of interest varies on the six monthly or yearly basis depending upon the bank. These interest rates are called as Prime Lending Rate (PLR).
Some of the banks with interest rates
1. Bank Of India
Rate of interest – Prime Lending Rate (PLR)
Delhi Tel: 3312654
Mumbai Tel: 2023020
2. Dena Bank
Rate of interest – Prime Lending Rate (PLR)
Delhi Tel: 5724837
Mumbai Tel: 2181231
3. Punjab National Bank
Rate of interest – 10.5%pa upto 4 lakhs, 11.25%pa over 4 lakhs
4. State Bank of India
Rate of interest – 11.25%pa upto 4 lakhs and 12.75%pa over 4 lakhs and 11.75 $pa above 7.50 Lakhs
5. Bank of Maharashtra
Rate of interest – 13.75%pa
Delhi Tel: 3321754
Educational Loans in India – Loan Repayment
The educational loan repayment can be done 1 year after the successful completion of the course. It can also be done after 6 months of successful job experience in any company. Whichever comes earlier, the student starts repaying the educational loan since that period.
The educational loan repayment can be done within 5 to 7 years after the commencement of the educational loan repayment.
Educational Loans in India – Education Loan Subsidy Scheme
On 24th June, 2010 a scheme was finalized by the government of India to make educational loans cheaper. According to the scheme, a full interest subsidy is provided on the education loan taken by the students with annual income less than 4.5 lakhs. The interest will be paid to the banks by the Government of India. This scheme was approved by the cabinet last year. It is applicable from the calendar year 2009-10. This educational loans scheme is valid for all loans from scheduled banks for pursuing courses in professional and technical streams from recognized institutes in India.
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