Educational loan is a loan that provide for the student who is unable to complete his or her study due to the lack of money. The difference in the educational loan from other modes of loans is this was used to the purpose of education. Educational loan have interest rate is less in compared to other mode of loan. And also get a time for repaying only after the completion of study. That is the borrower didn’t make repayment at the time of study. He should repay the amount after the completion of the course. The educational loan provides a good support for the student by helping them to pay the university fees, tution fees, hostel fees etc.
Advantage of educational loan
The major purpose of educational loan is to accompanying assistance for the student to complete their education. The major important benefits of educational loan are that the interest rate is less than that of the other types of loan. So the people can choose the educational loan for the purpose of study. The other advantage of educational loan is which is needed to repaying only after the completion of the study. The other benefits of the educational loan are that it can help the student without cash to study his ambitious course and to full fill his dream. The educational loan not only covered with tution fees but also covered with the entire expense that is needed to full fill the higher education. The other benefits of educational loan are that it helps to get reduction in tax payment. The borrower can claim the interest from the tax. The deduction only includes the interest rate and not the principle amount. The educational loan thus creates so many advantages.
Dis advantage of educational loan
The above factors depict the advantage of the educational loan, even though there is some dis advantage are also for the educational loan. The banks are providing very good help for the student by giving educational loan. Any how one think is that the bank given the educational loan for the student is not only for the service but also for increasing their margin. So they make some hidden rule for this. That may not be disclosing at the time of taking of educational loan. The banks are providing very good features for the educational loan to attract the people to their educational facility. It may not be fulfill after availing the loan. The students have a chance of trapped in the web of unsuitable educational loan due to the improper knowledge and also the lack of understanding in the educational loan procedure. To avoid this student should have analyzed the best educational loan for the study. In case of failing in the repayment of educational loan, the bank will create utter pressure in the head of the borrower. This may lead to the suicide of the borrower. Sometimes bank may not give the educational loan easily, they will disturb the applicant for various certificates. The bank may not disclose some late fine and other fine at the time of availing educational loan. The banks are creating some hidden rule to enlarge their benefits through providing educational loan. Due to complexity it is not at all easy for the normal people to understand about it.
Study of Educational loan from SBI
State Bank of India included in one of the leading nationalized bank in India. The bank offer educational loan for the student who are unable to go for the study due to lack of cash or money for the higher education. But providing of the educational loan for the student is based on some eligible criteria. The facility provided by the bank of providing education loan should be a very good relief for the student who had the ambition to full fill their studies but due to lack of money that ambition was broken. The bank thus provides a very good service for the student or the society.
Eligibility criteria for SBI student educational loan
There are some eligibility criteria for the applicant to fulfill for availing educational loan from state bank of India. They are listed below:
- The primary eligibility criteria for the applicant for availing educational loan in the State bank of India is the applicant should be Indian citizen. Or the applicant should be Indian national. The bank provides the educational loan for the Indian national.
- The second condition is that the applicant should have secured an offer letter for admission. In case of applying educational loan for overseas college or university.
- The applicant should have secured the admission through proper entrance test or selection process in the case of availing educational loan for Indian college or University.
Eligible courses for SBI student educational loan
The eligible courses for availing SBI student educational loan in India is given below:
- Graduation, Post graduation including regular technical and professional Degree/ Diploma courses conducted by UGC/ IMC/ AICTE/ Govt. etc are eligible course for the SBI education loan.
- The regular Degree or Diploma courses conducted by the autonomous institutions like IIM, IIT etc are also eligible for the education loan from SBI.
- The central government or the state government approved teacher training or nursing courses are also eligible for the educational loan from the SBI.
- Regular Degree or Diploma courses like pilot training, shipping, aeronautical etc. are also eligible for the educational loan from SBI if it was approved by the Director General of Civil/Aviation/Shipping.
The student is eligible for educational loan for studying in abroad, only if the course he joined including in the Graduation/ Post graduation for job oriented professional or technical courses offered by the reputed colleges or universities.
Expenses considered for the Educational loan
The bank put forward some considered expenses under the educational loan facility. They are listed below:
- The expense include the money for paying fees for college, school, or hostel
- The examination fees, library fees, and also laboratory fees are included in the expense.
- The expense required for purchasing of books, purchasing of equipments, purchasing of instruments, purchasing of uniforms etc are also included.
- The expense required for depositing the caution deposit, building fund, and refundable deposit (for the entire course maximum of 10% tution fees) are also under these.
- Travel expenses or passage money for studies abroad are also considered as the eligible expense by the bank
- Purchasing of computer is a necessary requirement for the completion of course, hence it also included in the valid expense.
- You can buy a two wheeler up to the cost of RS 50,000 are also considered as the expense eligible in the educational loan offered by the SBI.
- Any other expenses required for the completion of the course, like study tour, project work, etc are also included in the valid expenses.
Limits of SBI student educational loan
There is some limit in providing the education loan by the State bank of India. They offer upto Rs10 Lakh maximum for the studies in India. And they offer up to RS20 Lakh of maximum for the studies in the abroad.
Security requirement for availing educational loan from SBI
SBI offers loans upto Rs10 lakh for the studies in India and upto Rs 20 lakh for studies in the abroad. There is some security requirement for availing the loan.
- There is no security is needed for the loan upto Rs 4 lakhs.
- A collateral security in the form of third party guarantee is required for the loan amount between Rs 4 lakhs to Rs 7.50 Lakhs. The bank may weive the third party guarantee in some of the exceptional cases. If bank is satisfied with net-worth/ means of parent who would executing the document as " Joint borrower"
- For the loan above Rs 7.5 Lakhs bank require tangible collateral security of suitable value, along with assignment of future income of the student for payment of installment.
The bank provide the loans to the student borrower should secured by the parents/ guardian of the student. In case of the married person the co-obligator can be either spouse or the parent of the student, or the parents in law of the student.
Documents required for SBI educational loan
The bank needs some of the documents for providing the educational loan for the applicant. They are listed below:
- A completed application form of educational loan
- Mark sheet of examination the student last qualified.
- The proof of admission scholarship, studentship etc are should be submitted
- Should submit the scheduled expense for the completion of the specified course
- 2 recent passport size photographs should be submitted
- Should submit the account statement of the last six month of the borrower
- Should submit income tax assessment order of last 2 years
- Brief statement of the assets and liabilities of the co-borrower should be submitted.
- The income proof of the co- borrower should be submitted( i.e., salary slips/ form 16 etc)
Processing fees for the educational loan
There is no processing fees or upfront charges not required for student education loan from SBI. A deposit of RS 5000 is needed for education loan for studies in abroad. It will be adjusted in the margin money.
Margin for the Educational loan
No margin is needed for loans up to Rs 4 lakshs. 5% of margin is needed for the loans above Rs 4 Lakhs for studies in India. 15% of margins is needed for the loans above Rs 4 Lakshs for studies in abroad.
Interest rate for the Educational loan in SBI
Rate of interest (w. e. f. 27-2-12)
The interest rate for loans upto Rs 4 lakhs is 350 bps above the base rate, presently the rate is 13.5% per annual. The interest rate for above Rs 4 Lakhs and upto 7.5 Lakhs it is 325 bps above the base rate, presently it is 13.25 % annual. For the loan amount above Rs 7.5 Lakhs it is 200 bps above the base rate, currently it is 12 %. There is concession of .50 % of interest in the case of girl student.
NOTE: All interest rates provide here are subject to change without any notice according to the bank.
Repayment of Educational loan of the SBI
The student borrower is responsible of repayment of the loan after the six month of getting job or after the one year of completion of the course, whichever is earlier. If the place of study is India, the borrower should repay the educational loan within five to seven years if the amount is less than Rs 7.5 lakhs. If the amount is more than Rs 7.5 Lakhs then the borrower should pay within the period of 5 to 10 years. In the case of studying in abroad the repayment period for upto Rs 15 lakhs is 5 to 7 years. Whereas for above Rs 15 Lakhs repayment period 5 to 10 years.
List of some other bank who offer educational loan in India
Most of the banks are now provide educational loan for the student. Here I give some of the nationalized bank that offers educational loans in India. You can compare the loan procedure of those bank with the loan procedure of the SBI.
- Axis Bank Study Loan
- Allahabad Bank Loan
- Bank of India Loan
- Bank of Maharashtra Loan
- Bank of Baroda Loan
- Bank of Rajasthan Loan
- Canara Bank Student Loans
- Federal Bank Vidya Loan
- IDBI Bank Education Loans
- HDFC Education Loan
- UCO Bank Education Loan
- ICICI Bank Education Loan
- Punjab National Bank Loan
- Syndicate Bank Loans
- Indian Overseas Bank Loan
- Oriental Bank of Commerce
- United Bank of India Loans
The banks are provide a good service for the society by providing educational loan for the student who unable to continue their higher education due to lack of cash. There is a good advantage for availing the bank loan, besides there is some disadvantage too. Some time the borrower may not able to repay the payment in the period. Or they may not get sufficient salary as they expected. This may lead to brake in the repayment and thus may lead to the suicide of the borrower. So always take an extra care before take any educational loan from any bank. And also should search for the better offer and analyze before availing the loan.
|Guest Author: S K Gupta 17 Mar 2013|
|I want to take education loan for my son (in joint name with my son) who is expected to get admission in IIM (India) for MBA this year. The tution fees is around Rs. 7.5 lakh per year. (1) Can I take 15 lakh loan in one go or 7.5 lakhs in two academic years (as required by Institute)? (2) What will be EMI if I take loan from SBI? (3) What about tax benefit (and when I can start claiming tax benefit for the same)?|
|Author: Chitra 01 Aug 2014 Member Level: Gold Points : 10|
|Educational loans are really a blessing to those students who do not have the fund to continue their higher studies. But it does comes with certain disadvantages as well. Students, just end up taking a loan as they are eager to learn but finally when they are about to finish their course, the actual headache starts. They have to immediately find a job in-order to return the amount back to the bank. If they fail to return the installment amount in time, the bank will start to put utter pressure on them. Which will make the situation worse. |
Another point to be noted is that, the student has to pay interest on the loan amount even during his studies. Therefore he has to find the funds for that as well. Sometimes due to lack of money he will borrow money to pay the interest to the bank. Later he will have to pay those borrowings along with the money for the bank. this will be a burden to someone who has just started their career life.
Secondly, it is not necessary that you will get a job as expected immediately after the completion of your course. If it takes more than a year to get yourself placed in a good company, things will become worse. You will not be able to find any source to return the loan and that will make you totally upset. You will loose your confidence and may think that you are not going to get a job. A student who has taken an educational loan will have to immediately find a job, therefore he gets less chance to choose a better job.
Think about all these factors well before taking an educational loan. Also go for the one that better suits your requirement. Be prepared to face the future challenges than ending up in a suicide. After all banks are profit motive organisations working for their good.