Student Education Loan in India : Eligibility , Conditions and Details
The cost of education is increasing day-by-day. So, a number of people who have low income are facing difficulties to get higher education for their children. According to the cost of education calculator of the insurance company Aviva, the cost for doing fashion designing course or engineering comes between 7 lakhs to 10 lakhs in India. On the other hand, for MBA course the fee starts at Rs 5 lakhs and goes up to Rs 15 lakhs to Rs 25 lakhs in reputed business schools. While, the fee becomes double or four times higher in abroad for the same course.
Loan for studying in India or Abroad
In this condition, banks are coming ahead to fulfill dreams of higher education in India or abroad for those who are not able to afford such higher fees. Now, banks have started to give educational loans to get higher education. Any person can get educational loan from banks however, he or she will have to fulfill some terms and conditions for this.
According to the revised model of Indian Banks Association, students who come in merit list and want to take admission in private institutions, can also take advantage of educational loan, provided institutions must be approved by government bodies. Here, it is noteworthy that the courses which are offered in abroad do also come under educational loans.
Today, almost all public sector and private banks give educational loans at simple interest rate. Educational loan can be taken for graduation, post-graduation, technical, professional and vocational courses in the country whereas, for abroad, educational loans can be taken for job oriented professional or technical courses such as; MCA, MBA, Fashion Designing and Medical and many more.
Under the loan, financial support is given for tuition fees, examination fees, library fees, books, educational equipment like computers etc. Apart these, financial support is also given for study tour, thesis and project work.
Terms & Conditions of Study Loan
To get educational loans from banks, student must be an Indian. Some banks have fixed age limit, which is now between 16 to 35 years. Nevertheless, the age limitation differs with banks because parents or guardians can also take educational loans for their children.
The educational record of the applicant should be good. At the same time, his or her admission should be approved in technical or professional course. Also, college or institute must be approved by government educational bodies. Generally, banks keep the list of those colleges or institutions which they give loans. Some banks also check the status of applicants whether they are able to refund the loan or not. Bank check also the job potentiality of the course for which applicant has applied for loan. Normally, MBA candidates get educational loan easily, if their admission has been approved in top branded business schools.
Documents mandatory before taking educational loan
- Admission approval certificate
- Cost break up of study programme
- Application Form of loan
- Residential certificate
- ID of student and his or her Guarantor
- Income certificate of the Guarantor
- Educational certificates
- Letter, VISA or Travel Papers of the HOD of the university, if student is taking admission in Foreign University
Rate of Interest and maximum amount of Loan
The maximum amount of education loan is Rs 10 lakhs in India. Though the amount differs in banks. On the other hand, for abroad the amount is Rs 20 lakhs or more. The interest rate of the loan ranges between 11.75% to 16 % depending upon banks. No guarantee is required for loan up to Rs 4 lakhs while guarantee is essential for more than this amount. Some banks pass full loan whereas, a few banks approved up to 85%. Normally, the interest rate of educational loan is less than personal loan. Some banks charged at fixed rate while some banks charged at floating rate.
Banks in India have different interest rates for Education loans.Also the rate of interest changes depending upon the amount of the loan , the duration for which loan is sought as well as the Institution's name and reputation.It is because of these factors it is not possible to figure out the lowest interest rate for educational loan in India.
There are also a number of banks who give discount options in the interest rate exclusively for girls. In the same way, some banks charge processing fees whereas, some do not charge this processing fee. Nonetheless, student can request to bank for some discount.
Educational loan payback period
After one year of completing study, refund of loan begins through EMI. Although, some banks give facility of refunding the loan after getting a job. A few banks also offer flexible repayment options of loan. It is known as Moratorium Period or Repayment Holiday. Parents of the student can also avail tax benefits under section 80(E) of income tax Act 1961 on educational loans.
Relationship manager of IDBI bank says that before taking loan the interest rates among banks should be compared and the bank which offers less interest rate should be chosen. Also, the bank which does not charge processing fee, should be chosen. If all documents regarding loan are totally correct, loan can be easily approved.
Hence, it can be said that meritorious students, now, are never far away from their dream career and they can pursue their dream education course with education loan.
Amar Kumar works at MithilaConnect.Com.While keeping a tab on the latest happenings in the technology area he occasionally loves to share his thoughts at our Lifestyle section.