Education in India is getting costly, so indian banks are providing education student loans for studying in India and abroad
Here are some guidelines provided by Indian Bankers Association (IBA) for giving Education loans for students in India.
Eligibility criteria for educations loans
Student eligibility for education loans in India
The applicant should be an Indian National and should have secured admission to professional/ technical courses in India or Abroad through Entrance Test/ Merit Based Selection process.
There is no specific restriction with regard to the age of the student to be eligible for education loan.
Courses eligible for education loans
Courses available in India and Abroad are eligible for student loans
Here are some of the courses which can get education loans
- Graduation courses like BA, B.Com., B.Sc., etc.
- Post Graduation courses : Masters & Phd.
- Professional courses : Engineering, Medical, Agriculture, Veterinary, Law, Dental, Management, Computer etc.
- Computer certificate courses of reputed institutes accredited to Dept. of Electronics or institutes affiliated to university.
- Courses like ICWA, CA, CFA etc.
- Courses conducted by IIM, IIT, IISc, XLRI. NIFT etc.
- Regular Degree/Diploma courses like Aeronautical, pilot training, shipping etc., approved by Director General of Civil Aviation/Shipping, if the course is pursued in India. In case the course is pursued abroad, the Institute should be recognized by the competent local aviation/shipping authority
- Courses offered in India by reputed foreign universities.
- Evening courses of approved institutes.
- Other courses leading to diploma/ degree etc. conducted by colleges/ universities approved by UGC/ Govt./ AICTE/ AIBMS/ ICMR etc
- Courses offered by National Institutes and other reputed private institutions. Banks may have the system of appraising other institution courses depending on future prospects/ recognition by user institutions.
Education loans for studying abroad
- Graduation : For job oriented professional/ technical courses offered by reputed universities.
- Post graduation: MCA, MBA, MS, etc. Courses conducted by CIMA- London, CPA in USA etc.
Expenses considered for Education loan :
- Fee payable to college/ school/ hostel.
- Examination/ Library/ Laboratory fee.
- Purchase of books/ equipments/ instruments/ uniforms.
- Caution deposit, Building fund/refundable deposit supported by Institution bills/receipts, subject to the condition that the amount does not exceed 10% of the total tuition fees for the entire course.
- Travel expenses/ passage money for studies abroad.
- Purchase of computers – essential for completion of the course.
- Insurance premium for student borrower
- Any other expense required to complete the course – like study tours, project work, thesis, etc.
- This also varies from Bank to Bank for example: SBI even gives 50,000 for getting a two-wheeler etc.
Amount available as Education loan
Education loans are given subject to repaying capacity of the parents/ students with margin and the following ceilings.
Studies in India – Maximum Rs.10.00 lacs.
Studies abroad – Maximum Rs.20 lacs
Upto Rs 4 lacs Nil
Above Rs. 4 lacs : Studies in India 5%
Studies Abroad: 15%
– Scholarship/ assistantship to be included in margin.
– Margin may be brought-in on year-to-year basis as and when disbursements are made on a pro-rata basis.
Security for Education loans
There is no security needed for Upto Rs 4 lacs but the loan is provided with Co-obligation of parents.
For education loans above Rs.4 lacs and upto Rs7.5 lakhs: Co-obligation of parents together with collateral security in the form of suitable third party guarantee.
For education loans Above Rs.7.5 lakhs: Co-obligation of parents together with tangible collateral security of suitable value, along with the assignment of future income of the student for payment of instalments.
Other conditions for Student loan
The loan documents should be executed by the student and the parent/ guardian as joint-borrower.
The security can be in the form of land/ building/ Govt. securities/ Public Sector Bonds/Units of UTI, NSC, KVP, life policy, gold, shares/mutual fund units/debentures, bank deposit in the name of student/ parent/ guardian or any other third party with suitable margin.
Wherever the land/ building is already mortgaged, the unencumbered portion can be taken as security on second charge basis provided it covers the required loan amount.
In case the loan is given for purchase of computer, the computer has to be hypothecated to the Bank.
Education loan interest rate
Upto Rs 4 lacs BPLR
Above Rs. 4 lacs BPLR + 1%
Simple interest will be charged during the Repayment holiday/ Moratorium period.
Education loan repayment conditions:
Repayment holiday/Moratorium : Course period + 1 year or 6 months after getting job, whichever is earlier.
The loan to be repaid in 5-7 years after commencement of repayment. If the student is not able to complete the course within the scheduled time, extension of time for completion of course may be permitted for a maximum period of 2 years. If the student is not able to complete the course for reasons beyond his control, sanctioning authority may at his discretion consider such extensions as may be deemed necessary to complete the course.
The accrued interest during the repayment holiday period to be added to the principal and repayment in Equated Monthly Instalments (EMI) fixed.
1% interest concession may be provided for loanees if the interest is serviced during the study period when repayment holiday is specified for interest/ repayment under the scheme.
Girl students are given some concession in interest rates.
Education loan processing charges
No processing/ upfront charges may be collected on educational loans for studies in India.
Education loan sanction time:
Loan applications will be sanctioned within a period of 15 days to 1 month.
Education loan from banks
Here are links to all the banks that provides education loans. Interest rates of the education loans vary from bank to bank. Some banks allow online submission of application for education loans, or can download application forms for student loans.
Bank of Baroda
Bank of India
Bank of Maharashtra
Canara Bank Education Loan
Central Bank of India
Indian Overseas Bank
Oriental bank of Commerce
Panjab and Sindh Bank
Panjab National Bank
State Bank of India
State Bank of Bikaner and Jaipur
State Bank of Hyderabad
State Bank of Saurashatra
State Bank of Travancore
Union Bank of India
United Bank of India
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