Education Loan?

Investment in education is the best investment but not everyone has funds available to invest in Education. Financial crunch is one of the bottleneck for students who wants to study abroad.

Scholarships can’t be availed by everyone due to the limiting nature of these scholarships. This results in lifting Educational Loans to be one of the best and easily accessible options available for students like you. Almost all major banks provide education loans to students striving to study abroad.

Why take Education Loan?

Education loans provide a gamut of benefits which makes these as the most preferred education function option. Some of these benefits are listed below:

    • Huge tax benefit under Sec 80-E of income Tax Act
    • Doorstep service
    • Loan over 20 lakh also available
    • Easy EMIs
    • Flexible Loan Terms
    • Up to 100% finance
    • Attractive rate of interest
    • Some of the loan providers are even ready to sanction your loan before you get confirmation for your admission.

Features of Education Loan

  • Any candidate whose age  between 18 and 35 years can avail an education loan to pursue studies at abroad.
  • Students can easily procure education loans for different courses such as management courses, engineering courses, medicine, and graduate and architecture, pure science, hotel, graduate and post graduate degrees, arts, management, etc.
  • all expenses must be cover within the an education loan which has tuition fees, exam fees, lab and library fees, caution deposit, travel, projects and study tours, books and equipment inclusive in it..
  • Borrowers they have to bring in a margin of 5% to 15% for loans taken for foreign studies.
  • During the moratorium period, the borrowers has to pay the interest besides the principal payment starting when the loan tenure just started.
  • Education loans need to be provided in monthly installments through ECS or via post-dated cheques to the bank.
  • usually the banks sanction education loans with the period up to seven years, inclusive of the moratorium period.
  • A co-applicant has to be preferred for education loans which is to be taken for full time courses. Co-applicants can include parents, siblings, spouse other family members.
  • Banks will sanction a Rs. 20 lakhs atmost with the moratorium period and up to Rs. 10 lakhs maximum for loans without a moratorium period.
  • Security need not has to be submitted for education loans taken up to Rs. 4 lakhs. Third party guarantee has to be furnished for loans between Rs. 4 lakhs and Rs. 7.5 lakhs and tangible collateral security is required for loans above Rs. 7.5 lakhs.
  • The Central Government has also brought in an interest rate subsidy scheme for repaying done during the moratorium period only fso that the weaker section of the societycan avail the benefit

GOVERNMENT OF INDIA

The (Government of India) GOI has framed Educational Loan Scheme in consultation with Reserve Bank of India (RBI) and Indian Banker’s Association (IBA) to support our Education system and help eligible students. It covers all type of courses including professional courses in schools and colleges in India and abroad.
The salient features of the scheme related to study abroad are:
The scheme envisioned up to Rs. 15 lacs of loan for studies in foreign country
If your loan is up to Rs. 4 lacs then for that no collateral or margin is needed and the interest rate not to surpasses the Prime Lending Rates (PLR). For loans above Rs. 4 lacs the interest rate will not surpass PLR plus 1 percent.
Repayment need to be done within 5 to 7 years with one year grace period provision after completion of studies.

 

STATE BANK OF INDIA

State Bank of India (SBI) offers a term loan to Indian students aspire to study abroad. It provides finances for education for
All job-oriented technical and professional graduate and post-graduate degree courses like MBA, MCA, MS, etc.
Diploma courses at reputed institutions
Courses which is being offered by the Chartered Institute of Management Accountants (CIMA), London and the Certified Public Accountant (CPA), USA.
The maximum amount of loan is Rs. 30 lakhs. Collateral security is required only if the amount is more than Rs. 7.5 lakhs. You will need to ensure that you can pay 15% of your total fees by yourself.  loan only covers tuition fees, Examination, caution deposit, cost of books and equipment, travel costs and other necessary expenses, Laboratory and Library fees.
SBI does offer a moratorium period where full interest can be repaid and the interest burden is reduced. You have to start repaying the education loan after first year of education and complete loan has to be paid back with 15 years. You have to provide the admission letter, details of education costs, co-applicant details and other required KYC documents.

 

AXIS BANK

Axis Bank has hassles free and one of the quickest loan approval system where you can apply for technical or professional courses, career-oriented courses, etc., and avail an education loan from Axis Bank with hassle-free process.
The upper limit is Rs. 20 lakhs which covers hostel fees, tuition fees, book costs, etc. IF the loan amount is below Rs. 4 lakhs you don’t need any margin money (to be paid from your pocket) but for greater amounts of loans you should be capable of contributing 15% yourself. Your parent or guardian must be co-applicant, with third party guarantee or collateral security asked only for special cases.
The loan is disbursed directly to the institution where you have received admission from. They do not charge any processing fees or prepayment charges for education loan.

 

HDFC BANK

HDFC Bank has ties with various colleges/universities worldwide which enables them to offers education loans with flexible repayment tenures and preferential rates. You can get loans at you doorsteps. You have to be between 16 and 35 years of age to avail the loan facility.
The maximum loan amount can be Rs. 20 lacks. They provide loans to up to 100% of the educational requirement without any margin money. Loan can be sanctioned even before you have secured admission at a university in order to avoid last minute hassles.
It offers the flexibility of availing security collateral and co-applicants. Co-borrowers can be selected from different cities across India. The co-applicant can be any family member like parents, siblings, in-laws, uncle or aunt, which is mandatory for full-time courses.
They charge a processing fee of 1.5% of the loan amount. You don’t have to pay any penalty for prepayment of the loan.

 

PUNJAB NATIONAL BANK

If you are planning to study abroad, Punjab National Bank (PNB) can help you with their “PNB Udaan” education loan scheme. You should have acquired admissions for graduate, post-graduate courses, Diplomas, job-oriented professional and technical courses, CIMA/CPA courses, etc from a premier institution abroad.
It covers university fees, travel, exam fees, lab fees, library fees, book/equipment fees and other related expenses.
You have to pay the margin money of 15% or avail loans of above Rs. 4 lakhs. Assistantship and scholarships can be added to the loan margin. If you are taking admission in the top 200 universities, you will get loan at the base rate as interest, whereas for others they charge a certain margin on top of base rate. The moratorium period offered is up to a year, with no prepayment charges levied by PNB. You have to pay an upfront processing fee of 1%. The maximum tenure for availing loan is 15 years.

 

CANARA BANK

If you wish to study abroad, you can get loan from Canara Bank for eligible professional and technical courses, graduate and post-graduate courses. Their loan covers university fees, travel, exam fees, lab fees, library fees, book/equipment fees and other related expenses.
They can provide a maximum loan of Rs. 20 lakhs. If the loan amount is less than Rs. 4 lakhs, you have to pay the margin amount of 15% from your side but there is not need of collaterals. If your loan amount is less than Rs. 7.5 lakhs then you have to repay the loan in a maximum period of 10 years and for higher amount it is 15 years. If the loan amount is greater than Rs. 7.5 lakhs then a co-borrower and 100% collateral security will be required.

 

IDBI BANK

The IDBI bank can provide you educational loan if you have qualified using an entrance test or a merit based selection process for studying abroad. You can enrol for professional and technical graduate courses, post-graduation courses, diploma, and CPA/CIMA courses to avail education loan.
It covers university fees, travel, exam fees, lab fees, library fees, cost of computers, book/equipment fees and other related expenses. It offers standard features, where there is no security requirement for loans taken below Rs. 4 lakhs, the maximum loan amount can be Rs. 20 lakhs. The repayment tenure chosen can be up to 10 years for loans up to Rs. 7.5 lakhs and up to 15 years for loans above Rs. 7.5 lakhs. If your loan is between Rs. 4 lakhs and Rs. 7.5 lakhs then Third party guarantee has to be given. For loans above Rs. 7.5 lakhs, a co-borrower and 100% collateral security is required.

 

BANK OF BARODA

Bank of Baroda provides education loan using their “Baroda Scholar” scheme where Indian students applying for professional and technical courses abroad can avail loan for those who are selected reputed foreign universities.
They sanction a maximum of Rs. 20 lakhs at a loan margin requirement of 15%. You can also get a holiday or moratorium period of one year or six months after getting employment, whichever is earlier. You can repay education loans taken up to Rs. 7.5 lakhs within 10 years. For loan above Rs. 7.5 lakhs you need to repay in 15 years.
For loans below Rs. 4 lakhs, no security is required. For loans from Rs. 4 lakhs to Rs. 7.5 lakhs, a third party guarantee should be given. For loans above Rs. 7.5 lakhs, a collateral security will be required. During the moratorium period you can pay only the interest. Girl/women applicants are eligible for a concession of 0.50% on the interest rates.

How GlobEDwise can help?

Globedwise Help desk is situated in each of our offices to guide you to fulfil all your financial need for study abroad. We have established a well-defined process which ensures hassles free loan reimbursement assistance:

    • Submit a copy of your student visa registration receipt to our help desk team along with IELTS score card (if applicable), LOA copy (if applicable) and valid passport.
    • Our team will assess the documents and find best financial institution for you. Provide you a checklist of documents required for Education loan.
    • Get face to face discussion with executive from financial Institution in presence of our team member and submit the application for Education loan.
    • Once your loan will be approved, we will proceed for Student visa

Why Education Loan?

 

ECONOMIC

Education loan is the most cost effective means to fund your education as compared to other avenues. Though most banks do provide education loan, it is the public sector banks that are in the forefront in providing education loans.

 

REPAYMENT OPTIONS

Like any other loans, you will have to pay interest on your education loan as well. But unlike other loans, in education loan you can even provides the option of a moratorium period or you may say ‘repayment holiday’, which means, you can suspend repayment of the loan till the education course is not completed.

An education loan typically has three repayment options:
Education loan with repayment holiday. Depending upon conditions many banks engages repayment within one year after completing the course or 6 months after getting a job, whichever is earlier.
Interest alone is paid during the period of course. Once the course get completed, you start paying the actual EMI
You started repaying the loan through EMI immediately after loan disbursement, in which case you could get the loan at an interest rate lower by around 1 percent.

The repayment of money do vary from bank to bank. So, talk with as many banks as possible to get the repayment option as per your satisfaction

 

LOWER AND FLEXIBLE INTEREST RATES

Interest rate on education loan is usually lower than other sources. You can opt between a fixed and floating rate depending on your risk appetite. If you are totally risk hesitant person then and do not want to face the prospect of your EMI or repayment tenure budding in the event of an upward movement of interest rate then you must definitely opt for a genuine fixed rate education loan.

There are many banks especially the one which are public sector ones they have special schemes for girl students. There are also some bank which offer 1 per cent lower interest rate for girl students. So check with your bank about all special schemes.

 

LOWER PROCESSING FEE

There are many banks who donot ask for procession fees So if your bank asks for a processing fee, you might be able to persuade the bank tto forgo

 

NO OR REDUCED PREPAYMENT PENALTY

Again, in almost all cases, banks allow foreclosure or pre-payment of the education loan without charging a penalty if the borrower makes the payment from her/his own sources.

Banks charge a pre-payment penalty (usually up to 2 per cent of the outstanding loan amount) if the loan is transferred to another bank.

 

GOOD COVERAGE OF EXPENSES

 

The definition of expenses, which education loan covers, differ from bank to bank. The amount of education loan sanctioned is in relation to the expenses that you will incur while pursuing the course. The most common expenses covered include:

~ Fees payable to college/school/hostel
~ Examination/Library/Laboratory fees
~ Purchase of Books/Uniforms
~ Caution Deposit/Building Fund/Refundable Deposit
~ Travel Expenses/Passage money for studies abroad

Besides the above mentioned, there may be other costs incurred for the completion of the course. Like the cost of instruments, lap top and other aids necessary for completion of the course.

Banks provide about 80 per cent to 90 per cent of the cost of education as education loan. But the important factor to check here is the education expenses that are recognised by your lender.

If part of your education (course fee, for example) is funded through a scholarship, you could still get a loan to cover the balance expenditure.

In such cases, most banks include the scholarship amount as part of the total cost of education. This way you could end up financing the entire cost of your education through loans and scholarships.

ELIGIBILITY REQUIREMENTS FOR EDUCATION LOAN?

Indian nationals whose age is between 16 to 35 years, pursuing graduate or postgraduate degree and PG diplomas.
Confirmed admission in a college/universities recognized by UGC/Govt./AICTE etc., such as Management, Engineering, Architecture, Hotels and hospitality, Agriculture, Fine arts and design,Engineering, Medicine, Computer science, Architecture Pure science/BA/MA/B.Com/ M.Com, there are some vocational training and technical training courses like aviation and air-hostess training are also included
If you are acquiring a loan for. 7.5 Lakh or more a collateral security will be required.
Indian nationals of age between 16 to 35 years, pursuing graduate/postgraduate degree and PG diplomas.
Co-applicant: A co-applicant is mandatory for all full time programs. Co-applicant could be Parent/ Guardian or Spouse (if married) / Parent-in- law (if married).

WhAT EDUCATION LOAN COVERS?

100% College Tuition Fees payable
Books and equipment including computer
Travelling expenses abroad
Other reasonable expenses required to complete course

Accommodation charges
Exam and library fees

 

 

TIMELINE FOR APPLICATION APPROVAL:

Banks decision may take upto 2 – 3 weeks from the date of receipt of the application provided that the application is complete in all respects.

 

DISBURSEMENT:

The student loan are disbursed in full or in suitable instalments taking into account the requirement of funds and/or fee schedule as assessed by the Bank directly to the educational institution or vendor of books or equipment or instruments.

 

QUANTUM OF FINANCE:

Maximum limit of Rs. 20 lakh for study abroad
Banks may consider lending higher amount in special cases at their discretion.

 

SECURITY:

Upto Rs. 4 lakh – There is no security, but in this situation parents needs to be a joint borrower.
Between 4-7.5 lakhs – along with parents collateral security must be provided in form of third party guarantee.
Above 7.5 lakhs- Parents must be joint borrowers and tangible collateral security of suitable value required.
Security for the Loan is considered by the amount required and the credit worthiness of the principal borrower. Following types of Collateral are accepted:
Residential property such as house, plot or apartment
Life insurance that is sum assured to be at least 100% of the education loan amount
Non-agricultural land

Fixed Deposit

MORATORIUM PERIOD FOR REPAYMENT:

the Course period and with that 1 year or  6 months after getting job, whichever is earlier

 

MARGIN MONEY:

It is nil for loan which is up to Rs. 4 lakh
5 percent for study in India on loan which is above Rs. 4 lakhs.
15 percent for study in abroad on loan which is above Rs. 4 lakhs.

 

TENURE OF LOAN:

up to time period of 15 years for loan up to Rs 7.5 lakhs and above

 

TAX REBATE:

Under section 80(e) of the Indian income tax act, it is said that a person can be freed from responsibility the amount paid against the interest of the education loan – either for self or for his/her spouse or children, for eight years from the year(s) he starts to repay the loan or for the duration the loan is in effect, whichever is more.

Documents required education loan in India

Letter of admission is needed
Detailed break-up of the costs of the course
Completed loan application form and photographs is required
KYC (Know Your Customer)document
Academic: Mark sheets / pass certificates of S.S.C, H.S.C, Degree courses aswell
PAN Card of the student and Parent or guardian
AADHAR Card of the student and Parent or the guardian
Proof of identity such as Driving Licence/Passport/Aadhar/ any photo identity)
Proof of residence such as Driving Licence/Passport/Electricity bill/Telephone bill
Student/Co-borrower/ guarantor’s bank account statement for last 6 months
IT return/ IT assessment order, of previous 2 years of Parent/ Guardian/ other co-borrower (if IT Payee)
Brief statement of assets & liabilities of Parent/ Guardian/ other co-borrower
Proof of income (i.e. salary slips/ Form 16) Parent/ Guardian/ other co-borrower

Interest Rates

Different banks have own distinct interest rates according to the study loan.
Interest Rate = Base rate with  Mark Up as well
Base rate: 9.5 to 10%
Total interest rate comes between 11.75 per cent and 14.75 per cent, depending on the which type of  bank, loan amount and the college concerned.
Girl students may avail of slightly cheaper rate hat is about .50%.

 

ROLE OF THE GUARDIAN:

The parent(s) or guardian of the student would be considered as a co-applicant of the student loan.
His or her role would be, necessarily, like the primary debtor.

 

TERMS & CONDITIONS:

Bank reserves the entire right to reject any application or  renewal without assigning any suitable reason for that. It shall be the sole and entire right of the Bank only to ponder the proposal on case to case basis after taking into consideration, the credentials or credit worthiness of each and of the applicant.

 

CENTRAL GOVERNMENT INTEREST SUBSIDY SCHEME FOR ECONOMICALLY WEAKER SECTION FOR EDUCATION LOANS:

Government of India, Ministry of HRD vide letter no. F. 11-4/2010 – U.5(i) which is dated on 25thMay 2010 have planned a scheme to provide full interest subsidy during the period of moratorium that is  Course Period added with one year or six months after getting job, whichever is earlier. This scheme is feasible for loans taken by students belonging to economically weaker sections (EWS) (where parental income from all sources is up to & inclusive of 4.5 lakhs annually) under the Indian Banks’ Association (IBA) approved Model Educational Loan Scheme, for pursuing any of the approved courses of studies in technical or in professional streams, from recognized and renowned institutions in India.

Note:
There is always a uncertanity the student may not get a job immediately after completing the course. So, parents should be prepared for such a scenario in that case.
If you are looking for an education loan, keep these tips in mind:
Ask your chosen educational institution if it has any preferred lender with whom it has negotiated rates or has a pre-approved loan process.
If you are visiting abroad, then you may ask the institution if you can provide a loan on campus after you register for the course. You might be able to get better interest rates at abroad. For an example, the general level of interest rates is lower in the US and UK than in India righ this moment
If you or your family are regulars at your local bank branch then you can use this to your benefit because metimes your branch manager can help bring better loan terms for you.

EDUCATION LOAN & BANKS PERSPECTIVE:

Loans can not be ever claimed as a matter of right. A loan is always a debt. The borrower is obliged to pay back or repay the lender at a later period. But it is fact that in India,  many a loan is claimed as charity  “a voluntary help to those in people who are needy”.
Education loans are classified as priority sector and are to be encouraged. These loans are to be considered as investment for future economic development and growth . Most of the developed and developing countries have student loan schemes.