THOUGH the concept of education loans is fairly recent in India, it has become the preferred choice for thousands of students. Mr. S. Sastry of Bank of Maharashtra answers some frequently asked questions on the loans and gives useful tips on how to get the best loan:
When did the concept of education loans become popular in India?
The education loan was streamlined and reintroduced by banks after a Supreme Court order in 1999 to the Indian Bank Association ( IBA). Education loans became particularly popular when colleges and educational institutions increased their fees.
To support the higher education of students who could not afford the excessive fees charged by colleges, banks came forward to support their education through loans at affordable interest rates and extending the moratorium period to six months after completing their education.
Factors that determine your maximum permissible loan amount:
- Fee payable to the college or school or hostel.
- The examination or library or laboratory fee.
- The purchase of books, equipment, instruments or uniforms.
- Caution deposit*
- Travel expenses or passage money for studies abroad.
- The purchase of computers in case they are essential for the completion of the course.
- Insurance premium for student borrowers.
- Any other expenses required to complete the course — study tours, project work, thesis etc.
The eligibility criteria are that the student should be an Indian national and should have secured admission to professional and technical courses in India or abroad through an entrance test or a merit- based selection process. Based on the financial capacity of the parents, the maximum amount for studies in India is ` 10 lakh and it is ` 20 lakh for studies abroad.
It's a Numbers Game! The numbers you must keep in mind while applying for an education loan:
- The maximum loan amount for studies/research in India- INR 10 Lakh
- The maximum loan amount for foreign studies- INR 20 Lakh
- Maximum time for repayment of loan- 60-82 Months
i. Graduation courses/ colleges under universities approved by the UGC.
- B. A., B. Com, B. Sc., etc.
- Masters and PhD.
- Professional courses like Engineering, Medicine, Agriculture, Law, Management etc.
iii. Courses like the ICWA, CA, CFA etc.
iv. Courses conducted by the IIM, IIT, IISc, XLRI, NIFT etc.
v. Regular degree/ diploma courses like Pilot Training, Shipping etc., approved by the Director General of Civil Aviation/ Shipping, if the course is pursued in India. In case the course is pursued abroad, the institute should be recognised by the competent local aviation or shipping authority.
vi. Courses offered in India by reputed foreign universities.
vii. Evening courses of approved institutes recognised by the state or central government.
viii. Other courses leading to diplomas or degrees conducted by colleges or universities approved by the UGC , the AICTE, AIBMS, ICMR etc.
ix. Courses offered by national institutes and other reputed private institutions recognised by the state or central government.
For studies abroad the fields for which education loans are available are:
i. Graduation: For job- oriented professional or technical courses offered by reputed universities.
ii. Post Graduation: MCA, MBA, MS etc.
iii. Courses conducted by the CIMA in London, the CPA in USA etc.
Loans are not available for vocational training and skill development courses as under the model educational loan scheme applicable in India, loans are only provided for higher studies.
Are education loans available for overseas education?
Yes. Educational loans are available for overseas education.
Do some banks have policies which are different or advantageous as compared to the standard education loan policies in the country?
No. The education loan norms are more or less same across banks.
Article Credits: Mail Today