Everything about Education/Student Loan

 “A process of drawing out from within”, education is always important for any individual to foray in life and achieve his endeavours. But with increasing competition and increased cost of education, some lack to accomplish the same.

Well!! Here an Education/Student loan just might help…………

What is Education Loan?

The loan provided to finance expenses pertaining to studying in India or abroad is coined as Education loan. For a minor his or her parents can take the loan on their behalf and for an adult, he or she can directly apply for the loan.

Eligible courses for getting an Education Loan:

In India

• Graduation, Post-graduation including regular technical and professional Degree/Diploma courses conducted by colleges/universities approved by UGC/ AICTE/IMC/Govt. etc

• Regular Degree/ Diploma Courses conducted by autonomous institutions like IIT, IIM etc

• Teacher training/ Nursing courses approved by Central government or the State Government

• Regular Degree/Diploma Courses like Aeronautical, pilot training, shipping etc. approved by Director General of Civil Aviation/Shipping

• Vocational Training and Skill Development Study Courses will not be covered under the regular Education Loan Schemes. A separate scheme for ‘Loans for Vocational Education and Training’ has been launched which covers financing for such Vocational courses

Abroad

• Job oriented professional/ technical Graduation Degree courses/ Post Graduation Degree and Diploma courses like MCA, MBA, MS, etc offered by reputed universities

Scope of Expenses

1. Fees payable to college/school/hostel
2. Examination/Library/Laboratory fees
3. Purchase of Books/Equipment/Instruments/Uniforms, Purchase of computers- essential for completion of the course
4. Caution Deposit/Building Fund/Refundable Deposit (maximum 10% tuition fees for the entire course)
5. Travel Expenses/Passage money for studies abroad
6. Cost of a Two-wheeler upto certain limit
7. Any other expenses required to complete the course like study tours, project work etc.

Maximum Limit of Finance

1. For studies in India – 10.00 lacs
2. For studies abroad – 30.00 lacs

Rate of Interest:

The rate of interest for any education loan differs depending upon the quantum of loan taken and generally varies from 11.50% to 14.00%. Higher the loan amount lower is the rate of interest. The interest rate is here is basically the sum of two rates (base rate + spread). Base rate is the rate at which a bank borrows from other banks or RBI and spread is the rate that bank intends to earn on the quantum of loan provided to you.

Repayment Tenure

Repayment tenure again ranges from 4 to 12 years depending upon the quantum of loan. Higher the loan value larger repayment tenure. Just to add, the in most of the cases the repayment of loan starts after one year of completion of the course or six months form the date of securing the job whichever is earlier.

Documentation required

1. Loan Application Form
2. Mark sheets of last qualifying examination
3. Proof of admission scholarship, studentship etc
4. Schedule of expenses for the specified course
5. 2 passport size photographs
6. PAN Card of the student and the Parent/ Guardian
7. Borrower's Bank account statement for the last six months
8. Income tax Returns/ IT assessment order, of last 2 yrs (If IT Payee)
9. Brief statement of assets and liabilities, of the Co-borrower
10. Proof of Income (i.e. Salary slips/ Form 16 etc. if applicable)

Happy Studying!!!