All you need to know about the education loans in india

Greetings,

Education, as we all know, is most vital asset in the modern world. And when it is from prestigious institutions it widens our horizons more. But accessing it can be difficult for quite a lot of students due to finance. This is where education loans can help.

Indian banks provide wide range of education loans. Loans for studying in India, abroad, for higher education in IITs, IIMs, NITs, etc (with special benefits) and loans even for vocational courses.

 Eligible Courses

Graduation, Post-graduation courses approved by UGC/ AICTE/ IMC/CIMA (Chartered Institute of Management Accountants) - London, CPA(Certified Public Accountant) in USA, etc.

Teacher Training/ Nursing courses approved by Central government or the State government.

Courses run by Industrial Training Institutes (ITIs), Polytechnics, training partners affiliated to National Skill Development Corporation(NSDC)/ Sector Skill Councils, State Skill Mission, State Skill Corporation.

Certificate/Diploma/Degree issued by such organisation as per National Skill Qualification Framework (NSQF) are eligible for a Skilling Loan.

 Expenses Covered

 Fees payable to college/school/hostel.

 Examination/ Library/ Laboratory fees.

 Purchase of books/ Equipment/ Instruments/ Uniforms/ computers.

 Caution deposit/ Building Fund/ Refundable deposit.

 Travel expenses for studies abroad.

 Expenses to cover study tours, project work, etc.

 Repayments

 Usually Loan to be repaid in 15 years.

 Repayment commence one year after after completion of course.

 Accumulated simple interest during the moratorium period and course period is added to principle and repayment is fixed in EMI ( Equated Monthly Instalments) .

 If full interest is paid before the start of repayment , EMI is fixed based on principle amount only.

 Vocational courses Loans have repayment period between 3 to 7 years depending on the amount. ( Maximum loan amount under Skill courses is generally 1.5 Lacs).

 Salient Feature of loans designed for studying in India and abroad

 Schemes like Student Education loan (SBI), PNB Saraswati, Baroda Gyan, IBA Model Education loan (Canara Bank), PNB Udaan (for studies in abroad),Baroda Scholar ( for study abroad) , AXIS Prime Domestic, Axis Prime Abroad, Skill Loan Schemes, etc provide loan for studies in India and abroad. There are many common features among these schemes with slight modifications.

 Loan Amount

 For studies in India - Medical Course upto 30 Lacs, Other courses upto 10 Lacs and higher amount is considered from case to case basis with maximum amount upto 50 Lacs

 For Studies in Abroad - Upto Rs. 7.5 lacs, Higher loan amount is considered from case to cases basis while some banks have upper limit of 1.5 crore, few have no upper limits. This amount depends on the type of course and also the ranking of institute.

 More loan amount can be provided if the student secures admission in prestigious institutions like IIT, IIMs, NITs.

 Rs 50,000 to Rs 1.5 Lacs for vocational or Skill courses.

 Security

 Upto Rs 7.5 lacs : Only parent/ Guardian as co-borrower, No collateral Security or third party guarantee

 Above Rs 7.5 lacs : Parent/Guardian as co-borrower and tangible collateral security.

 Meritorious students can avail unsecured loans (i.e. collateral free) upto Rs 40 Lacs from almost any bank though with slightly different interest rates.

 No collateral or third party guarantee will be taken for Vocational or Skills Loans. However parent/Guardian required as joint borrower.

 Money margin

 It is the amount paid by the borrower while the rest of the amount is paid by the bank. Margins can be FD/ Scholarships/ initial fee paid to the institute.

 Upto 4 lacs - Nil ( i.e. bank will finance total expenses)

 Above 4 lacs - 5% for studies in India and 15% for studies in abroad.

 100 percent financing for students securing admission in premier institutes in India or abroad.

 ICICI bank charges no margin upto Rs 20 Lacs for non-premier institutes as well.

 Nil money margin for Vocational or Skill Loans.

 Interest Rates

 Interests rates are set according to RLLR ( Repo Linked Lending Rate) , MCLR (Marginal Cost of funds based lending Rate) . These reference rates are subject to change upon which Rate of Interest is calculated. Every bank has therefore slightly different interest rates because these metrics are internal to banks.

 State bank of India bank

 Upto 7.5 lacs - Effective Rate of Interest is 8.65 % . 0.5% concession in interest for girl students.

 Above 7.5 lacs  and  Above 20 Lacs and upto 1.5 Cr (for studies in abroad) - Effective Rate of Interest is 8.65 % . 0.5% concession in interest for girl students. 0.5% concession for students availing of SBI Rinn Raksha or any other existing life policy assigned in favour of SBI bank.

 List AA institutes - Effective ROI - 6.85% to 6.95%

 List A institutes - Effective ROI - 7% to 7.15%

 List B institute - Effective ROI - 7.15% to 7.65%

 List C institute - Effective ROI - 7.15% to 8.15%

 Skill Loan Scheme : Upto Rs 1.5 Lacs - Effective ROI - 8.15% with no further concession.

 Punjab National Bank

 For studies in Indian and Abroad - Upto 7.5 lacs - RLLR  - 6.8% ( w.e.f. 1.09.2020) + 2.00%

                                               Above 7.5 lacs - RLLR + 2.75%

 Loans irrespective of amount where 100% tangible collateral security is available - RLLR + 2%

 For PNB employees where employee is either a co-borrower or guarantor - RLLR + 0.25%

 Institutes like IITs, IIMs, XLRI Jamshedpur and NITs - Upto 7.5 Lacs- RLLR + 0.65%

                                                                                      Above 7.5 Lacs - RLLR + 0.15%

 Institutes such as IIM Ahmedabad, IIM Bengaluru, IIM Kolkata - Above 7.5 Lacs - RLLR + 0.10%

 PNB Kaushal - Vocational Education and Training - RLLR + 1.50%

 Bank of Baroda

 For studies in India

 Upto 7.5 lacs : BRLLR (Baroda Repo Linked Rate) - 6.75%(w.e.f. 15/03/2021) + 1.85%

 Above 7.5 Lacs : BRLLR + 1.6%

 0.5% concession in rate of interest to loans for girl students not in premier institute.

 For studies In abroad

 In Premier Institute : BLLR + 1.5%

 In non-premier institute : BLLR + 2.15%

 Premier Institutions for studies in India

 List AA/ A institutions : BLLR - 6.75%

 List B : Upto 7.5 Lacs : BRLLR + 1.10%

            Above 7.5 Lacs : BRLLR + 0.85%

 List C : Upto 7.5 Lacs : BRLLR + 1.85%

            Above 7.5 Lacs : BRLLR + 1.60%

 Baroda Skill Loan Scheme - BRLLR + 1.50%

  Canara Bank

 Upto 7.5 Lacs - MCLR ( 7.35%) + 2%

 Above 7.5 Lacs - MCLR + 1.5%

 0.5% concession in ROI ( Rate of Interest) to girl students.

 0.5% concession for timely repayment of interest during moratorium.

 Selected IIMs/IITs/NITs/IISc/ISB (Hyderabad and Mohali) and other reputed institutes - 7.35%

 IBA Skill Loan Scheme - MCLR + 1.50%

 AXIS Bank

 Upto 4 Lacs  - Effective ROI - 15.20%

 Loan greater than 4 Lacs and upto 7.5 Lacs - Effective ROI - 14.7%

 Loan greater than 7.5 Lacs - Effective ROI - 13.7 %

 ICICI Bank

 Secured Loan - Starting at 10.50%

 Unsecured Loan - Starting at 10.75%

 Interest rates will vary depending on the institutes and courses.

 HDFC Bank

 For studies in India

 Min APR (Annual percentage rate which includes additional costs or fees) - 9.4%

 Max APR - 13.34%

 Preferential rate of interest for prestigious institutions..

 For Studies in Abroad

 Effective Rate of Interest - 8.64%

 Interest Subsidy Schemes

 Central Scheme of Interest Subsidy for education loans - For Economically weaker sections to pursue technical/professional courses.

 Padho Pradesh Scheme of Interest Subsidy for education loans - For students of minority communities to study abroad.

 Dr. Ambedkar Central Sector Scheme of Interest Subsidy - For OBCs and economically backward classes to pursue education abroad.

 Central Sector Interest Subsidy Scheme (CSIS) - For providing full interest subsidy during the moratorium period on modern education loans without any collateral security and. third party guarantee, for pursuing technical/professional courses in India.

 Vidya Lakshmi (vidyalakshmi.co.in)

 This is an online portal designed in collaboration with different government ministry where students can view, apply and track the education loans from different banks. The portal links students to National Scholarship Portal also. Students can avail information on loans offered by 34 banks and can apply to three different banks with single form. Applying involves less paper work and it takes almost 15 days for the loan to be processed.

 While applying for education loans, one should clearly asks bank about the hidden costs such as processing charges, documentation charges, penalties in case EMI is not deposited on due dates. Also banks provide insurances specifically in case of unsecured loans in which premium amount is added to loan amount. Lastly, any kind of loan is a liability, it needs to be repaid, so one should think thoroughly about whether their college and courses will provide them good platform to land into a good job so that repayment is a stress free routine.

 Useful links

 Know your College - knowyourcollege-gov.in

 Ranking of higher Education in India - nirfindia.org/Home

 National Scholarship Portal - scholarships.gov.in

Comments

  1. UnknownApril 5, 2022 at 12:57 AM

    This information is very helpful. Thank You for sharing such valuable information with us. Online Banking Application

    ReplyDelete

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