Facing financial crunch for higher studies? Opt for educational loans!

If you are the one among those students who want to study higher but are facing financial crunch, then this is the time for you to go and apply for education loan.

These days, education loan is becoming quite popular because of increasing fee structure. It was in 1995 when the State Bank of India started this initiative. Later on, looking at its popularity, many banks started offering the same.

It wont be wrong to say that Education loan has come up as a blessing when fee structure has gone up enormously for higher education.

Recently, the RBI included education loan as part of the priority sector lending. this was a positive step. Meanwhile students should remember that it is just like any other commercial credit. Here, the banks have the discretion to chose whether to sanction the loans for students or not. The banks check the credit worthiness of students.

Eligibility for Education loan

Educational loans are available to Indian nationals to pursue different approved courses leading to graduate/postgraduate degree and PG diplomas conducted by colleges and universities that are recognised by UGC/Govt., AICTE, ICMR etc. There are many professional and technical courses of repute which are considered for granting such loans. There are different loans which are also granted for courses in reputed foreign universities. Different expenses are also covered under education loan. They include fees payable, exam and library fees, accommodation charges, reasonable expenses for books and equipment such as computer, etc.

Finance limit

The finance amount is Rs. 10 lakh for studying in India and Rs. 20 lakh for studying abroad. Banks can also lend high amount in special cases at their own discretion.

Security issues

There is no security up to Rs 4 lakh, however, parents should be a joint borrower in this case.

For the range falling in between Rs 4-7.5 lakhs, there has to be parents collateral security which comes in the form of third party guarantee

For the funds above Rs 7.5 lakhs, parents have to be joint borrowers. There should also be a tangible collateral security of the suitable value which is required.

The Moratorium period for repayment includes the coverall course period and a year or 6 months after getting job, whichever comes earlier

Margin money is nil for loan up to Rs. 4 lakh. However, it comes around 5 per cent and 15 per cent respectively for studying in India and abroad on loan above the ceiling of Rs. 4 lakh. At time when your loan amount is higher than Rs 20 lakh to study abroad, the overall percentage is calculated within in a margin of the required amount and the bank sets a ratio in this case.

The loan tenure is 10 and 15 years for loan up to Rs 7.5 lakhs and above respectively.

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