Education Loan in Delhi NCR

Highlights of Educational Loan Scheme

What is Education Loan?

An Education loan is designed to help students pay for  college tuition, books, and living expenses. It differs from other types of loans in that the interest rate is substantially lower and the repayment terms are easy.

FAQs

1. For what type of courses can educational loans be taken?

Educational loans can be taken to pursue a wide variety of courses, for example: · School/graduation courses, like High School, B.Sc., B.Com., B.A., etc. · Post-graduate/specialized courses, like B.Sc., M.Sc., B.A., M.A., B.Com, M.Com., etc. · Professional courses, like M.B.A., M.C.A., B.E., M.E., BTech, M.B.B.S., etc. · Other courses, like computer courses, fashion designing, commercial pilot training, etc. Keep in mind, however, that, usually, the courses financed should be for durations of more than a year, i.e., 12 months.

2. What are the costs covered under educational loans?

Educational loans usually cover the costs of tuition fees, hostel fees, mess fee and examination fees. Some banks may also finance the cost of books, equipments and other instruments required by the student for that course. For studies abroad, banks may provide one-way air fare. But this needs to be checked with your individual bank

3. Who is eligible for an educational loan?

There are many criteria that determine the eligibility of a student for an educational loan. These vary greatly from bank to bank. The most important criterion is that the student must have qualified for, or have a confirmed admission in a college or institute. The other factors that are normally important with nationalized banks are the age band, i.e. the student applying for the loan must be in the age group of 16-26 or some such specified range. Other criteria are good academic record (first class throughout, with no gaps or breaks in education, etc.), and a regular source of income for the parents. The recognition granted to the institution the student has opted for is also an important criterion.

4.   What is the maximum amount that can be availed under educational loans? / How is the maximum loan amount calculated?

The maximum loan amount varies from bank to bank, but, most importantly, it depends on the course for which the loan is sought and the institution chosen. For example, the loan amount for an M.B.A. course would be different for different institutes--the fees at I.I.M.'s would be approximately Rs 2 Lac, whereas at Somalia it would be Rs 80,000. Hence the loan amount will vary drastically. But many banks have a margin criterion, which means that they would provide up to 75 per cent or 90 per cent of the total cost of the course, while the balance has to be paid by the applicant. The loan amount can also depend on the borrower's parents/guardians net monthly salary. The loan amount could also be calculated as being six or 10 times the monthly salary of the parent. Ultimately, however, the loan amount would depend on the discretion of the bank.

5.  What security does one needs to provide for the loan?

The security depends on the loan amount. It is quite possible that banks may not require security for a loan of up to Rs 25,000, but would require it for amounts greater than that. These limits are usually in slabs that vary with banks. The usual security that the banks generally take is National Savings Certificates (NSCs), bonds, gold, vehicle, house or property, etc. In addition to these, some banks might also require the applicant to have a life insurance policy equivalent to, or greater than, the loan amount.

6. What are the documents required for an educational loan?

The general documentation required by the banks for disbursing education loans is usually very simple. The most important among them is proof from the college/institute that the student has a confirmed admission there. Then comes an agreement with the students or the parents/guardians, and proof of residence. Proof of age is also important, considering that quite a few banks have a clause that they would not finance a student above a certain age limit. Also required are documents to prove that the parents/guardians have a regular source of income, namely, salary statements, IT returns, etc. And, lastly, a resume of the student, clearly showing his past academic performances.

7. What is a holiday period?

A holiday period is the maximum time given to the student before he/she needs to start paying back the principal loan in Equated Monthly Instalments (EMIs). In other words, it is the period between the student's final examination in the course for which the loan was availed and when he/she actually starts paying the EMIs. Typically, holiday periods range from six to 12 months. Take note, however, that if the student starts working immediately after completing the course, he does not enjoy a holiday period. Repayment usually starts six months after the course completion or the commencement of a job, whichever is earlier.

8. Will I get an educational loan for payment seats' also?

Yes, one can get an educational loan for payment seats too. Usually, the banks have a ceiling for each course, and, based on that, they decide the loan amount. So long as the loan amount does not cross that ceiling, the student can be assured a loan, provided he/she satisfies the other eligibility criteria.