All about Education Loans in India-FAQ and Important Links
- What are the eligibility criteria for obtaining Education Loan from Banks in India ?
The student should be an Indian National.
Should have secured admission to a higher education course in recognized institutions in India or Abroad through Entrance Test/ Merit Based Selection process after completion of HSC(10 plus 2 or equivalent).However, entrance test or selection purely based on marks obtained in qualifying examination may not be the criterion for admission to some of the post graduate courses or research programmes. In such cases, banks will have to adopt appropriate criteria based on employability and reputation of the institution concerned
Note: It would be in order for banks to consider a meritorious student (who qualifies for a seat under merit quota) eligible for loan under this scheme even if the student chooses to pursue a course under Management Quota.
- What are the courses covered under Education Loans?
A. Studies in India: (Indicative list)
- Approved courses leading to graduate/ post graduate degree and P G diplomas conducted by recognized colleges/ universities recognized
by UGC/ Govt./ AICTE/ AIBMS/ ICMR etc.
- Courses like ICWA, CA, CFA etc.
- Courses conducted by IIMs, IITs, IISc, XLRI. NIFT,NID etc.
- Regular Degree/Diploma courses like Aeronautical, pilot training, shipping, degree/diploma in nursing or any other discipline approved by Director General of Civil Aviation/Shipping/Indian Nursing Council or any other regulatory body as the case may be, if the course is pursued in India.
- Approved courses offered in India by reputed foreign universities.
1. The above list is indicative in nature. Banks may approve other job oriented courses leading to technical/ professional degrees, post graduate degrees/diplomas offered by recognized institutions under this scheme.
2.Courses other than the above offered by reputed institutions may also be considered on the basis of employability.
B.Studies abroad :-
What is the quantum of loan and expenses covered under Education Loan?
QUANTUM OF FINANCE:
- Graduation : For job oriented professional/ technical
courses offered by reputed universities.
- Post graduation: MCA, MBA, MS, etc.,
Courses conducted by CIMA- London, CPA in USA etc.
- Degree/diploma courses like aeronautical, pilot training, shipping etc provided these are recognized by competent regulatory bodies in India/abroad for the purpose of employment in India/abroad.
Need based finance to meet the expenses will be considered subject to the following ceilings:
Studies in India - Maximum upto ₹ 10 lakhs.
Studies Abroad - Maximum upto ₹ 20 lakhs.
Expenses considered for loan :
- Fee payable to college++/ school/ hostel.*
- Examination/ Library/ Laboratory fee.
- Travel expenses/ passage money for studies abroad .
- Insurance premium for student borrower, if applicable.
- Caution deposit, Building fund/refundable deposit supported by Institution bills/receipts. **
- Purchase of books/ equipments/ instruments/ uniforms .***
- Purchase of computer at reasonable cost, if required for completion of the course.***
- Any other expense required to complete the course - like study tours, project work, thesis, etc.***
- While computing loan required, scholarships, fee waiver etc., if any available to the student borrower may be taken into account.
++ For courses under Management quota seats considered under the scheme, fees as approved by the State Government/Government approved regulatory body for payment seats will be taken, subject to viability of repayment.
* Reasonable lodging and boarding charges will be considered in case the student chooses / is required to opt for outside accommodation.
** These expenses could be considered subject to the condition that the amount does not exceed 10% of the total tuition fees for the entire course.
*** It is likely that expenditure under Item Nos. vi, vii & viii above may not be available in the schedule of fees and charges prescribed by the college authorities. Therefore, a realistic assessment may be made of the requirement under these heads. However, the maximum expenses included under vi, vii & viii may be capped at 20% of the total tuition fees payable for completion of the course.
Can I take the loan without providing security for the Loan?
For loans upto RS 4.00 lakhs ,No security is to be provided.Parents are to be made as joint borrower(s).
But for loans above Rs4.00 lakhs
and upto Rs7.50 lakhs , besides the parent(s) executing the documents as joint borrower(s) , collateral security in the form of suitable third party guarantee will be taken. The bank may, at its discretion, waive third party guarantee .
For Loans Above Rs 7.50 lakhs ,Tangible collateral security is to be provided.
Is there any repayment holidays / moratorium during my studies for repayment of the loan?
Yes,Repayment holiday/Moratorium is admissible.
Is it compulsory to pay interest on the loan during the course of my studies?
Repayment starts only after Course period + 1 year or 6 months after getting job, whichever is earlier.
No ; it is not compulsory to pay interest during study period.
But you are eligible for 1% interest concession ,if interest is serviced during the study period and subsequent moratorium period prior to commencement of repayment.
Is there any subsidy on interest during repayment holidays / moratorium period?
Yes,if you satisfy the conditions stipulated Under a Scheme announced by the MoHRD.
My brother / sister already obtained Education Loan in a Bank .Can I also get Education Loan from Banks?
- 100% interest subsidy on Education Loans availed from scheduled
banks is admissible for Students whose parental income is upto 4.5 lakhs
per annum .
- Interest subsidy is available for loans disbursed on or after 1st April, 2009.
- Students who had loan sanctioned prior to that date would also be eligible for interest subsidy on fresh disbursements made by banks on or after 1st April, 2009.
- The subsidy would be paid on interest charged during the study period as well as subsequent moratorium period before commencement of repayment.
- The subsidy is applicable for pursuing any of the approved courses of studies in
technical and professional streams from recognized Institutions in India.
Existence of an earlier education loan to brother(s) and/or sister(s) will not affect the eligibility of another meritorious student from the same family obtaining education loan as per this scheme from the bank.
IBA's-Model Educational Loan Scheme could be
adopted by all member banks of the Association or other banks and financial institutions as may be advised by the Reserve Bank of India. The scheme provides broad guidelines to the banks for operationalising the educational loan scheme and the implementing bank will have the discretion to make changes as deemed fit.
Students who intend to avail Education Loan are advised to confirm the changes if any from respective banks .
Education Loans in India:
For further details follow the links
- Indian Banks’ Association (IBA)-Model Educational Loan Scheme for pursuing Higher Education in India and Abroad
(September, 2012) ,
Government of India-Central Scheme to provide Interest Subsidy for the period of moratorium on
Educational Loans taken by students from economically weaker sections. and related links.
- IBA-Model Loan Scheme for Vocational
Education and Training
- Interest Subsidy Scheme for Education Loans -IBA Press Release Dt 26.02.2011 .
- Central Scheme to provide lnterest Subsidy for the period of moratorium on
Educational Loans taken by students from Economically Weaker Sections
- Government of India-Central Scheme to provide Interest Subsidy for the period of moratorium on
Educational Loans taken by students from economically weaker sections