Typical Education Loan Schemes from Indian Banks

On-line application and registration is available on most of the bank web sites

Stae Bank of India...
http://www.statebankofindia.com/user.htm
Corporation Bank:
http://www.corpbank.com/asp/0100text.asp?presentID=110&headID=19
Canara Bank:
http://www.canarabank.com/English/Scripts/CanEduLoan.aspx
Syndicate Bank:
http://syndicatebank.in/scripts/SyndVidya.aspx
Union Bank:
http://www.unionbankofindia.co.in/ln_Union_Education.aspx

see previous posting about Interest Subsidy during first 4-5 years of professional education(engineering, medicine etc.)

From: Stae Bank of India Website... http://www.statebankofindia.com/user.htm

EDUCATION LOAN

A term loan granted to Indian Nationals for pursuing higher education in India or abroad where admission has been secured.

Eligible Courses

All courses having employment prospects are eligible.

• Graduation courses/ Post graduation courses/ Professional courses
• Other courses approved by UGC/Government/AICTE etc.

Expenses considered for loan

• Fees payable to college/school/hostel
• Examination/Library/Laboratory fees
• Purchase of Books/Equipment/Instruments/Uniforms
• Caution Deposit/Building Fund/Refundable Deposit (maximum 10% tution fees for the entire course)
• Travel Expenses/Passage money for studies abroad
• Purchase of computers considered necessary for completion of course
• Cost of a Two-wheeler upto Rs. 50,000/-

Any other expenses required to complete the course like study tours, project work etc.

Amount of Loan

• For studies in India, maximum Rs. 10 lacs
• Studies abroad, maximum Rs. 20 lacs

Interest Rates

w.e.f. 29.06.2009 (SBAR 11.75%)

SBI Student Loan Scheme

Loan Amount	Rate of Interest
Loans upto Rs. 4.00 Lacs	0.50% below SBAR i.e. 11.25% p.a.
Loans above Rs. 4.00 Lacs and upto Rs. 7.50 Lacs	1.00% above SBAR i.e. 12.75% p.a.
Loans above Rs. 7.50 Lacs	At SBAR i.e. 11.75% p.a.

An Interest Rate concession of 0.50% to Girl Student availing Student Loans

Processing Fees

• No processing fee/ upfront charges
• Deposit of Rs. 5000/- for education loan for studies abroad which will be adjusted in the margin money

Repayment Tenure

Repayment will commence one year after completion of course or 6 months after securing a job, whichever is earlier.

Place of Study	Loan Amount	Repayment Period in Years
Studies in India	Rs. 10.0 lacs	5-7
Studies Abroad	Rs. 20.0 lacs	5-7

Security

Amount	For loans upto Rs. 10.00 lacs for Studies in India and upto Rs. 20.00 lacs for studies abroad
Upto Rs. 4 lacs	No Security
Above Rs. 4 lacs to Rs. 7.50 lacs	Collateral security in the form of suitable third party guarantee. The bank may, at its discretion, in exceptional cases, weive third party guarantee if satisfied with the net-worth/means of parent/s who would be executing the documents as "joint borrower".
Above Rs. 7.50 lacs.	Tangible collateral security of suitable value, along with the assignment of future income of the student for payment of installments.

All loans should be secured by parent(s)/guardian of the student borrower. In case of married person, co-obligator can be either spouse or the parent(s)/ parents-in-law

Margin

• For loans up to Rs.4.0 lacs : No Margin
• For loans above Rs.4.0 lacs:
• Studies in India: 5%
• Studies Abroad: 15%

Documentation Required

• Completed Education Loan Application Form.
• Mark sheets of last qualifying examination
• Proof of admission scholarship, studentship etc
• Schedule of expenses for the specified course
• 2 passport size photographs
• Borrower's Bank account statement for the last six months
• Income tax assessment order, of last 2 years
• Brief statement of assets and liabilities, of the Co-borrower
• Proof of Income (i.e. Salary slips/ Form 16 etc)

Interest Subsidy for Education Loans in India

From: http://www.education.nic.in/uhe/IntSubsidyonELS.pdf

Government of India
Ministry of Human Resource Development
Department of Higher Education

Central Scheme to provide Interest Subsidy for the period of moratorium on Educational Loans taken by students from economically weaker sections from scheduled banks under the Educational Loan Scheme of the Indian Banks’ Association to pursue technical/professional education studies in India.

One of the major concerns of the Government is to ensure that nobody is denied professional education because he or she is poor. The Indian Banks’ Association (IBA) had formulated a comprehensive model educational loan scheme for adoption by all Banks, aimed at providing financial support from the banking system to deserving/meritorious students for pursuing higher education in India and abroad. Government of India has now approved a Scheme to provide full interest subsidy during the period of moratorium on loans taken by students belonging to economically weaker sections from scheduled banks under the Educational Loan Scheme of the Indian Banks’ Association, for pursuing any of the approved courses of studies in technical and professional streams, from recognized institutions in India.

2. The broad parameters of the Scheme are :-

(i) The Scheme would be only applicable for studies in technical and professional courses in India. The interest subsidy shall be linked with the existing Educational Loan Scheme of IBA and restricted to students enrolled in recognized professional courses (after Class XII) in India in Educational Institutions established by Acts of Parliament, other Institutions recognized by the concerned Statutory Bodies, Indian Institutes of Management (IIMs) and other institutions set up by the Central Government.

(ii) Under the Scheme, interest payable by the student availing of the Educational Loan Scheme of the Indian Banks’ Association for professional courses for the period of moratorium (i.e., course period, plus one year or six months after getting job, whichever is earlier) as prescribed under the Educational Loan Scheme of the Indian Banks’ Association, shall be borne by the Government. After the period of moratorium is over, the interest on the outstanding loan amount shall be paid by the student, in accordance with the provisions of the existing Educational Loan Scheme and as may be amended from time to time.

* (iii) The benefits under the Scheme would be applicable to those students belonging to economically weaker sections, with an annual parental income upper limit of Rs. 4.5 lakh per year.

(iv) The interest subsidy under the Scheme shall be available to the eligible students only once, either for the first undergraduate degree course or the post graduate degrees/diplomas. Interest subsidy shall, however, be admissible for combined undergraduate and post graduate courses.

(v) Interest subsidy under this scheme shall not be available for those students who either discontinue the course midstream, or for those who are expelled from the Institutions on disciplinary or academic grounds. However, the interest subsidy will be available for the actual period of study, only if the discontinuation was due to medical grounds for which necessary documentation to the satisfaction of the Head of educational institution will have to be given.

(vi) There would be a tag/marker on the degree of the student indicating his repayment liabilities.

(vii) The National Minorities Development & Finance Corporation (NMDFC) has an Educational Loan Scheme for individual beneficiaries, which is implemented through State Channelizing Agencies (SCAs). The National Safai Karamcharis Finance and Development Corporation under the Ministry of Social Justice and Empowerment also provides educational loan to the students of the target group for higher education. Interest on Educational Loan provided under these two schemes, if the loans are for pursuing professional courses after XII class, shall also be subsidized for the period of moratorium as per the terms and conditions of this Scheme.

(viii) The Scheme shall be implemented through Canara Bank, which is the nodal bank for the Ministry of Human Resource Development. Modalities for implementation and monitoring mechanism shall be finalized in consultation with the Canara Bank.

(ix) The Scheme shall be applicable from the academic year 2009-10.

(x) A list of professional courses for which the scheme shall be applicable, shall be brought out, in consultation with the concerned Ministries/Departments and the Indian Banks’ Association, and publicised from time to time.

** (xi) A monitoring mechanism shall be evolved to monitor the benefits accruing to different categories of loanees, such as, the Scheduled Castes, Scheduled Tribes, Minorities, Disabled etc.

* Income proof shall be required from the students from such public authorities as are authorised by the State Governments for certification of income status for various purposes, including Central and State Sector Schemes.

** For better statistical reference and collation of data, information pertaining to beneficiaries shall be maintained in respect of the categories to which they belong, namely, Scheduled Castes, Scheduled Tribes, Minorities, Other Backward Classes, and Others; alongwith sub-classification in terms of gender, differently-abled/ persons with disabilities as well as the disciplines/programmes of study, year of enrolment and programmes as also the specialisation of study, institutions, locations, State-wise and Bank-wise.

Belated application, no ground to deny education loan: Madras High Court

Date:29/05/2010 URL: http://www.thehindu.com/2010/05/29/stories/2010052950980600.htm Back

Tamil Nadu - Madurai

Belated application, no ground to deny education loan: HC

Mohamed Imranullah S.

Banks bound to examine plea for grant of educational loans

MADURAI: Nationalised banks cannot deny educational loan to a student on the ground that the loan application had been made belatedly after the commencement of the academic year, the Madras High Court Bench here has ruled.

Allowing a writ petition filed by an engineering student from Kanyakumari district, Justice T.S. Sivagnanam said that banks were bound to examine the plea for grant of educational loans bearing in mind the laudable object of the Model Educational Loan Scheme framed by the Union Government.

The petitioner, S. Sugitha, said that she completed her Plus Two in March 2009 and secured admission in a private engineering college through counselling conducted by Anna University. However, her father, a farm labourer, could not afford the course fee of Rs.3,10,400 for the four-year course. She decided to avail herself of an education loan from the State Bank of Tranvancore, Peyode branch in Kanyakumari district, and obtained an application form after great difficulty.

No response

Even after that, the bank did not sanction the loan and a representation made to the Collector also did not evoke any response.

On the other hand, counsel for the bank contended that the loan application was filed in December 2009 and hence it would be considered from the second year of the course onwards, subject to the condition that the applicant should score good marks in the forthcoming examinations.

Disagreeing with the condition imposed by the bank, Mr. Justice Sivagnanam said that the High Court had held, as early as in 2007, that poor academic record of a student could not be cited as a reason for refusing to grant education loan because it would amount to underestimating the ability of the candidate.

The judge also pointed out that the Model Educational Loan Scheme stated that development of human capital was a national priority and loans for education should be seen as an investment for economic development and prosperity.

© Copyright 2000 - 2009 The Hindu

Education loans set to become more attractive!

May 10th, 2010 (Copy From http://www.bankbazaar.com/guide/education-loans-set-to-become-more-attractive/18487/ )

Typically interest rate on the education loan starts accumulating as soon as the course is over. Since interest during the moratorium period will be paid by the government, EMI for the borrower is set to fall. This will reduce pressure on his/her cash flows.

This is a proposal which has been submitted to the Planning Commission and has been discussed with them too. The Planning Commission is currently looking into the proposal of setting up a National Education Finance Corporation (NEFC) to refinance banks. Based on the feedback received, the ministry will prepare a formal note which will be submitted to the Cabinet for approval.

The Ministry of Human resource development (HRD) headed by Mr. Kapil Sibal, has drafted a proposal on educational loans, which entails changes that will increase the accessibility of these loans- the objective being an equitable distribution.

The proposed changes include:

• Reduction in the rate of interest: The Ministry is planning to subsidize the interest rates on educational loans and intends to bring in down to as low as 4%. For the same, the Ministry is working on a refinance scheme. This would involve, setting up of a Special Purpose Vehicle (SPV) to refinance banks for giving educational loans at a rate of interest below the PLR. National Education Finance Corporate (NEFC) will have to be set up to refinance the banks.

Impact: Banks have been witnessing defaults and non-payments on educational loans. This may change. Banks are set benefit on two counts- defaults should reduce because of low rate of interest charged to the borrower and even in case of defaults; banks will be able to cut their losses by virtue of subsidy provided by the government.

• Set criteria for charging interest rates: It is intended that the rate of interest charged will be based on parent’s income.

• Parents with income less than Rs 4.5 lakhs p.a. will be charged 4%

• Parents with income more than Rs 4.5 lakhs p.a. and requiring a loan of less than Rs 12 lakhs will get it at 7%

• For loan amounts above Rs 12 lakhs, interest will be charged at 9%

Impact: The highest rate of interest to be charged under the proposed structure i.e. 9% is lower than the lowest rate currently charged by banks, which is in the range of 10%-12% in most instances. This will certainly prove to be beneficial to students across the board.

• Repayment period: The ministry intends to increase the loan repayment period to 6-12 years from the current 5-7 years.

Impact: This will reduce the pressure on the borrower by giving him/her greater amount of time for re-payment.

• No interest during moratorium period: The interest cost for the moratorium period will be paid by the government - So if the loan is for a period of 7 years, the interest for the first two years (study period) and one year moratorium (holiday period to find a job) will be paid by the government and for the balance 5 years, interest and principal will be paid by the borrower.

Impact: Typically interest rate on the education loan starts accumulating as soon as the course is over. Since interest during the moratorium period will be paid by the government, EMI for the borrower is set to fall. This will reduce pressure on his/her cash flows.

This is a proposal which has been submitted to the Planning Commission and has been discussed with them too. The Planning Commission is currently looking into the proposal of setting up a National Education Finance Corporation (NEFC) to refinance banks. Based on the feedback received, the ministry will prepare a formal note which will be submitted to the Cabinet for approval.

If this proposal is approved by the Cabinet, educational loans will certainly be accessible to more number of students. ‘Financial issues’ will hopefully not deprive a student from pursuing higher education.

Loan Guarantee Authority for Education Loans

Date:10/05/2010 URL: http://www.thehindu.com/2010/05/10/stories/2010051060631100.htm ‘Set up loan guarantee authority for education loans' Aarti Dhar Montek Singh Ahluwalia NEW DELHI: The Planning Commission has suggested that the Human Resource Development Ministry examine the option of setting up a loan guarantee authority as a separate division within the purview of the proposed National Education Finance Corporation (NEFC). The proposed NEFC aims at refinancing student education loans and institutional loans at concessional rates with longer repayment, which will help expansion and new investments in the higher education sector, particularly universities. While putting the NEFC on a “fast track”, Planning Commission Deputy Chairman Montek Singh Ahluwalia reportedly told the Ministry to also look into the possibility of creating an authority that would stand guarantee for education loans to students or institutions who borrow money for investment in the higher education sector, instead of only refinancing. Mr. Ahluwalia is said to have suggested to the Ministry that both the options of refinancing and standing guarantee could be brought under the purview of the NEFC. The proposed NEFC would have two divisions, one as a loan guarantee authority and the other to deal with infrastructure loans. To be entrusted with the task of managing the corpus fund for educational institutions, the NEFC would refinance the institutional loans available to colleges, institutions in higher educations for capacity expansion and new investment, and universities for expansion at the prime lending rate (PLR) of banks. It will also provide concessional funding for philanthropic institutions at below-PLR rates. The repayment period will be 15-20 years, with a five year moratorium on principal repayment. If the NEFC stands as a guarantor, it will have to pay only for defaulters, who would be few. The Ministry, open to the new suggestion, is working out mechanisms to cut down on defaulters before approving the loans. The refinancing of loans for investment is also expected to curb capitation fees, since, at present, investment for infrastructure has to be borrowed at commercial rates where the interest is high and the repayment period short. To avoid this, institutions often borrow money from the market, and in order to repay it quickly, charge capitation fees from students. Once the loan is repaid, the capitation fee turns into profit. With the availability of soft loans, this is expected to come to an end. The NEFC will refinance to the bank at a lower rate the sanctioned loan that it releases to the student or an institution. The bank makes its margin from the difference in interest rates, while the NEFC will use the educational cess released by the government, which is free of cost and also borrows from the market, so that the average cost of funds advanced as loans is lower than the rate at which it lends to banks. This differential rate will be the NEFC's margin or profit. © Copyright 2000 - 2009 The Hindu

Poor Students may get Education Loan at 4 %

'Poor' students may get education loan at 4 per cent

New Delhi, May 14 (PTI):

Government is planning to provide education loans at four per cent interest rate to help students from weaker sections of society to pursue higher studies.

Discussions are on between the HRD Ministry and the Planning Commission on this innovative concept, which is seen as a significant initiative of the UPA government. "It (education loan at four per cent proposal) is at a preliminary stage. We have discussed this idea with the Planning Commission and it is supportive," HRD Minister Kapil Sibal told PTI. This loan will be provided by banks while a proposed funding corporation for higher education will re-finance the banks to help them compensate the loss. The mandate and functioning of the proposed National Higher Education Finance Corporation (NHEFC) are now being worked out. "I hope it will be crystallised soon," Sibal said. The detailed modalities are being worked out for the scheme, including the weaker section criteria. The scheme will have another component of providing loans to students at the rate of seven per cent, subject to a ceiling. There will be a cap on loan amount in this category. There may another provision of extending loans at nine per cent without a cap on the amount. According to sources, the NHEFC, which will also provide low-interest loans to higher educational institutions for capacity building through commercial banks. The HRD Ministry has already prepared a concept note on creation of NHEFC. As per the HRD Ministry's plan, the proposed NHEFC will be an institutional mechanism to address the investment needs in higher education sector. The proposed corporation will nurture philanthropic tradition in education by providing loans at concessional rates on interest to such agencies for establishment of higher and vocational institutions in educationally backward areas. It will be a NABARD like institution in higher education and will raise debt by issue or sale of bonds for augmenting resource from the market and will finance creation of universities. The proposed scheme will be in addition to the existing interest subsidy on educational loan scheme. Under the existing scheme, students, whose family income is less than Rs 4.5 lakh per annum, are able to get loans at a concessional rate. Normally the education loan is about one per cent less than the Prime Lending Rate (PLR) of the banks. The PLR of the national banks is around 11-12 per cent on loans.

Education Loan Information

Acouple of good sources of information about Education Loan Schemes in India are available at

http://action2020eltf.blogspot.com/

http://www.apnaloan.com/education-loan-india/

Check out these sites.

How to Apply for Education Loan and Get it!

The public sector banks in India have a very good education loan scheme for students pursuing higher education in general and professional courses in particular. The banks have published on their websites the rules and requirements for these loans and also provide facilities to apply on-line and also to download the application form. However many students do not take advantage of this on-line facility and directly approach the bank managers without accessing and/or understanding this online information. Many times the bank managers flatly deny the loan request or impose extra requirements than necessary. Following step by step guide will help students to access this information and exercise their right to get the loan.

• Before CET Counseling

1. Make a list of Public Sector Banks nearest to your family home and rank them starting with the nearest.

2. Go onto their Education Loan webpage on the internet and print information about the bank’s education loan scheme, study it and understand the eligibility requirements, eligible expenses and conditions for various levels of loan amount. Check whether the bank has online application facility. List the phone numbers and names of the bank manager and the assistant division manager.

3. Decide on amount of loan you need to complete your education. For example, for 4 years of engineering, with or without hostel, Rs. 4 lakhs or less is currently sufficient for most of the colleges in Karnataka. Understand the bank conditions for the loan amount you need. Conditions to look for are collateral security, third party guarantee, margin, interest rates and repayment period.

4. Download the loan application form, print it and make list of documents needed to be attached to the application form.

5. Collect as many needed documents as and when possible

• At CET Counseling

6. Talk to the bank loan kiosks at the CET counseling center and ask for education loan. Choose the bank nearest to your home if present at the center; otherwise go to the next one on your list prepared in step 1. Some banks will even give you a DD required for the payment of the fees at the counseling. Ask for loan amount you decided in step 3 or Rs 4 lakhs for engineering or more for medical or other courses. Get a letter from the bank officer at the counseling center that typically says that the loan is approved in principle.

• After Final Selection of the College You Will Attend or After Admission

7. Apply online on the banks website, if this facility is available. You will receive an email with the in principle approval in a short time, typically 7-10 days.

8. Get a letter of expenses and admission from the principal of the college you going to attend. Collect all the documents that are required with the education loan application from the list you made in step 4.

9. Fill up the application form you printed in step 4.

10. Submit the application and the required documents to the bank nearest to you. Get a written receipt of the application submitted with the date of submission stamped. Getting the receipt is the most important part of the application process. Once you have a written receipt, the bank loan officer is required to follow a well defined and time limited procedure and approve or disapprove the loan. If the bank officer does not cooperate, do not get discouraged. Politely and firmly insist on getting the receipt. Visit the bank multiple times if necessary.

11. The bank officer may ask you to provide a third party guarantor or collateral security even if requested loan amount is less than Rs. 4 lakhs. Show the manager the printout from the bank website and politely tell him that neither is required if the requested loan is less than Rs 4 lakhs. Make sure that the bank officer knows the fact that you are only asking them to follow their own bank’s rules.

12. If the bank is still not cooperating, seek out help of a prominent person in your community who may be able to help you with the bank manager.

13. If that is not possible, talk to the assistant division manager of the bank and explain your situation and request him to help you with processing of the loan application.

14. If you are still having difficulties, email me at appam@yahoo.com with your phone number and I will help you.