How to get Bank Loans for Higher Education in India

Education is the Best Weapon to Change the World — Nelson Mandela…..
If education is the main weapon then all intelligent students must have to continue their higher studies, for the students who economically backward in continuing their higher studies banks are providing education loans at lesser interest rates. All public and private sector banks are offering education loans to students.

Bank Loans for Higher Education

Higher education means fee in lakhs, hostels, books and computer. So there will be need of money in lakhs. Students who are unable to bare these amounts are not continuing their higher studies. For these students’ central government and RBI (Reserve Bank of India) relaxed norms for education loans. With this step education loans are getting more easily unlike in previous days.

For which Courses Loans will be given:
According to the norms of RBI and Indian Bankers Association (IBA) loans will be given to those students who will continue their education in University Grants Commission (UGC), All India Council for Technical Education (AICTE), Medical Council of India (MCI) and institutions recognized by state and central governments.

Degree/Diploma courses offered by independent bodies such as IIT’s and IIM’s.

Institutes recognized state and central governments for Teacher training and Nursing courses.

Aeronautical, pilot training and shipping courses offered by Director General of Civil Aviation (DGCA) i.e. Ministry of Shipping.

Professional/Technical, Degree, PG and Diploma courses offered by top universities in foreign countries.
On which Basis Banks will Lend Loans:
He/she will get loans based on their course, institute and others. Students have to submit all expenditure details, and then based on that banks will give loans.

Expenditure’s that will be taken into consideration:

  1. Fee paid to the institute
  2. Hostel fee
  3. Exam/Library/Laboratory fee
  4. Books, Uniform and other expenditure’s
  5. Money required to buy a two wheeler (Max amount is 50000)
  6. Study tour and project work expenditure
  7. For foreign there will be some other expenses such as Flight charges, VISA and insurance.

How much amount Banks will give

Maximum loan amount will be differed from bank to bank; banks will lend a maximum loan of 10 lacs to students studying in our country and 20 lacs for foreign education and the biggest bank in our country SBI will give a maximum of 30 lacs for foreign students.

Based on the talent, course, institute and capability to repay the amount to bank his/her will offer a loan of 40 to 50 lacs also.

Interest Rates:
Education loans will be less than compared to the house and vehicle loans. These will depend on the individual bank base rates.

SBI up to 4lacs @ 13.20%, 4lacs to 7.5lacs @13.45% and above 11lacs @11.45%.

Subsidy in Interest Rates:
Central government will pay the subsidy amount to banks to those students who are economically backward. Subsidy amount will be given to those whose family income not more than 4.5lacs /anum. This subsidy will be given to only students who joined in technical and professional courses.

  1. Subsidy of 0.5% will be avail for ladies and physically handicapped students
  2. Subsidy of 0.5% will be avail for SC and ST students.

Tax Subsidies:
Interest paid on education loans will get a tax subsidy under 80(E) of Income tax.

Assurance:
Banks simplified the loan norms compared to previous days, upto 4lacs there is no need of surety just parents assurance will be enough. For the loans between 4lacs to 7.5lacs parent’s surety, collateral security and third party guarantee will be required. For above 7.5lacs his/her need to produce parent’s surety, third party guarantee and assets with same value that of loan required.

Margin:

  • No need to pay any margin upto 4lacs in India
  • If it crosses 4lacs then 5% margin need to be paid.
  • For courses in foreign SBI kept a margin of 15% for above 4 lacs

How to Repay the Student Loan:

Students who had taken the loans have to pay one year after the course or 6 months after he/she will get the job.
Documents need to Submit for Getting Loan:

  • Filled loan application
  • Admission letter of particular institute and course
  • Estimated amount for completion of course
  • Two passport size photographs and pan card
  • Income tax returns of parents for last two years
  • Parents income certificate
  • Banks will provide loan within one month of submission of all these documents.

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