Government of India in consultation with Reserve Bank of India (RBI) and Indian Banker’s Association (IBA) has framed a Comprehensive Educational Loan Scheme to ensure that no deserving student in the Country is deprived of higher education for want of finances. The new scheme covers all type of courses including professional courses in schools and colleges in India and abroad.
The Salient features of the scheme are as under:
- The scheme envisages loans up to Rs.10 lac for studies in India and up to Rs. 20 lac for studies abroad.
- For loans up to Rs. 4 lakh no collateral or margin is required and the interest rate is not to exceed the Prime Lending Rates (PLR). For loans above rs. 4 lakh the interest rate will not exceed PLR plus 1 percent.
- The loans are to be repaid over a period of 5 to 7 years with provision of grace period of one year after completion of studies.
Indian National who has secured admission to professional/ technical courses in recognized institutions in India or Abroad through Entrance Test/ Merit Based Selection Process after completion of H.S.C. (10 plus 2 OR equivalent).
- For study in India:
- Approved courses leading to Graduate/ Post-Graduate degree and P.G. Diploma 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 etc. approved by Director General of Civil Aviation/ Shipping, if the course is pursued in India.
- Approved courses offered in India by reputed Foreign Universities.
2. For Study abroad:
- 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.
- Regular Degree/ Diploma courses like Aeronautical, pilot training, shipping etc., the Institute duly recognized by the Competent University/ State Body/ Local Aviation/ Shipping Authority.
- For studies in India – Max Rs.10 lac.
- For studies Abroad – Max Rs.20 lac.
The information on recognition status of the Institute may be gathered from the following websites:
- www.education.nic.in (For studies in India)
- www.webometrics.info (For studies abroad)
Expenses Considered for Loan
- Fee payable to College / School /Hostel.
- Examination/Library/Laboratory Fee.
- Purchase of Books / Equipments/ Instruments/ Uniforms.
- Caution Deposit/ Building Fund/ Refundable Deposit supported by Bills/Receipts of the Institution, subject to the conditions that amount does not exceed 10% of the total tuition fees for the entire course.
- Travel Expenses/Passage Money for studies abroad.
- Purchase of Computers essential for completion of the course at reasonable cost.
- Insurance premium for student borrower.
- Any other expenses required to complete the course, such as- Study Tours, Project Work, and Thesis etc.
- Reimbursement of the fee paid at the time of counseling if applied within 60 days from the date of such payment.
- Repayment Holiday / Moratorium is “Course Period + 1 year” or “6 months after getting job”, whichever is earlier.
- 5-7 years after commencement of repayment.
- Loans up to Rs.7.50 Lac to be repaid within a maximum period of 10 years & those above Rs.7.50 Lac within a maximum period of 15 years after commencement of repayment period.
- For loan upto Rs. 4.00 lac : Co-obligation of lac / Guardian, No security.
- For loan above Rs. 4.00 lac and upto Rs. 7.50 lac : Co-obligation of lac / Guardian together with third party guarantee.
- For loan above Rs. 7.50 lac : Co-obligation of lac/ guardian together with tangible collateral security covering of suitable value.
- Upto Rs. 4 lac : Nil
- Above Rs. 4 lac:
- Studies in India – 5%
- Studies Abroad -15%
- Upto Rs. 4 lac- 13.50%
- Above Rs. 4 lac & upto Rs. 7.50 lac-13.25%
- Above Rs. 7.50 lac- 12.0%
- 1% Concession in interest rate for full tenure of loan if interest is serviced during the moratorium period.
- Full Interest subsidy incase of parental annual income upto Rs. 4.50 lac.
Documents Required :
- PAN Card of the applicant & co-applicant.
- Identity proof of applicant & co-applicant.
- Address proof of applicant & co-applicant.
- Income certificate of parent.
- Duly filled in application form.
- Term loan agreement.
- Guarantee agreement.
Repayment of an education loan is deductible under section 80E of the Income Tax Act. The yearly limit for deduction is Rs. 40,000 (for both the principal and the interest). Only loans taken for higher education – fulltime studies in any graduate or post-graduate, professional, and pure and applied science courses – may claim deduction. The deduction will be available for a maximum of eight years starting from the day you start repaying.
Equitable Access to quality higher education has been a concern of the University Grants Commission. To this purpose the Commission, besides encouraging colleges and universities to provide for liberal financial support to the meritorious but needy students, has also been instrumental in educational loan scheme. The Reserve Bank of India (RBI) has issued guidelines in this regard to all commercial banks. A large number of banks have already launched educational loan schemes. Provided below are links to the respective website of individual banks offering such facilities.
- Allahabad Bank
- Andhra Bank
- Bank of Baroda
- Bank of India
- Bank of Maharashtra
- Canara Bank
- Central Bank of India
- Corporation Bank
- Dena Bank
- Indian Bank
- Indian Overseas Bank
- Oriental Bank of Commerce
- Panjab and Sindh Bank
- Panjab National Bank
- State Bank of India
- State Bank of Bikaner and Jaipur
- State Bank of Hyderabad
- State Bank of Indore
- State Bank of Mysore
- State Bank of Saurashatra
- State Bank of Travancore
- Syndicate Bank
- UCO Bank
- Union Bank of India
- United Bank of India
- Vijaya Bank
Since the rules, regulations, eligibility conditions, repayments and interests rates etc are revised by the banks from time to time in keeping pace with the changing capital market conditions, students and lac are advised to thoroughly check the terms and conditions of educational loan scheme on offer at the time of application.