Your dreams of earning a professional degree is now within reach, thanks to education loans from banks.
There was a time when the medical college fee amounted to just a few thousands for the entire course, something well within the reach of a middle-class family. This was the era of government colleges. The drawback at the time was the lack of seats for every interested student to pursue a professional course.
At present there are enough and more seats to go around for all students who put in an effort — the only thing that stands between a student and the coveted professional degree is money — lots of it. But capital flows in to fill every empty stream and banks step in to bridge this lucrative gap — both nationalised and private. Here are some brief impressions from the various players:
The scenario
Bharathy Kannan is now in his second year of BE Mechanical in Coimbatore Institute of Technology, a government-aided college. He has taken a loan from Indian Bank. His total loan amount for the first year comes to Rs. 12,000 which is about 80 per cent of the total fee. But educational loans can now go up to 20 lakhs.
The banker’s POV
Almost all banks have close-to similar pre-requisites and conditions, the purpose of which is to offer financial assistance to deserving students for pursuing higher studies in India and abroad.
To avail of an education loan, the student should be an Indian National and should have secured admission to the relevant course. The loans which are availed of from banks/institutions are between 12 -14 per cent per annum.
C. Arumugam, Assistant General Manager (Retail Assess Hub), Canara Bank, says that any student who has an account with Canara Bank and who has secured not less than 60 per cent can apply for the loan. “We give preference to students who have secured a college seat through merit. We support at least 500 to 600 students every year. If the loan amount is less than Rs. 4 lakhs, no security or guarantee is needed. If the loan amount is between Rs. 4 lakhs and Rs. 7.5 lakhs, then a guarantee is needed. If the amount is more than 7.5lakhs, then collateral security is needed. The students should start repaying the loan one year or six months after they get a job (whichever is first). The repay period is generally five years, in certain cases we may extend it to seven years,” he says.
According to www.hdfcbank.com, loans up to Rs. 20 lakhs can be obtained from the HDFC bank for foreign education.
Role of institutions
Colleges also guide, support and assist the students to obtain education loans. Prof R. Muthu Subramaniam, Director, Admissions, SRM University, asserts the role of the college in helping the students. “We invite officials from a minimum of 12 to 15 banks for a meeting. This takes place generally in the month of April or May. We provide all the details about various programmes, admission procedures, fee structure, and so on. The quality of the institution and the good placement records motivate banks to offer loans to more of our students.”
The flip side
The situation with regard to education loans is not all that rosy, claims Nandini (name changed). “I have been trying to get a loan for my brother who is pursuing an MBA degree in a private college. I was asked to approach banks near my house. Since it is a sub-urban area, there are just three banks. If approaching the bank is tough, tougher is the job of convincing the manager to sanction the loan. More often, loans are given to people who have good contacts in society. There may be good officials but there are also officials of the other kind.”
Go for it!
Tamizhmarai, who is working for an international financial services group in London, shares his experience, “I had taken a loan from SBI. I walked into a loan mela which was going on at the time of admission. I have never once feared that taking a loan would hamper my career. I would strongly recommend students to use this option but it would be wise if we start repaying the interest/principal amount as soon as we can.”
Changing fields
Varsha has taken a Rs. 10-lakh loan from Indian Bank to pursue a one-year course on entertainment management in the University of California after having done her engineering in India. Her mother Rani Mohanraj says, “It is a blessing that banks have come forward.”
Repayment issues
Rahul, who is now in his first year of BE Mechanical in John Bosco, Tiruvallur, estimates that the total loan would amount to nearly two lakhs by the time he completes his course. Most likely he will repay the loan himself by taking up a part-time job as he engages with his future plans of doing an ME. “ I will repay90 per cent of the loan myself, for 10 per cent I will go to my parents,” he says confidently.
Loan repayment options
Make up your mind to repay the loan as soon as you can. Repaying the loan should be the top priority
People who study and thereafter get jobs abroad are far better placed than those in India. So planning is utmost essential.
Don’t get swayed when people advise you that repaying loan can get you tax benefits. It does, according to M/S 80C of the Income Tax Act but ensure you don’t feel pressured financially.
Compulsory savings every month to develop a fund can help one repay the loan faster.
Take up a part-time or a freelancing job.
Documents required (Applicant and co-applicant)
Photo ID (PAN card, passport, driving licence, voter ID, employee ID, )
Residence proof (passport with address, telephone bill, ration card)
Academic documents of student (12th Exam mark, UG certificate, mark sheet of entrance exam)
Proof of admission
Bank statements of Co-applicant for eight months
Income proof of Co-applicant
In the case of collateral security, the relevant property documents should be given.
Completed application form.
All the copies of the above provided documents should be self-attested.
USEFUL SITES
● http://www.ugc.ac.in/page/Educational-Loan.aspx
● http://www.indiaedu.com/education-loans-india/
● http://www.indiaeducation.net/Educationloans/
● http://www.geniusabroad.com/
Appropriate title. In USA, with adequate facilities for taking loans, a large part of the income of young professionals goes to the repayment of educational , home and car loans. Young men without experience do not realize what it means to spend half their lives with loans on their heads. In India, a major part of the total expenditure on getting them educated comes from their parents. Those with enough money, and connections to the power holders do not need educational degrees for getting jobs. But under the changing circumstances middle class professionals will not be in a position to pay for the eduction and marriage of their children, building houses for themselves, living comfortably well after their retirement, and meeting contingencies. Here in India, vidya veechari tan paropkari. Its function here is not only jobs and incomes, but also tamso ma jyotirgamay.
I believe, the word Shylock refers to a person, who lends money at exorbitant rates of interest.
What I gather is that the maximum volume of Education Loan having gone
sticky in nationalised banks is in Southern States of Tamil Nadu,
Andhra, Karnataka, Kerala ( in that order ).
I think reverentially my uncle who paid all my fees both at undergraduate level and at post-graduate level when all these facilities were unavailble. What a golden period I lived in India
The story of Tamizhmarai looks very inspiring. Even I will take a loan for my studies
India a low income developing, the university fees are too high.
Why is it so? Even in high income developed the fees are not as high as in India.
Why is there a capitation fees? Can't universities of India charge fees as in other countries annual evenly distributed fees for the duration of course.
Lower the fees to enable affordability to many more students.
Simply Indiand are not creative, and accept changes. Accept changes to change the system.
I like the heading that you have given for this article. Yes, I know many students they face difficulty to repay the educational loan. I had taken appoximately 1.28lakhs for my MTech(2009-2011 period) merit seat admission. Now I do PhD in Italy with scolarship, so I can somewhat manage to repay.
According to bank rule we have to start to repay the loan after 6 months of course completion. So I started to repay loan on this July 2012. Only for six months (my course finished in 2011 December)I paid Rs. 26000 interst(ie monthly ~4500!!!). Understand the hirrible situation for Educational loan. They tell there is no interest during the course period, but this is only for fees not for other amount like computer, book etc..so think before you take a huge amount of educational loan.
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