 A large Number of students feel handicapped for
accessing the higher avenues of education particularly the professional courses
on account of the high costs involved at the admission stage and the recurring
annual fees. While the government does tries to help through its scholarships,
the numbers are not enough to meet the requirements of all the deserving and
talented students. Under these circums-tances, the facility of educational
loans being advanced by the banks comes.
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 :
l The scheme envisages loans up
to Rs.7.5 lakh for studies in India and up to Rs. 15 lakh for studies abroad.
l 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.
l 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.
Tax Benefits
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.
Salient features of the Loan schemes of some Banks are
listed below:
BANK OF MAHARASHTRA EDUCATIONAL LOAN SCHEME
Purpose For studies
in India
For studies abroad
Eligibility You should be
an Indian National
You should have secured admission to
professional/ technical courses through entrance test/selection process.
You should have, secured admission to
foreign university/ institutions.
Amount For studies in India :
Maximum Rs.10.00 lac
*For studies abroad : Maximum Rs. 20.00
lac
Margin There is no
margin up to Rs.4.00 lac.
For loans above Rs.4.00 lac.
l For studies in India : 5%
l For studies abroad : 15%
This may include own contribution as well
as scholarship.
Security No
security required upto Rs.4.00 lac loan.
Above Rs.4.00 lac securities are required
to be furnished as under either singly or in combinations-
l Government securities, public sector bonds.
l Units of UTI, Shares (as per
our approved list from
time
to time), Debentures.
l L.I.C. Policies.
l NSCs/KVPs, Banks own deposits
l Mortgage of land and Building
The
eligible securities are as above. However
terms
apply.
Value
of collateral security after providing requisite margin, as stated above should
be equal to the Quantum of finance.
Repayment You get a
repayment holiday of one year after completion
by
EMI of the course selected
or 6 months after getting a job (after which your repayment will start).
The loan is then to
be repaid in 5 years after commencement of repayment.
Fee
Expenses Tuition fees,
hostel expenses, purchase of books/
Considered
equipments/instruments
etc. Travel expenses for studies abroad & other essential expenses.
Eligible
l School education including plus 2 stage of
CBSE
&
State Education Boards.
l Graduation courses/Colleges under
universities
approved
by UGC.
o B.A, B.Com, B.Sc. etc.
o Post graduation courses, Masters and PhD
o Professional courses, Engineering, Medical,
Agriculture, Veterinary, Law, Dental,
Management, Computer etc.
l Computer
certificate courses of reputed
institutes
accredited to Dept.of Electronics or
institutes
affiliated to university.
l Courses like ICWA, CA, CFA etc.
l Courses
offered in India by reputed foreign
universities.
l Courses conducted by IIM, IIT, IISC, XLRI,
NIFT etc.
l Evening courses of approved institutes
recognized
by State/Central Govt.
l Other courses leading to diploma/degree
etc.
conducted
by colleges/universities approved
by
UGC/Govt/AICTE/ICMR etc.
Studies
abroad
l Graduation : For job oriented
professional/
technical
courses offered by reputed
universities.
l Post graduation : MCA,
MBA, MS etc.
l Courses conducted by CIMA -
London, CPA in
USA
etc.
Documents l Proof of being an Indian
national i.e., School
to be Leaving Certificate.
Furnished l Letter confirming selection through
Entrance
Test.
l Letter confirming admission to
foreign university/
institutions.
l Brochure of the educational institution
stating
the
amount of fees charged.
CANARA BANK Vidyasagar Loan for Students :
Rate of Interest : (Subject to changes as advised by
Bank/RBI from time to time) :
(1)
Student satisfying DRI norms 4.00%
(irrespective
of quantum of loan)
(DRI:annual
income less than Rs 7200 p.a)
-Upto
Rs.4 lakhs 12.50%
-
Above Rs.4 lakhs upto Rs. 7.50 lacs 13.50%
-
Above Rs. 7.50 lacs upto Rs. 15 lacs 11.25%
(studies abroad)*
-
For students secured admission in IIT / IIM / ISB* 10.75%
* for loans granted w.e.f.
9.7.2005
NOTE :
1) 0.50 %
concession in ROI for prompt servicing of interest during study period.
2) Reduction
of 1 % for all courses in all slabs / category for girl students for
loans granted from 1.12.2005 to 30.6.2008.
INDIAN OVERSEAS BANK’s Vidya Jyoti Scheme
Eligibility criteria.
l You should be an Indian
National.
l You should have secured admission
to professional/technical courses or other academic courses.
l You should have
secured admission to foreign University/Institution (in the case of overseas
study)
What can I use the loan for ?
You can avail the loan for your school education
including plus 2 stage/Graduation/Post graduation/Diploma/Computer education in
any recognised State/Central Government/University. Professional courses
including Engineering, Medical, Agriculture, Veterinary, Law, Dental,
Management, courses like ICWA, CA, CFA, etc., courses conducted by IIM, IISC,
XLRI, NIFT etc. Courses offered in India by reputed foreign
universities/Evening courses of approved institutes.
How much can I get ?
You can get a maximum of Rs. 7.50 lakh for studying in
India and Rs. 15.00 lakh for studying abroad.
What rate of Interest will I have to pay ?
Present Interest rate is as follows:
- Up to Rs. 4.00 lakh PLR (at the time of availing
of loan). Presently 11% (Flat).
- Above Rs. 4.00 lakh PLR+1% (at the time of
availing of loan). Presently 12% (Flat).
- The
rate of Interest prevailing at the time of first availment shall prevail
throughout the repayment period.
- Interest to be debited quarterly/half yearly on
simple basis during the repayment holiday/moratorium period.
What is the margin for the loan ?
For loans upto Rs. 4.00 lakh Nil
For loans above Rs. 4.00 lakh Studies within India 5%
For
studies abroad 15%
Scholarship/assistantship
to be included in margin.
What security do I need to provide ?
For
loans upto Rs. 4.00 lakh Nil
For loans above Rs. 4.00 lakh Satisfactory personal guarantee
and up to Rs.7.50 lakh of a third pary,
For
loans above Rs.7.50 lakh Collateral
security in the form of NSC/KVIP, LIC Policy, Gold, Shares/Debentures or
immovable properties Bank Deposits in the name of student/Parent/Guardian or
any other third party with suitable margin/co-obligation of third
party/parent/guardian along with assignment of future income.
DISCLAIMER - 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 parents are advised to
thoroughly check the terms and conditions of educational loan scheme on offer
at the time of application.
The list of Bank loans is indicative and other Banks
also have educational loan schemes.
(The writer is a management
consultant and a practicing advocate with Delhi High Court)
Author:
Ms. Versha Singh | 
