What I need to do to get education loan????

On an average 80% of the students need financial support in pursuing education in abroad. In this process applying for bank loans is quite common. It is very essential to explore various bank loans and required documents for education loans.

Most of the commercial banks are offering education loan to fulfil the student’s dreams of getting graduation in abroad.

(1) What is the eligibility to secure a loan?

To be eligible for loan approval you need to be Indian Citizen and you would have secured an admission in any of bank’s approved courses.

(2) What is the maximum amount of loan I can get?

In most instances the maximum amount of loan you could get up to Rs.20 Lakhs. This depends on course cost and bank.

(     (3) Which things can be covered under education loan?

·         Tuition fees to University or college

·         Examination/hostel charges

·         Travel Expenses

·         Purchase of books/equipment.

(     (4) When I need to start repaying my loan?

Most banks required the payments of quated monthly instalments (EMI’s), which commences one year after the course finished. The tenure can be 3-8 years of instalment period, most banks don’t take margin money up to 4 lakhs. Above the 4 lakhs, banks require 15 % of margin on the loan amount.

(     (5)  Do I need to submit any collateral security documents to secure the loan?

In most of cases up to 4 lakhs you don’t need to give any collateral security to get the loan. For loans between 4-7.5 lakhs, collateral security in the form of a satisfactory third party guarantee is required.

For loans above 7.5 lakhs, collateral security in terms of suitable value or co-obligation of parents/guardian/third party guarantee along with assignment of future income of student for the payment of instalments may be required.

(    (6) Documents applicable as collateral security.

•          Government Securities/public sector bonds
•          Land/building documents
•          Units of UTI, NSC,KVP, LIC policy, gold, shares/debentures
•       Bank deposit in the name of the student, parent/guardian or any other third party     with suitable margin.

Interest Rates for some banks in India follows as:

Bank	Amount (Max in lakhs)	Rate of Interest
Bank of Maharashtra	20	Up to 4 lakhs: 12% Above 4 lakhs: 12.75%
State Bank of India	20	4-7.5 lakhs: 1.00% above SBAR 14.75 % Floating Above 7.5 lakhs: SBAR 13.75% p.a. Floating
Punjab National Bank	20	Up to 4 lakhs: BPLR-1.50% Above 4 lakhs: BPLR-0.75%
Allahabad Bank	20	Up to 4 lakhs: PLR-0.75% Above 4 lakhs: PLR-1.00%
Indian	20	Up to 4 lakhs: 12.50% Above 4 lakhs:13.00%
Dena Bank	20	Up to 4 lakhs: 11.25% Above 4 lakhs:14.25%
Union Bank of India	15	Up to 4 lakhs: PLR Above 4 lakhs:PLR+1%

The Benchmark Prime Lending Rate (referred to as SBAR) of State Bank of India. Steps to follow before applying for education loan: Step 1: Check whether the course is in the list of bank’s preferred education loan programs list. Step 2: Figure out how much loan you need. To estimate this check out the program cost and living expenses in your destination country. Discuss with your parents/guardians on how much they can afford to pay for you. Step 3: Check for various available loan options Step4: Go through all term and conditions very carefully. It is better to consider following things while looking in the loan agreement.           Which offers the lowest interest rate.           How long will I be paying the loan.           How long can I defer payments while studying.           Is there any option for deferring payments if faced into a financial problem.                   Documents required for education loan: ·         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)          What bank will consider before granting a loan? ·     The repayment capacity of the student’s parents/family/Sponsor. ·   The value of Collateral Security. Bank usually got the valuation of the collateral done from an approved Valuator only then process the loan application. ·   Margin money: Usually in case of Overseas education loan the student family to contribute some margin money, usually its 25%. For example if a student is applying for Rs. 20 Lakh loan and the margin money is 25% then Rs.5 lakhs has to be contributed by Student’s Family.

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