EDUCATION LOAN
Before enrolling in undergraduate, postgraduate, or technical professional diploma courses, in both India and abroad, please be aware that education loans are available for eligible students. However, it is crucial to consider that not all courses may qualify for loans amounting to lakhs of rupees.
What is the maximum loan amount available?
The amount of loan you can obtain varies depending on the bank's policy and the specific institution you are studying in. While some banks may offer loans covering up to 100% of the study cost, the maximum loan amount could differ based on the institution and the collateral provided to the bank.
In the case of State Bank of India, educational institutions are divided into four categories. Students studying in top-tier institutions can avail loans up to Rs 50 lakh without the need for security. Conversely, for those enrolled in lower-ranked institutions, the maximum loan amount available without security is limited to Rs 7.5 lakh.
Is collateral required for the loan?
As previously mentioned, banks typically do not require collateral for loans up to a certain specified amount. However, parents will need to be co-borrowers. Loans exceeding a specific threshold may necessitate collateral, such as property, as a security measure.
When is the loan repayment due?
The loan repayment should commence within one year after completing the course or within six months of securing employment. Banks typically allow a repayment period of up to a maximum of 15 years.
Are the interest rates higher?
Interest rates on education loans can vary among different banks, usually ranging from 10% to 11.5%. Students enrolled in prestigious educational institutions like IITs may also be eligible for discounted interest rates.
What is this Vidyalakshmi portal?
The Vidyalakshmi portal serves as a centralized platform for applying for educational loans, streamlining the process and eliminating the need to approach multiple banks individually. To initiate the application, users must register on the portal. Once registered, they can simultaneously apply to three banks of their choice. The application form, along with the required documents, can be submitted conveniently through the portal.
Are there any subsidies available?
Students from families with an annual income of less than Rs 4.5 lakh can be eligible for the central government's interest subsidy, subject to certain conditions. Additionally, the state government offers an education loan repayment assistance scheme. Beneficiaries must have an annual family income not exceeding Rs 6 lakh, while the income limit is set at Rs 9 lakh for persons with disabilities.
What is the Jan Samarth Portal?
The Jan Samarth portal serves as a unified platform for 12 central government subsidy schemes, including those related to education loans.
Avoid loan complications:
When considering an education loan, it is crucial to assess our repayment capacity carefully. Ensuring timely and proper repayment is essential, just like any other loan.
Is there a potential for employment during the course of study?
If yes, what is the average monthly salary?
After accounting for income tax and other deductions, what would be the net monthly income?
Considering the education loan EMI, is it feasible to lead a comfortable lifestyle with the remaining amount?
Before obtaining a loan, both students and their parents must consider all these factors. By inquiring with the bank, one can estimate the approximate EMI for the loan amount. As the loans are provided at floating interest rates, the repayment amount may vary in the future. However, considering the current interest rates, the average repayment amount would be reasonably accurate.
It is essential to assess whether parents can offer assistance in case of job delays and if the initial salary received is relatively low. These factors should also be taken into account during the decision-making process. A recent study investigated the loan repayment duration for IIM MBA students based on average salaries and fees among various IIMs. The findings revealed that individuals who drop out of certain IIMs might require up to 12 years to repay their education loans.
This emphasizes the importance for prospective students to carefully consider their decision regarding education loans, taking into account the course fees and potential future salary prospects.
For more information, you can visit the Vidyalakshmi and Janasamarth project websites:
- Vidyalakshmi: www.vidyalakshmi.co.in
- Janasamarth: www.jansamarth.in
An Article By Mujeebulla K.M
CIGI Career Team