An education loan is a form of financial support from any bank or financial
institution that enable a student for taking higher education. Availability
of the education loan, at the appropriate time will help millions of deserving
bright young Indians to achieve their dreams come true. All graduation, post-graduation
and professional courses from institutes approved by the state and central
government and also from foreign universities are eligible for a loan. Several
institutes/ colleges have tied up with various banks, for the benefit of prospective
students. For studies in India one can get loans up to Rs.7.5 lakh and up
to Rs. 15 lakh for studies abroad.
Before giving the loan, banks study the viability of the borrower based on
personal discussions with the student, family's assets and annual income,
the nature of the course and reputation of the institute. In most banks for
loans up to Rs. 4 lakh no collateral or margin is required and the interest
rate will not exceed the Prime Lending Rates (PLR). For loans above Rs. 4
lakh the interest rate will be PLR plus 1 percent. PLR is a term used to refer
the interest rate of the bank and it may vary with each bank. Some banks
offer lower rates to women students or those from specified institutions. Security
to the loan depends on the amount. Security is some form of investment (i.e
bank deposits, house property etc) that are surrendered to the bank while
taking the loan. Security is not needed for loan amounts up to Rs. 4 lakhs.
Instead of security, some bank may ask for a third party guarantee ( guarantor)
for higher loan amounts. There is no need to repay the loan while studying.
The repayment starts after you have finished the course or started working.
The repayment cannot be delayed for years after the completion of course.
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.
