Can I get a comparison of educational loans available in the market?
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Features
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Axis Bank
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IDBI Bank
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Central Bank of India
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State Bank of India
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Executive Summary – Quality Education is important but beyond the reach of all as it is expensive. Banks offer educational loans to deserving students for higher education. We have compared the loan offerings of four banks – SBI, Axis Bank, IDBI Bank and Central Bank.
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Rate of Interest
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The rate of interest varies from 15.50%-17.50% depending on the loan amount. Girl students get a discount of 0.50%.
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A rate from 10.75%-13.25% depending on the type of course and loan amount.
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The interest rate is around 12% with concession of 0.50% for girl students.
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There are 4 types of loan schemes available and the interest rates are different for each.
Global Ed-Vantage Scheme loans are at 10.90% The Scholar Scheme loan interest rate ranges from 9.60% to 11.10% p.a. The Skill loan is offered at 13.10% p.a. There is a 0.50% concession for girl students. There is a discount given if interest is serviced promptly. |
Higher Education with Education Loan
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Loan Amount
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Minimum Amount – Rs. 50,000
Maximum for course in India – Rs. 10,00,000 Maximum for studies abroad – Rs. 20,00,000. The bank can sanction higher amounts depending on the case. Margin is required for loans above Rs. 4,00,000 |
Depending on the type of course, the loan amount can vary. The maximum is Rs. 20,00,000
Margin is required for loans above Rs. 4,00,000. Loans under Financial Inclusion Program cannot exceed Rs. 2,00,000. |
Maximum Amount – Rs. 10,00,000 for Indian courses and Rs. 20,00,000 for courses abroad.
Margin for loan above Rs. 4 lakhs is 5% for India , 15% Margin is required for a loan for course abroad Scholarship can be included in margin. |
Different loans have different minimum and maximum limits.
The Global ED-Vantage Scheme loan has a minimum of Rs. 20,00,000 and a maximum of Rs. 1.5 crores. Student loans have a limit of Rs. 10,00,00 for courses in India and a a maximum limit of Rs. 20,00,000 for courses abroad. A margin of 5% for studies in India and 15% for studies abroad is required for loan amount greater than Rs. 4,00,000 In some cases, the margin money is decided on a year-on-year basis. |
What is an Educational Loan?
Education is a stepping stone for your success and it is important that you get the right educational qualifications at the right time. An educational loan is financial support given to a deserving persons so that they can complete quality education as per their choice.
Why should I take an educational loan?
Quality education is important in today’s world but expensive. You need to plan in advance to take care of the finances required. You can focus on getting admission, studying and managing your course well, if the finances are taken care of. There are various expenditure items like caution deposits, tuition fees, specialized courses’ fees etc. An educational loan will ensure that you do not worry about finances and concentrate on your education.
What are the benefits of an educational loan?
Financial Discipline – As a student, you get the loan for your education which you may not be able to afford. Once you start earning, you will have to repay the loan which will instil a sense of financial discipline in you. You will be cautious before spending unnecessarily.
Parents need to save money for old age and emergencies – Parents want to give the best of everything to their children. Most parents have children’s education as one of their financial goals. But they also need to save money for life after retirement and emergencies. You do not get a loan for retirement. So it is better to take the leverage of educational loans which are easy to avail of and have customer friendly repayment options.
Healthy Credit score – If you pay the EMIs on time without any payment lapses, you can build a good credit history which will help you get favourable conditions on loans that you will take in future or get loans and credit cards more easily.
How do I apply for an Educational loan?
You should first calculate the amount you need. Apart from the tuition fees, you will need money for books and equipment, library fees etc. If you are studying away from home, you will have accommodation expenses. You should add up all these expenses and get an estimate of the sum that is required. You can then to any of the banks offering educational loans to get the details. The potential lender will check if the loan applicant has got admission. Other checks include ability to get a job, quality of course, credit history of co-applicant, amount required etc. If the lender is satisfied with the current status, the loan is sanctioned.
Education is a stepping stone for your success and it is important that you get the right educational qualifications at the right time. An educational loan is financial support given to a deserving persons so that they can complete quality education as per their choice.
Why should I take an educational loan?
Quality education is important in today’s world but expensive. You need to plan in advance to take care of the finances required. You can focus on getting admission, studying and managing your course well, if the finances are taken care of. There are various expenditure items like caution deposits, tuition fees, specialized courses’ fees etc. An educational loan will ensure that you do not worry about finances and concentrate on your education.
What are the benefits of an educational loan?
Financial Discipline – As a student, you get the loan for your education which you may not be able to afford. Once you start earning, you will have to repay the loan which will instil a sense of financial discipline in you. You will be cautious before spending unnecessarily.
Parents need to save money for old age and emergencies – Parents want to give the best of everything to their children. Most parents have children’s education as one of their financial goals. But they also need to save money for life after retirement and emergencies. You do not get a loan for retirement. So it is better to take the leverage of educational loans which are easy to avail of and have customer friendly repayment options.
Healthy Credit score – If you pay the EMIs on time without any payment lapses, you can build a good credit history which will help you get favourable conditions on loans that you will take in future or get loans and credit cards more easily.
How do I apply for an Educational loan?
You should first calculate the amount you need. Apart from the tuition fees, you will need money for books and equipment, library fees etc. If you are studying away from home, you will have accommodation expenses. You should add up all these expenses and get an estimate of the sum that is required. You can then to any of the banks offering educational loans to get the details. The potential lender will check if the loan applicant has got admission. Other checks include ability to get a job, quality of course, credit history of co-applicant, amount required etc. If the lender is satisfied with the current status, the loan is sanctioned.
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Details
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.Axis Bank provides financial support to deserving students to pursue higher professional or technical education.
Once the loan is sanctioned, the loan is disbursed as per payment schedule to the educational institution or vendor accordingly |
IDBI Bank provides different loans for vocational courses, non-vocational courses, for students getting admission under Management Quota and students falling in the Financial Inclusion program
Loans are also provided for students of Executive Programs. |
Loans are available for graduation, post graduation courses, vocational courses and professional courses with duration of 1 year or more.
It covers fees, purchase of equipment and books, travel expenses, study tour costs and project expenses. Disbursement is done directly to the education provider. If given to borrower, original receipts have to be submitted. |
SBI provides different loans –
Scholar loans for education in IITs. IIMs etc. Student loans for higher education, Global Ed-Vantage loans for education abroad and Skill Loan for vocational loans. It covers fees, purchase of equipment and books, travel expenses, study tour costs. project expenses. In some loans, it includes the cost of a two-wheeler up to Rs. 50,0000. |
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Collateral
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In some cases, collateral may be asked for.
Annual premium for an LIC policy in favour of the bank might be included to provide security to the bank. |
– Collateral is not required for a loan amount < Rs. 4,00,000 or for loans under the Financial Inclusion program.
– Third party guarantee is required for loan amount from Rs. 4,00,000 to Rs. 7,50,000. – Above that, collateral in the way of land, Bonds, bank deposit etc. is required. |
– Collateral is not required for a loan amount < Rs. 4,00,000.
– Third party guarantee is required for loan amount from Rs. 4,00,000 to Rs. 7,50,000. – Above that, collateral in the way of land, Bonds, bank deposit etc. is required. Insurance is required in favour of bank for amount equivalent to educational loan. |
Depending on the type of loan the sum for which collateral is required is different. For example, the student loan requires collateral for a sum of Rs. 7,50,000 and more. In a Global Ed-Vantage Scheme, tangible collateral security is mandatory.
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Processing Fees
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There are no processing fees involved.
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No processing fees for Indian courses
1% of loan amount up to a maximum of Rs. 5000 is charged for loans taken to study abroad. There are some charges added. |
No processing fees for loans in India Rs.500 – Loan up to Rs.10 lakh for education abroad Rs.1000 – Loan above Rs.10 lakh for education abroad.
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Rs. 10000 for Global Ed-Vantage Scheme loan
There is no processing fees for loans taken to study in India or abroad in the other loan schemes. |
What are the key things to consider while taking an educational loan?
1. An educational loan needs to have a co-applicant. It can be parents, siblings or spouse and parents-in-law.
2. The co-applicant can get tax benefits under section 80-E of Income Tax Act.
3. Public sector banks usually offer a discount for female students on the interest rate.
4. If the student repays the loan properly, the credit score is benefitted greatly. But default in payment will affect the credit scores of the student for whom the loan is taken and the co-applicant.
5. Most colleges/universities abroad require insurance. You should ensure that the loan covers it.
6. The loan may not cover the entire expense of education abroad and so the student has to look at other avenues like savings, scholarship or part time job. Some loans have a limit on different components of the fees. You should be aware of that and manage accordingly.
7. If the student stays in a foreign country after the course is over, the co-applicant should repay the loan to the bank.
8. Repayment starts usually 1 year after the course is over or 6 months after getting a job whichever is earlier.
9. You should be ready with a backup plan to pay off the loan in case the student does not get regular income even 1 year after the course.
What is the education portal www.vidyalakshmi.co.in all about?
The government launched the education portal www.vidyalakshmi.co.in on 15th August 2015. It is being maintained by NSDL e-Gov. It has details on how to fund your education via loans through the Pradhan Mantri Vidya Lakshmi Karyakram (PMVLK) and other scholarships. As per the site, 64 loan schemes are available and 37 banks have registered with the portal which means you can apply to get information and apply for educational loans provided by banks and Government Scholarships using only one medium.
This article has been originally published in Teenager Today Magazine in May 2016 issue.
1. An educational loan needs to have a co-applicant. It can be parents, siblings or spouse and parents-in-law.
2. The co-applicant can get tax benefits under section 80-E of Income Tax Act.
3. Public sector banks usually offer a discount for female students on the interest rate.
4. If the student repays the loan properly, the credit score is benefitted greatly. But default in payment will affect the credit scores of the student for whom the loan is taken and the co-applicant.
5. Most colleges/universities abroad require insurance. You should ensure that the loan covers it.
6. The loan may not cover the entire expense of education abroad and so the student has to look at other avenues like savings, scholarship or part time job. Some loans have a limit on different components of the fees. You should be aware of that and manage accordingly.
7. If the student stays in a foreign country after the course is over, the co-applicant should repay the loan to the bank.
8. Repayment starts usually 1 year after the course is over or 6 months after getting a job whichever is earlier.
9. You should be ready with a backup plan to pay off the loan in case the student does not get regular income even 1 year after the course.
What is the education portal www.vidyalakshmi.co.in all about?
The government launched the education portal www.vidyalakshmi.co.in on 15th August 2015. It is being maintained by NSDL e-Gov. It has details on how to fund your education via loans through the Pradhan Mantri Vidya Lakshmi Karyakram (PMVLK) and other scholarships. As per the site, 64 loan schemes are available and 37 banks have registered with the portal which means you can apply to get information and apply for educational loans provided by banks and Government Scholarships using only one medium.
This article has been originally published in Teenager Today Magazine in May 2016 issue.
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