If you think you cannot manage finance for your education, you can always apply for a loan from banks to fund your degree or diploma. You just need to meet certain minimum requirements. Education loans are mostly offered by public sector banks but private banks such as HDFC and HSBC also offer education loans.You can get an education loan for study in India or abroad.
According to some sections of the media, very soon, students will be able to benefit from interest-free loans till they complete their higher studies. Reportedly, the Human Resource Development (HRD) ministry is looking to allocate Rs. 40 billion towards this purpose. This amount is likely to be disbursed under the 11th five-year plan ending 2012. Banks currently charge between 15 and 18 percent interest against the amount sanctioned to students as education loan.
Education Loan: Study in India
- You can borrow up to Rs 4 Lac without providing any security or margin.
- You can get a loan amount of Rs 4 Lacs to Rs 7.5 Lacs against a third-party guarantee. This loan comes with a five percent margin. The loan amount disbursed is 5 % lesser than the sanctioned amount. You need to arrange for the rest of the money. The third-party guarantee can come from any relation, neighbour or friend standing guarantee for the full amount.
Education Loan: Study Abroad
- Amount of loan sanctioned may vary but usually Rs 7 Lacs and above are usually sanctioned against fixed deposits, NSC certificates, property worth the loan amount and a margin amount of 15 percent. This loan comes with a five percent margin. The loan amount disbursed is 15 % lesser than the sanctioned amount. You need to arrange for the rest of the money.
- Also, if a loan below Rs 4 Lacs comes at x rate of interest, the loan over Rs 4 Lacs is usually charged one percent higher interest that is x+1.
Note: The Reserve Bank of India prescribes the specifics (amount, rate, repayment period) of education loans and the government provides a two per cent subsidy on these loans to the banks.
Documents required for education loan
- Mark sheets of the last qualifying examination for school and graduate study
- Proof of admission to the course
- Schedule of expenses for the course
- Copies of the letter confirming scholarship, if any
- Copies of foreign exchange permit, if applicable
- Two passport size photographs
- Statement of borrower's bank account for the last six months
- Income tax assessment order not more than two years old
- Brief statement of the assets and liabilities of the borrower
- Residence proof
