Professional education is becoming more and more available as banks and financial institutions have extended their support to finance the education. In India many national banks award student or education loans to the applicants.
Education Loans: Education loans are provided by national banks and several other foreign banks and financial institutions. The concerned bank or agency provides monetary help and assistance and bears up to 90 per cent of the expenses incurred on education for a certain course.
Student Loans – Types: There are two types of loans provided by the banks – for studies based in India, and for students seeking admissions in foreign schools and universities.
For admissions and studies in India, the loan amount varies from 20,000 to 7.5 lacs. The loan amount is fixed as per the course of study. It can be availed for graduate programs and technical education.
Students who want to go abroad for studies, the loan amount is larger. There are banks that provide more than 10 lacs as student loan to finance the education.
Guarantor: Most of the banks just ask for a guarantor, who can be the guardian, parent, relative or even friend, as security for the loan amount. It is on the guarantor’s promise that the loan is sanctioned. The bank may also consider other factors and hasten up the process.
For studies abroad, the applicant must have some collateral security like fixed deposits or property whose worth is greater than or equal to the loan amount to be disbursed.
Documents: To avail the loan the students must provide to the bank necessary documents like marks sheet or certificate of the last qualified examination, admission certificate of the particular institute one has mentioned in the loan application, receipts of fee and other course expenditures, etc.
Margin and Rate of Interest: The margin is the amount that would be deducted from the loan amount for which the student has applied. Say the margin is 5 per cent and the amount is 5 lacs, then the amount disbursed would be 4.75 lacs. The remaining amount, which is 25,000 has to be contributed by the student.
The rate of interest varies and is generally above 10 per cent and below 14 per cent.
The repayment procedures have been made less rigid so that students do not feel reluctant to apply for the loan. Generally the students are asked to pay after six month or 1 year of the completion of the education or till they get a job, the time period not exceeding one year.