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Education Loans
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.
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