Introduction

Providing quality education to children is the first priority of every parent. However with increasing cost of living, good education is also becoming dearer. High cost may sometime deter a parent from sending the child for higher education especially for professional courses. Sometimes even working individuals may find the costs prohibitive while wanting to pursue a course for career advancement.

Despite the fact that a professional degree may cost a neat sum of money, more so if acquired from a prestigious institution abroad, one has to accept the fact that such an investment is sure to fetch handsome returns in terms of long-term career prospects. Therefore if cost of a course is the only constraint, it is prudent to take an educational loan and do the course. Investment in higher education also makes sense for the banks and many of them lend money to bright students as educational loans at very affordable rates and attractive terms. Though most of them require some collateral security, equivalent to the loan amount, in form of LIC policy, Government Bonds etc.

These loans are available for studying in India and abroad as well. The best feature of such loans is that most banks provide a `loan holiday’ and start recovery even one year after the course is completed and the individual gets into a suitable job.

Some of these loans that are available and offered by different banks, have been discussed below along with their salient features.

Allahabad Bank   

Eligibility:

Allahabad Bank offers education loans to students who have secured admission or are already studying in any of the following institutes:

1.             Indian Institutes of Management (IIMs’) 

2.             Indian Institute of Technology (IITs’)

3.             Indian Institute of Science, Bangalore,

4.             Jamnalal Bajaj Institute of Management, Mumbai,

5.             XLRI Jamshedpur,

6.             Roorkee Engineering College

7.             Indian School of Mines, Dhanbad

Purpose & Quantum of Loan:

The loan is meant to cover entire tuition fees, hostel and mess charges, library fees or any other fees / charges payable to the institution subject to a maximum of Rs 2.50 lacs. The rate of interest for loans upto Rs 2 lacs is 12.5% per annum and 16% per annum for loans above Rs 2 lacs.

Application & Procedure:

Eligible candidates can obtain application forms for the loan from the designated branches of the bank or download the form from the bank’s website. The bank makes an agreement with the student who also has to provide a guarantee from the parent or third party. The loan amount is disbursed in installments and remitted directly to the Institutes after the necessary formalities are completed.

Repayment Terms:

The loan is repayable in 48 equated monthly installments (EMIs). The EMIs commence one year after the completion of the course or when the student gets a job, whichever is earlier.

Canara Bank    

Eligibility:

Canara Bank offers educational loan under the scheme ‘Vidyasagar Educational Loan Scheme’. The scheme is open to any student with consistently good academic record for pursuing school education or higher education in India or abroad. The scheme provides relaxation for reserved candidates.

Purpose & Quantum of Loan:

The loan is meant to cover upto 75% to 85% of the entire tuition fees, hostel and mess charges, library fees or any other fees / charges payable to the institution as well as one way passage for those going abroad, subject to a maximum of Rs 5 lacs for studying in India and Rs 10 lacs for going abroad. The rate of interest is 12.25% for loans upto Rs 2 lacs and 14.25% for loans above Rs 2 lacs.

Application & Procedure:

Eligible candidates can obtain application forms for the loan from any of the branches of the bank or download it from the bank’s website. The student can borrow the loan jointly with his parents.

Repayment Terms:

The loan is repayable in 36 to 60 installments. It commences 6 months after completion of the course or after getting a job whichever is earlier.

Dena Bank

Eligibility:

Dena Bank provides educational loans under the scheme called the ‘Vidya Laxmi Educational Loan Scheme’. It is available to students with good academic record who are interested in pursuing higher education in India or abroad. 

Purpose & Quantum of Loan:

The loan is meant to cover upto 75% of the entire tuition fees, hostel and mess charges, library fees or any other fees / charges payable to the institution as well as one way passage for those going abroad, subject to a maximum of Rs 3.50 lacs.

Application & Procedure:

Eligible candidates can obtain application forms for the loan from the designated branches of the bank. The student has to enter into an agreement with the bank and provide requisite guarantees etc as in case of other banks giving similar loans.

Repayment Terms:

The loan is repayable in 60 installments for students pursuing their course in India and 84 installments for those going abroad. In both the cases the repayment commences 12 months after the date of completion of studies (including training period, if any) or 1 month after getting employment whichever is earlier.

Indian Overseas Bank

Eligibility:

IOB offers educational loan under the scheme ‘Vidya Jothi Educational Loan Scheme’. The scheme is open to any student with consistently good academic record for pursuing higher education in India or abroad.

Purpose & Quantum of Loan:

The loan is meant to cover upto 75% to 90% of the entire tuition fees, hostel and mess charges, library fees or any other fees / charges payable to the institution as well as one way passage for those going abroad, subject to a maximum of Rs 2 lacs for studying in India and Rs 6 lacs for going abroad. The rate of interest is equivalent to the prevalent market rate for loans upto Rs 2 lacs and one percent more for loans above Rs 2 lacs.

Application & Procedure:

Eligible candidates can obtain application forms for the loan from the designated branches of the bank or download it from the bank’s website. The student can borrow the loan jointly with his parents.

Repayment Terms:

The loan is repayable in 60 installments. It commences 6 months after completion of the course.

State Bank of India

Eligibility:

For school/graduate education in India or abroad:
Minimum second division (pass marks for SC/ST)
For technical/professional/specialized /post graduate studies in India or abroad:
Securing admission.
Parents/guardians having independent source of income

Purpose:

You can take a loan for pursuing studies in recognized schools/colleges/ institutions to meet:
* Tuition and other fees
* Maintenance costs, books & equipments, etc.
* Cost of passage (for studies abroad)
Loans available even for correspondence and part time courses and normally given to student and parent/guardian jointly.

Loan Amount:

* For school/graduate education in India or abroad:

   A maximum of 6 times the monthly net income of the parent/guardian, subject to a cap of Rs. 1 lac
* For technical/professional/specialized/post graduate studies in India or abroad:
   90% of the cost of the study, subject to a maximum of Rs. 5.0 lacs for studies in India and Rs. 10.00

   lacs for studies abroad

Interest:

Loans up to Rs 2 lacs 12% and loans over Rs 2 lacs 14% per annum. 

Securities:

Some security acceptable to the Bank would be required.

Application & Procedure:

Eligible candidates can obtain application forms for the loan from the designated branches of the bank or download the form from the bank’s website (htt://www.sbi.co.in & htt://www.statebankofindia.com). The bank makes an agreement with the student who also has to provide a guarantee from the parent or third party. The loan amount is disbursed in installments and remitted directly to the Institutes after the necessary formalities are completed.

Repayment of Loan:

I. For school/graduate education in India or abroad: Loan may be conveniently repaid in 36 monthly installments by the parent/guardian

II. For technical/professional/specialized/post graduate studies in India or abroad: Conveniently repay in a maximum period of 60 months after completion of course or securing a job, whichever is earlier. A nominal amount of 0.5% of the loan only need be paid per month towards part payment of interest 

State Bank of Travancore

Eligibility:

The educational loan facility offered by SBT is open to NRIs under the scheme ‘SBT NRI Educational Loan’. It is available to students with good academic record who are interested in pursuing higher education in India or abroad. The courses covered under the scheme cover almost every level and field of education. 

Purpose & Quantum of Loan:

The loan is meant to cover upto 90% of the entire tuition fees, hostel and mess charges, library fees or any other fees / charges payable to the institution as well as one way passage for those going abroad, subject to a maximum of Rs 10 lacs for professional courses. The rate of interest for loans upto Rs 2 lacs is 12% per annum and 14.5% per annum for loans above Rs 2 lacs.

Application & Procedure:

Eligible candidates can obtain application forms for the loan from the designated branches of the bank or download it from the bank’s website. The student can borrow the loan jointly with his parent or in case parents are not NRIs then with a NRI relative who is willing to stand guarantee for the loan.

Repayment Terms:

The loan for school/college education is repayable in 36 installments and commences one month after the disbursal of the loan. Loan taken for professional course is repayable in 60 installments and commences a year after the completion of course or immediately after securing a job whichever is earlier.

Union Bank of India

Eligibility:

Union Bank of India offers Higher Studies Loan Scheme to students above sixteen years of age with good and consistent academic records having secured admission in any Government/University recognised course.

Purpose & Quantum of Loan:

The amount can be used for any education related expenses (like hostel fees, cost of equipments, books etc). The quantum of loans is up to Rs 3 Lacs for inland and upto Rs 5 lacs for studies abroad.  Higher amount of loan can be considered on merit basis.

Application & Procedure:

Eligible candidates can obtain application forms for the loan from the designated branches of the bank or download the form from the bank’s website (i.e., www.unionbankofindia.com). The bank makes an agreement with the student who also has to provide a guarantee from the parent or third party. The loan amount is disbursed in instalments and remitted directly to the Institutes after the necessary formalities are completed.

Repayment Terms:

Repayment to start after 12 months of completion of course or after three months of securing job, whichever is earlier.

Vijaya Bank

Eligibility:

The bank offers educations loans to meritorious students who have secured admission in a designated college/institution in India or abroad for pursuing any graduate postgraduate or professional course. The bank also stipulates that the duration of the course should not exceed 5 years.

Purpose & Quantum of Loan:

The loan is meant to cover upto 75% to 100% of the entire tuition fees, hostel and mess charges, library fees or any other fees / charges payable to the institution as well as one way passage for those going abroad, subject to a maximum of Rs 4 lacs for studying in India and Rs 10 lacs for going abroad.

Application & Procedure:

Eligible candidates can obtain application forms for the loan from any of the branches of the bank or download it from the bank’s website. The bank does not insist on security for loans upto Rs 25,000 however above that parents have to stand guarantee.

 
Repayment Terms:

The repayment of the loan commences 6 months after completion of the course or 3 months after getting a job whichever is earlier. It is repayable in period of six months for those studying in India and 60 installments for those going abroad.