Education and Career Forum

how does the education loan scheme works?does any bank provides cash payment to the student as education loan ?or all the payment is done to the respected college or institute of the student?

Education loans has become the best friend of the students of modern world. It caters to the need of financially weak students giving them the power to study in the reputed institutions and the institutions of high quality standard both within the country as well as outside the country. It is one of the best schemes from the government that has uplifted the education standard of the country.

The loan is usually sanctioned once the candidate fulfills certain norms and formalities of the concerned bank which is issuing the loan. In India, almost all nationalized banks have this feature. Once the loan is sanctioned the bank takes over the charge of paying the requisite college fees of the candidate and each time the bank pays the fees, the total loan amount gets lessened by that amount. The interest begins to credit on the amount which has loaned out. The interest is calculated as simple interest for the entire study period.

The bank does not make any cash payment to the student as education loan. Once the college fees are required to paid, the candidate has to write an application to the bank requesting them to reimburse the fees from the loan amount sanctioned. The bank will issue a demand draft or transfer the money to the institute's account through RTGS/NEFT. Since every educational institution in India has the provision of Demand Draft or RTGS/NEFT payment and most of them do not allow cash payment, hence the bank does not make any cash payment to the student.

You need to visit the nearest bank branch where you and family members hold accounts. Your merit score will decide the sanctioning part as bank officials check the borrower’s credibility. The rate of interest fluctuates between 10-15 per cent. Spanning from graduate, postgraduate and doctoral level programs in India, students can get loans. There are a lot of help for the under developed segment of the society from the Government of India. You will not get the cash directly but bank will directly deposit the amount with the institute’s account.