Education and Career Forum

I did request all of you guys to tell me in detail that What is the procedure for getting the education loan ?

Education loan is one of the most important part of modern education. It is with the help of education loan that even a financially weak student can dream of quality education in ultra urban education institutes. Education loan has made it possible for the students to go abroad and pursue higher studies. Education loans have played a major role in levelling up the standards of education and bringing education of the entire world under one umbrella.

Coming to your query, there are two types of education loans given by the nationalized banks of India. They are - Education loans for study in India and Education loans for Study in foreign countries. Although the procedure of applying for loan and the interest rate is similar in both kinds of loans yet they differ in the term - maximum loan amount that can be sanctioned to the students. For study in India, the maximum loan amount that can be taken is 10 lakhs and for study in foreign lands, maximum loan amount can be 20 lakhs. However there are various criteria in getting a loan sanctioned.

It is advisable to consult different banks before taking loan since every bank differs from others in some norms or internal policies. So first of all, approach banks and get to know all the terms concerning education loans. Then choose the best one from the available options before you. The interest rate of all the private banks is same which fluctuates between 13 -14 %. However SBI offers a reduced rate of interest by 1% as compared to other banks. So SBI is indeed a good choice from the interest point of view.

There are various margins decided by the banks upon which various norms are applied. For example:- Taking a loan amount till 4 lakhs will not require any third party guarantee or mortgage. But taking loan more than 4 lakhs and less than 7.5 lakhs will require a third party guarantee and one has to deposit 15% of the loan amount to the bank as security deposit. For loans more than 7.5 lakhs, mortgage of property and third party guarantee is required. However in SBI, if one takes loan more than 4.5 lakhs, mortgage of property is required.

You just need to go to the concerned branch from where you want to take the loan. Consult with the branch manager. Then open an account of yours and request for loan. You need to submit various details like salary pay slip and investments of your family members, prospectus of the college where you are seeking admission, their fee structure,etc. The bank will investigate the originality of documents and then sanction your loan.

After that whenever you have to pay your college fees, you can approach the bank to reimburse the amount. You need to write an application to the branch manager requesting to reimburse the requisite amount and he/she shall do it. Education loan is better than other type of loans since the interest is accounted as simple interest for your entire study period thereby bringing the interest amount to a considerable low amount and easing off pressure from your head. However, the bank will keep an eye on your academic performance and have the discretion to withdraw the loan sanctioned if your performance is found to be unsatisfactory.

Education loans mainly depend on the worthiness of the borrower. *It is completely bank’s*discretion to sanction the loan after assessing your credit worthiness. In a way, the bank also checks out the merit of the borrower. It is on the basis of the marks scored in the entrance examination, you will get the loan sanctioned. Bank interest varies between 12 to 13 per cent annually. Incase of India, you can get a loan of Rs 10 lakh approximately while for abroad studies, Rs 20 lakh can be granted. Some banks can provide loans amounting Rs 1 crore against residential property like land.