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Educational loans: banks have their hands full

Karthik Madhavan

ERODE: It's that time of the year when your son or daughter, after scoring well in his or her Plus Two exam, walks to you for financing his or her education for a professional course. You for sure want to see your child getting groomed into an engineer, doctor, lawyer, or for that matter any professional. But then your pocket may not be deep enough to support his or her studies.

Do not worry! Almost all nationalised banks offer educational loans.

The Hindu is giving you an outlook on how to go about availing a loan, courses for which a loans can be obtained, the repayment period, etc. Loans can be got for admissions obtained in Indian and foreign universities.

For the latter, though, the loan applicant along with proof of admission must produce additional documents that a bank may ask for.

For admissions made in foreign universities, most banks offer up to Rs. 15 lakh, while in domestic the cap is Rs. 7.5 lakh. Some banks offer up to Rs. 20 lakh for foreign studies.

Loan is offered for courses such as chartered accountancy, cost and works accounts and company secretary as well.

It will cover tuition and lab fee, boarding expenses, expenditure incurred on books, uniforms, equipments, caution deposit, building fund, and computer, if necessary for the completion of studies.

All banks providing educational loans first demand a proof of admission from a recognised college offering a recognised course, preferably a professional course.

Along with it, the banks also demand mark sheet of the last qualifying exam (in some cases including Class X and Plus Two), schedule of expenses (college's fee structure), family income details, particularly candidate's father's/guardian's income details, and collateral security and visa, if required.

As far as the interest rate goes, banks charge between 10.5 to 11.5 per cent on loans up to Rs. 4 lakh. Above Rs. 4 lakh they charge a per cent more. Some banks demand collateral security if the loan amount is high, and also a third party guarantee.

The repayment period, which is usually between five to seven years, starts a year after the completion of the course or six months after appointment - whichever is earlier. In some banks, it is six months after completion of the course. There is no processing fee, though.

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