India - Guidance to apply for Student Loan / Education Loan

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Procedure

Before applying for a Student loan, first you need to determine that how much amount you have, and how much more would you need to take as loan to meet your requirement taking into consideration of tuition fee as well as boarding and lodging expenses etc.

Once decided the amount of education loan and the agency / Bank from which to sanction this loan there comes the question how to get the loan.

Visit the Agency / Bank which you have decided to apply for education loan. Fill up the application form which is available there in the Agency / Bank and submit the all required documents, proof.

After approval your loan amount will be disbursed in stages as per the requirement/ demand directly to the Institutions / Vendors of books / equipments / instruments to the extent possible.

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Required Documents

Academic

• Institute Admission Letter with Fee break-up
• SSC,HSC,Graduation Marksheets

KYC (Know Your Customer)

• Age Proof
• Signature Proof
• Identity Proof
• Residence Proof
• Aadhaar Card

Income Documents

Salaried

• Latest 2 Salary Slips carrying date of joining details
• Latest 6 Months Bank Statement of the Salary Account.

Self Employed

• Last 2 Year ITR with Computation of Income
• Last 2 Years Audited Balance Sheet
• Last 6 Months Bank Statement
• Proof of Turnover (Latest Sales / Service Tax Return)

Self Employed - Professional

• Last 2 Year ITR with Computation of Income
• Last 2 Years Audited Balance Sheet / P& L
• Last 6 Months Bank Statement
• Proof of Qualification

Others

• Course & Fee Details
• Co-applicant KYC and Income Documents
• Collateral Documents

Office Locations & Contacts

Please list down the office locations that can be approached for applying. External links can also be used for specifying office locations.

Eligibility

• The student taking the study loan must be an Indian Citizen and 18 years old or above.
• Should have secured admission to a higher education course in recognized institutions in India through Entrance Test/ Merit Based Selection process after completion of HSC (10 plus 2 or equivalent).
• A co-applicant is mandatory for all full time programs. Co-applicant could be Parent/ Guardian or Spouse (if married) / Parent-in-law (if married).
  • Co-applicant must be an Indian Citizen and should be parent(s)/guardian or sibling of the student borrower. In case of married person, co-borrower can be spouse also.
  • Co-applicant must have a bank account in any bank in India with cheque writing facilities
  • Co-applicant would necessarily be the primary debtor.
  • Co-applicant can be located at a city/town that is different from the current study residence of the student

Fees

No processing charges for studies abroad upto Rs.4.00 Lacs and in case of studies in India irrespective of loan amount. In case of loans above Rs.4.00 Lacs for studies abroad.

• Rs. 5000/- to be collected at the time of delivering sanction letter to the student / guardian.
• Rs.1000/- to be appropriated towards processing fees.
• Rs.4000/- to be adjusted towards students margin at the time of release of the loan.
• In case the loan is not availed for any reason by the student, the amount of Rs.4000/- to be refunded to the student without interest.

No processing charges to be levied on the loans to the wards of Banks staff members including Retired Staff

Validity

Explain the time until which the certificate/document is valid.
e.g. Birth Certificate Valid Forever

Documents to Use

Application forms may vary for each Agency / Bank.

Sample Documents

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Processing Time

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Related Videos

Videos explaining the procedure or to fill the applications. 
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Instructions

Aim of Education Loan is to provide the much needed financial support to deserving students for pursuing higher professional or technical education in India and abroad. The education loan would be provided to those students who have obtained admission to career-oriented courses e.g. medicine, engineering, management etc., either at the graduate or post-graduate level. Purpose for which a student can apply for education loan are:-

• Tuition and other fees
• Maintenance costs, books & equipments, etc.
• Cost of passage (for studies abroad)
• Caution fund/building fund/refundable deposit.

Maximum amount of education loan

Although educational loan is subject to the need of the individual repaying capacity of the parents/ students yet there are following margins and ceilings.

• Studies in India Maximum Rs.10 lakh subject to the repayment capacity of the parents and student.
• Studies in Abroad Maximum Rs. 20 lakh subject to the repayment capacity of the parents and student.

Margin Money

• There is no margin money required for a study loan up to Rs. 4 lakh.
• For education loan of over Rs 4 lakh, for studies in India is 5% and for studies in Abroad is 15% of the loan amount. This amount need not be paid up-front. It may be put up as and when disbursements are made by the bank year to year on a pro-rata basis.
• This amount would include the value of any scholarship acquired by the student

Security

• Upto Rs. 4.00 Lacs No Security (Co-obligation of parent / guardian is compulsory).
• Above Rs.4.00 Lacs and upto Rs.7.50 Lacs: Collateral in the form of a suitable third party guarantee.
• Above Rs.7.50 Lacs: - Collateral security of suitable value or Co-obligation of parents / Guardians / third party guarantee along with the assignment of future income of the student for payment of instalments.

Note:

• The security can be in the form of land / buildings / Govt. securities / Public Sector Bonds / Units of UTI, NSC, KVP, Life policy, Gold, Shares/debentures, bank deposit in the name of student / parent / guardian or any other third party with suitable margin as specified in the various schemes for loaning against the concerned securities. Assignment of future income of the student for payment of instalments may be obtained.
• All charges in connection with valuation of property, search report from the Bank Advocate and stamp duty etc., to be borne by the borrower.
• In case parent / guardian undertakes to service the interest fully during moratorium period the collateral security to obtain may be in the range of 110% to 125%.
• In case parent / guardian do not undertake to service the interest fully during moratorium period the collateral security to be obtained may be approximately 150%.

Rate of Interest

• Upto Rs. 4.00 Lacs Not to exceed BPLR
• Above Rs4.00 Lacs Not to exceed BPLR +1%

Present Interest Rates

• Loans upto Rs. 4.00 Lacs 11.50% (1% less than BMPLR)
• Loans above Rs4.00 Lacs & UP TO Rs.10.00 Lacs 12.50% (0.50% less than BMPLR)
• Loans above Rs.10.00 Lacs - 13.00% (At BMPLR)

The accrued interest for the moratorium period has to be added to the principal on conclusion of moratorium period and repayment fixed in EMI accordingly.

• The interest to be debited mothly/quarterly/half yearly on simple basis during Repayment holiday / Moratorium period.
• Penal interest is to be levied @2% on all irregular Education Loans above Rs.4.00 Lacs for the overdue amount and over due period.

Note: The rate of interest may vary with respect to the loan authority and period when the loan is obtained.

Repayment

• Repayment on the loan starts one year after the completion of the course or six months after getting a job, whichever is earlier and the loan must be cleared within five to seven years.
• However, to ease the interest burden, a parent/ guardian may choose to pay the interest during the moratorium period and avail of an interest rate concession.
• If the student is not able to complete the course within the scheduled time extension of time for completion of course may be permitted for a maximum period of 2 years. If the student is not able to complete the course for reasons beyond his control, sanctioning authority may at his discretion consider such extensions as may be deemed necessary to complete the course.
• The accrued interest during the repayment holiday period to be added to the principal and repayment in Equated Monthly Instalments (EMI) be fixed.
• A concession of 0.50% in interest during the moratorium period if 0.50% of loan amount is paid every month towards part payment of interest. Concession of 1% in interest during the moratorium period if full interest is paid during the moratorium period. This concession has to be calculated and credited back to the account in the month of January every year.

Required Information

• Applicant Details
• Name of the applicant
• Date of Birth
• Fathers / Spouse Name
• Mothers Name
• Permanent / Residence Address
• Marital Status
• No. of Children (if Married)
• PAN Card Number
• Passport Number
• Voters ID Number
• Driving License Number
• Aadhar ID Number
• Religion
• Category
• Occupation

Education & Course Details

• Examinations Passed (like SSC, HSC, Last Degree)
• Name and address of Institution / University Studied
• Year of Passing
• Percentage of marks / Class Obtained
• Name and address of Institution / University in which going to study
• Contact Person Name in the University
• Course Name
• Course Applied for
• Course approved by

Employment Details

• Name of the current employer (if employed)
• Office address
• Designation
• Date of Joining
• Type of Business (if self-employed)

Financial Details

• Gross Monthly Income
• Net Monthly Income
• Other Income (if any)
• Investments (if any)

Need for the Document

Student loans also known as Education loans or higher education loans have become a popular method of funding higher education in India with the cost of educational degrees going higher. The spread of self-financing institutions (which has less to no funding from the government) for higher education in fields of engineering, medical and management which has higher fees than their government aided counterparts have encouraged the trend in India. Most large public sector and private sector banks offer educational loans. The Education loans will ensure that worthy students are empowered to take their destiny in to their own hands. It is designed to help students pay for college tuition, books, and living expenses. Unlike other financial aids like scholarships, grants and stipends, a student loan must be repaid by the recipient although with some ease than the other loans. Most of these loans are to be repaid after the completion of the course of education.

Information which might help

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Other uses of the Document/Certificate

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e.g. Birth Certificate can be used as proof of identity.

External Links

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Others

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