Some Revised facts of Education Loans

In today’s competitive world, education requires major investment especially when a person wishes to pursue a higher degree in a premium institute. Based on of Google’s Keyword Research about 1.5 lakhs, Indians search for Education Loans. It is apparent from the data itself the craze among citizens for pursuing education.

What is the reason for the expensive education?

With the diminishing value of the Indian Rupee compared to British currency, studying abroad takes a toll on finances for Indians.

Indian banks have been providing Education Loans since the year 2001 in helping the students to pursue higher education abroad. However, most of the students are seen feeling sad for not making payments on time because of low earnings. Hence, banks have revised these loans that were framed in 2001.

Higher Fees – Low Funding Situations

The latest IBA documents show the fair idea of government’s observation regarding the current public financing policies for higher education in abroad. According to the Government, the current schemes are not so useful and needs a lot of improvement.

A new education funding scheme is made in keeping the students’ burden low that was high in the early phases of their careers in the last funding scheme. Thus, RBI has added student loans as the favorite sector of lending for public companies. Hence, education loan aims at providing need-based education finance to rank holding students without any hassle.

Credit Worthiness 

Students must understand the fact that getting financing for higher education is only in the hand of banks and they will sanction the loan only after evaluating the Credit Score of the student.

Although students do not have any credit score, banks just presume the credit score of the student.

Also if your parents have a good credit history, it can act as a plus point in your loan application.

Employability 

Both the students and banks needs to get a better job upon the successful completion of their overseas educational courses. This act gives the power and confidence to the students for repaying the loan within a specified period. 

Latest Guidelines:

The Indian Bank Association has made few changes in the guidelines of the education loan. Students must be clear about these changes to avoid any sort of complications in the loan process. 

• Tax Exemption: One can get the tax benefit under Section 80 C for a tenure period of 8 years.
• Eligibility: Loan is provided to only those Indians who are opting for higher education in reputed institutes and universities.
• Eligible Expenses: The major expenses that are being covered under this loan are fees payable, hostel fee, library, exam fees, study material expenses, and other equipment like laptops. It also includes other charges that are mentioned in the university’s prospectus.
• Loan Limit: Maximum of Rs 20 lakhs is given for studying abroad or getting a higher education.      
• Security: Parents are required to become the co-owners and a tangible asset as security is to be kept with the bank.
• Moratorium Period: Course Duration along with extra six to seven months of job placements.
• Tenure period: The tenure extends up to 15 years.
• Margin available: For a loan amount over Rs 4 lakhs,  15 % of the margin is available.

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