What is the reason of expensive education?
As the Indian rupee was continuously falling as compared to the British Currency Dollar, studying abroad has become very expensive.
Indian banks have been providing the Education Loans since 2001 in helping the students to pursue higher education in 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 reflects the fair idea of government’s observation regarding the current public financing policies for higher education in abroad. According to Government, the present scheme is not so much useful and needs a lot of improvement.
New education funding scheme is made in keeping the students’ burden low that was high in the early phases of their career in the last funding scheme. Thus, RBI has included the student loans as the favorite sector of lending for public companies. Thus, it aims at providing the need based education finance to the meritorious students without any hassle.
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. Though students do not have any credit score, banks just presume the credit score of the student. Also if your parents have good credit history, it can act as a plus point in your loan application.
It is important for both the banks and students to get a better job upon the successful completion of their overseas educational course. This act gives the power and confidence to the students for repaying the Loan within a specified period of time.
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 Indian 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 equipments 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 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 plus one year or six months after getting a job.
- Tenure period: 15 years are available.
- Margin available: For a loan amount above Rs 4 lakhs, 15 % of the margin is available.