Educational Loans - Eligibility, Amount, Documents required and security

A good number of nationalized and other banks in India are providing financial assistance to young scholars, enabling them to fulfill their dreams. Students can approach any banks in their locality for educational loans. Banks has been directed by the RBI to lower Interest rates for educational loans. According to the RBI guidelines, for studies within the
country the ceiling of the loans provided is approximately Rs. 7.5 lakhs, while it is Rs. 15 lakhs for higher studies abroad.

Most of the banks have devised educational loans schemes under different names. The loan schemes may slightly differ from bank to bank. The repayment period normally starts after Course period + 1 year or 6 months after getting a job, whichever is earlier but this may again differ from bank to bank.

Eligibility for Educational Loans

* The primary requirement for these loans is the Indian domicile, the scholar applying for the loan should be an Indian National

* He / She should have secured admission to professional / technical courses in India or abroad through Entrance Test / Merit based selection

Purpose of the Educational Loans : Educational Loans are given for the purpose of meeting the cost of education covering fee payable to college, school and hostel, exam fees,
travel expenses, passage money for studies abroad, purchase of computers essential for completion of the course and purchase of books.

Courses for which loans are offered by Banks : The scholars opting for the following courses of study will get loans.

* Graduation/ Post graduation/ Diploma courses in various disciplines.

* Computer certificate courses of reputed institutes accredited to The Department of Electronics

* Job oriented technical/ professional courses offered by prestigious universities of the world


* Courses conducted by CIMALondon, CPA in USA etc.

Amount of the Loan : For studies in India, the maximum permissible amount is Rs.7.50 lakhs. For studies abroad, the amount is Rs.15 lakhs. For meritorious and deserving candidates, the banks may give additional amount. Rate of interest may vary from bank to bank.

Security : Documents should be executed both by the student and parent / guardian as joint borrower. Up to 4 lakhs there is no security needed. If the amount taken is more than 4 lakhs, collateral in the form of satisfactory third party guarantee is required. Above Rs.7.50 lacs, collateral security of suitable value or co-obligation of parents / guardians / third party along with the assignment of future income of the student for payment of installments.

Documents to be submitted

* Proof of residence (Ration Card or Voters Identity Card or Passport or Electricity or Telephone bill)

* Academic record (certificates of X, XII, degree certificate)

* Date of birth/age proof

* Proof of Family Income

* Admission letter/Bonafide student certificate from the College/University

* Letter/Certificate from the College/University confirming admission and fees structure

* Passport/VISA in case of studying abroad

* Collateral, wherever required

* Declaration/affidavit stating that no Educational Loan is availed from any other bank by the applicant and his parent