{"id":4838,"date":"2019-11-04T14:07:35","date_gmt":"2019-11-04T08:37:35","guid":{"rendered":"https:\/\/versionweekly.com\/?p=4838"},"modified":"2019-11-04T14:11:24","modified_gmt":"2019-11-04T08:41:24","slug":"how-to-get-education-loan-from-bank","status":"publish","type":"post","link":"https:\/\/versionweekly.com\/news\/how-to-get-education-loan-from-bank\/","title":{"rendered":"How to Get Education Loan From Bank?"},"content":{"rendered":"
“Neither a borrower nor a lender be,” William Shakespeare had written in Hamlet. Trying to go by this today, however, seems an impossible task.<\/p>\n
Whether it is for buying a house or a car or pursuing higher studies,\u00a0loans\u00a0are common today. With college fees increasing every year, many have no option but to opt for education\u00a0loans.\u00a0For undergraduate engineering courses, the fees could be Rs 5-10 lakh, while for a five-year medical course at a private college, this could go up to Rs 50 lakh. For post-graduate courses such as those on management, fees could be more than Rs 10 lakh.<\/p>\n
Fees at private colleges are higher than in government colleges.<\/p>\n
To get a\u00a0loan\u00a0from a\u00a0lender, you generally have to pledge\u00a0security\u00a0such as house property, fixed deposits, shares, bond, etc., to take the loan. This is done so that in case you default on the loan, lenders can recover it by selling the pledged security. The security pledged against a loan is termed as collateral.<\/p>\n
However, you can get an\u00a0education loan\u00a0without pledging any security. The Credit Guarantee Fund for Education Loans (CGFEL)\u00a0Scheme\u00a0provides a guarantee for education loan dispersed by banks under the Model Education Loan Scheme of Indian Banks’ Association (IBA). Under this scheme, you can get a collateral-free loan amount for up to Rs 7.5 lakh without providing any third-party guarantee.<\/p>\n
There is no margin requirement if you apply for a loan within this limit through a scheduled commercial\u00a0bank\u00a0under the CGFSEL scheme. It means that the bank can finance up to 100 percent of the loan, if the loan is up to the limit of Rs 7.5 lakh. Under the CGFEL scheme you can get a loan up to Rs 10 lakh for study in India and up to Rs 20 lakh for studying abroad. But, if you take a loan of more than Rs 7.5 lakh, the bank may ask for collateral for the loan amount. The bank may also ask you to deposit margin money and seek third-party guarantee.<\/p>\n
Gaurav Aggarwal, Director & Head of Secured Loans, Paisabazaar.com said that normally lenders require third-party guarantee or tangible collateral as security, depending on the loan amount. He said, “You do not have to provide collateral and present a third-party guarantee for a loan up to Rs 7.5 lakh under the CGFSEL scheme.”<\/p>\n
Do all banks provide collateral-free education loan benefit?<\/strong> The guidelines issued by IBA for the CGFSEL educational loan scheme is generally followed by banks. However, the banks may vary in providing loans under the scheme as per their own internal rules.<\/p>\n Aggarwal said that some banks do provide collateral-free loan option to students looking to pursue higher education from premier institutes. However, it’s the bank’s sole discretion to waive off third-party guarantee or tangible collateral security requirement. He further explains, for instance, for loan up to Rs 4 lakh, lenders only require parents\/guardians as joint borrower(s). But, lenders can ask for suitable third-party guarantee for loan amount in the range of Rs 4 lakh to Rs 7.5 lakh, besides having parents\/guardian as a joint borrower.<\/p>\n However, “You will be required to provide tangible collateral security if the loan amount is more than Rs 7.5 lakh, along with the assignment of future income of the student for payment of installments,” he added<\/p>\n Can you get a collateral-free loan above Rs 7.5 lakh?<\/strong> Process to apply for an education loan<\/strong> Banks generally ask for co-applicant details when you apply for a collateral free loan. Not only this, banks also ask for the income documents such as salary slips or income-tax returns (ITR) of the co-applicant before sanctioning the education loan.<\/p>\n As per the Reserve Bank of India (RBI) guidelines, there are no restrictions on the upper age limit, but some banks may have it as per their own internal rules and regulations.<\/p>\n To apply for the loan, you should be an Indian citizen, having secured an admission into a college\/university recognised by a competent authority (NAAC\/NBA accredited Institutions\/programmes or Institutions of National Importance or Central Funded Technical Institutions (CFTIs)) in India or abroad.<\/p>\n The lender will ask for the admission letter of the college\/university with the fee structure of the course for which you have applied for the education loan. Apart from this, lenders may also require documents such as Class X, XII and graduation (if applicable) mark sheets.<\/p>\n When your loan application is accepted by the lender, then the lender disburses the amount directly to the college as per the given fees structure.<\/p>\n Points to remember<\/strong><\/p>\n Ajay Bohora, chief executive, Credila Financial Services, an HDFC Ltd company, says, “We have been noticing a surge in the number of students going abroad for undergraduate studies. Many students have started opting for the US for undergraduate studies,” he says.<\/p>\n Banks offer loans of up to Rs 10 lakh for courses in Indian colleges and up to Rs 20 lakh for studies abroad, according to Indian Banks’ Association norms. But for post-graduate courses in premier management colleges in India, such as the Indian Institutes of Management, banks offer loans of up to Rs 20 lakh. While the size of a loan depends on the course and the college, the ticket-size of student loans in India ranges between Rs 2 lakh and Rs 22 lakh, the average ticket size being about Rs 5 lakh, says Bohora.<\/p>\n Education Loan for Abroad Studies – Interest, Eligibility, Documents<\/a><\/p><\/blockquote>\n
\nIBA has formulated the ‘Model Education Loan Scheme’ to financially support meritorious students for pursuing higher education in India and abroad.<\/p>\n
\nHowever, if your education loan requirement is more than Rs 7.5 lakh or even more than Rs 10 lakh, you can reach out to other lenders to get a collateral-free loan. Adhil Shetty, CEO, BankBazaar.com said, “Non-banking financial companies (NBFCs) and private lenders can provide you collateral-free loans for a higher amount, but these collateral-free loans are sanctioned at a slightly higher\u00a0interest rate\u00a0as compared to education loan taken with collateral.”<\/p>\n
\nBefore applying for a collateral-free education loan, you must know that the student is the main borrower of the education loan and parent, spouse or sibling can be the co-applicant.,<\/p>\n\n
How to Get Education Loan From Bank?<\/h2>\n