Sunsea has summarized and given the details of norms of the education loan in nationalized banks as per the Reserve Bank of India guidelines.

  • An Indian national having secured admission to job oriented professional/ technical courses offered by reputed universities abroad is eligible to apply for education loan
  • The expenses considered for loan are tuition & hostel fees, examination/library/laboratory fee, purchase of books/equipment/ instruments/uniforms, caution deposits with the institutes, the purchase of computers and other incidental expenses of study tours etc., required for completion of the course.
  • Student should preferably approach the Branch nearest to the place of domicile for the processing.
  • The condition of minimum qualifying marks in the last examination is dropped.
  • No margin is insisted upon for loans up to Rs.4 lakhs. However, for loans of higher amounts, the margin requirement may be 5% for inland studies and 15% for studies abroad.
  • No security may be insisted upon for loans up to Rs. 4 lakh.
  • Loans up to Rs.7.5 lakhs are considered for studies in India and Rs.15 lakhs for studies abroad.
  • Loans up to Rs.4 lakh may be advanced at interest rate not exceeding PLR of the bank. Above Rs.4 lakh, the interest rate may be PLR+1%.
  • No processing/upfront charges are collected on education loans.
  • For loans above Rs. 4 lakhs, 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 may be obtained.
  • For loans above Rs.4 lakhs and up to Rs.7.5 lakhs, banks are required to obtain a satisfactory guarantee provided on behalf of the student as security. It is clarified that where the parent/s is/are the party to the loan as the co-obligant/s and the bank is satisfied about the net-worth of the parent/s, the bank may waive the condition regarding third party guarantee.
  • Cost of M.B.B.S Course in Private Medical Colleges exceed Rs.4 lakhs, thereby making it difficult for a meritorious student to pursue such courses unless he / she is in a position to provide collateral security sought by banks for sanction of educational loan. With a view to enable meritorious students to pursue higher education / professional courses based on his aptitude and interest, it is proposed to relax security norm for loans up to Rs.7.5 lakhs.
  • Under the revised norm for loans above Rs.4 lakhs but not exceeding Rs.7.5 lakhs, no tangible collateral security will be insisted upon. For such loans, banks would take only a satisfactory guarantee provided on behalf of the student.
  • The document should be executed by the student and the parent/ guardian.
  • Admission confirmation letter from the university and the details of expenses under various heads towards the study course is the primary document for applying to education loan.
  • The security can be in the form of land/ building/ Govt. securities/ Public Sector Bonds/ Units of UTI, NSC, KVP, LIC policy, gold, shares/ debentures, bank deposit in the name of student/ parent/ guardian or any other third party with suitable margin.
  • Wherever the land/ building is already mortgaged, the unencumbered portion can be taken as security on II charge basis provided it covers the required loan amount.
  • Banks who wish to support highly meritorious/ deserving students without security may delegate such powers to a fairly higher level authority.

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