Indian students can now avail cheap education loans to study abroad
Students in India can now pursue their higher studies or any professional course with ease. With the help of education loans one can pursue their dream courses in India and abroad. Many banks are offering loans to potential students, with simple steps and processes. In a recent move, many nationalized and private banks have put up competitive rates of interest for student loans.
With the recent change in RBI guidelines regarding subsidizing of education loans, the RBI Gov. Raghuram Rajan sent a breather to all those banking on education loans. He said, “Banks are actually subsidizing student education loans for overseas studies under the PSL (priority sector lending segment)”. Under this lending segment, it is imperative for banks to lend nearly 40% of their allocated credit to housing, agriculture, education and businesses.
The good news for students aspiring to go abroad under student visa is that various banks have put forward their best competitive rates of interest. The minimum student loan amount that can be availed to study within the country is Rs 50,000 and the maximum Rs 2 lakh. The margin money that needs to be shelled out by the student or applicant for the student loan is at 15%.
Interest rates charged by different banks on the loan amounts are:
- Central Bank of India- 10.25%(women, SC, ST & IIT/IIM) – 12.25%(men), maximum loan for education within India Rs 10 lakh, abroad Rs 20 lakh
- IDBI Bank- 10.25%(for loan amounts up to 10 lakh) – 13.75% (for loan amounts above Rs 10 lakh)
- Bank of Maharashtra- 11.15% (for loan amounts up to Rs 4 lakh) – 12.90%(for loan amounts above Rs 4 lakh)
- Allahabad Bank- 11.75% – 13.25%
- Punjab National Bank- 11.25% – 14.25%
Before one goes for an education loan, the following points could prove to be helpful:
- Education loan money generally covers tuition fee, books, hostel expenses, travel expenses, money for useful equipment and other expenses needed to complete the course.
- The maximum amount of the loan could be between Rs 10 to 20 lakhs, with exceptions for a higher loan amount could be considered depending on the course.
- Margin money for loans above Rs 4 lakh is very much necessary.
- Parents of the student have to be the joint borrowers for all types of education loans. If the loan amount is above Rs 7.5 lakh, tangible assets have to be produced as collateral security. Loans between 4 and 7.5 lakh needs third party guarantees.
- Repayment of the loan begins six months to one year after the ending of the course or after the student gets a job.
- The EMI’s are generally calculated with a tenure not exceeding 10 years for loans up to 7.5 lakhs and 15 years for higher amounts.
- The entire interest paid on the loan amount is under section 80E tax deduction with the deduction for interest payment being available for 8 years with the first year taken as a beginning to the repayment period.
News Source: Economic Times
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