Student Loan Rules In India
RBI - Reserve Bank of India guides the policy on student loans.
The policy is in accordance with the Government's objectives.
Higher education is a priority for the India State and hence all possible help is accorded to students wanting to pursue higher education.
Higher education is defined as any study (generally understood to be an Undergraduate or Post-graduate degree from a recognized institution)
- Education Loan Value - No Limit.
- Guarantor required. - generally parents are preferred, but you can get anyone who can stand guarantor.
- No collateral for up to 4 lacs for education in India & 16 lac for education in foreign countries.
- Education loans above Rs 4 lakh require tangible collateral, security for the full value of the loan or third-party guarantee, depending on the amount. However, the co-borrower -- the parent or guardian - is required to furnish his/her bank account statement, tax returns of the last two years, statement of assets and liabilities and proof of income.
- Student loans are easier to secure for children of Govt employees.
- The loan is spread over 7 years.
- You do not need to pay anything until 6 months after your education is complete but the interest will start from the day the loan is disbursed. You can ask for some more time if you are unable to find a job.
- The loan is disbursed to the education institute directly, not to you.
- When applying ensure the institute is affiliated to an accredited university and the course is approved by AICTE - All India Council for Technical Education or a competent govt authority.
- You have to submit regular education progress reports / transcripts as your move from semester to semester.
- The loan includes study fees, stationary (books etc) and in some cases domiciliary expenses too.
What To Be Careful About
- Submit the complete application with all paper work in order. You will need to attach the college/institute prospectus/brochure, course details, fee plans etc.
- Ensure your guarantor's paper work is up-to-date, including PAN - Permanent Account Number, bank account details, etc.
- Ensure the course is recognized.
- Ensure you are applying to the branch of the bank closest to your area of residence.
- In case of international colleges, ensure all necessary approvals are in place.
The master circular of the RBI to banks — revised in 2007 — clearly says that banks should not insist on security or a no-due certificate for educational loans up to Rs 4 lakh.
RBI, however, has insisted on both collateral security and third-party guarantee for educational loans above Rs 4 lakh and up to Rs 7.5 lakh. For loans above Rs 7.5 lakh, the circular demanded documents relating to future income prospects of the student along with tangible collateral security.
- ApnaLoan: Education Loan & Student Loan Rates in India
Get the lowest EMI by comparing latest education loan rates and student loan rates from major banks like ICICI, SBI bank and Dena Bank in India.
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