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    WWW.STUDYABROAD.CAREERS360.COM

    CAREERS360

    KNOW ALLABOUT

    EDUCATIONLOAN How to take education loan Eligibility Criteria Application Checklist

    Education Loan Interest Rate Education Loans from Different Banks & more...

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    A Career is a Life KNOW ALL ABOUT EDUCATION LOAN

    Introduction 03

    How much education loan should you take? 04

    Interest rate of education loan 05

    Default on education loan repayment 06

    Document checklist to apply for education loan 07

    Eligibility criteria to take education loan 09

    Steps to take education loan 10

    Education loan from State Bank of India 11

    Education Loan from Punjab National Bank 13

    Education loan from Canara Bank 15

    Education loan from Credila 17

    Other Useful Resources 19

    CONTENTS

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    A Career is a Life KNOW ALL ABOUT EDUCATION LOAN

    An education loan can be a saving grace. However, high

    interest rates and the cumbersome process could

    come as a dampener. Read on to find out how to get

    the best deal?

    The first thing that comes to a students mind while arrang-

    ing funds for his education abroad are Scholarships and

    Financial aids. However, given the huge crowd and competi-

    tion in international education it is not always possible to

    secure such benefits.

    As such, Education loans to study abroad become an easier

    way to secure funds. The following points helps you gain

    some insight into why exactly you should consider applying

    for an education loan for studying abroad:

    1. Education loan is one of the priority sector under which

    banks are required to lend by the Reserve Bank of India.

    2. Students applying for education loan for education

    abroad can avail tax benefits under section 80 (E) of

    Income Tax Act 1961. Some of the highlights of this Act

    are:

    l Loan should be taken from approved financial insti-

    tution

    l Loan should be for full-time studies for any graduate

    or postgraduate course

    l Deduction is allowed for a continuous period of eight

    years

    INTRODUCTION

    Most banks are into lending of education loans. In fact,

    study loans are categorised as priority sector lending for

    public sector banks. But again, it does not mean that lending

    institutions are quick to disburse loans to all kinds for all pro-

    grammes and for all institutions. In this E-Book, we discuss

    about all that you need to know about taking an education

    loan to fund your studies.

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    A Career is a Life KNOW ALL ABOUT EDUCATION LOAN

    This question may haunt you if you are dont do cost

    benefit analysis. The maximum loan that lenders dis-

    burse for studies in India is Rs. 10 lakhs and for over-

    seas, Rs. 20 lakhs. Credila provides loan above Rs 20 lakhs.

    The education loan you should take would depend on the

    course fees and your capacity of generating down payment

    (payment from own pocket) towards it. For a loan above Rs.

    4 lakhs, one has to generate minimum down-payment of 5%

    for studies in India and 15% for studies abroad. For a loan

    HOW MUCH EDUCATION LOAN SHOULD YOU TAKE?

    below Rs. 4 lakhs, one can get the entire fees as loan, as the

    banks claim. But you can pay the down payment or the mar-

    gin money piecemeal. Allahabad Bank, for instance, takes the

    margin money on year-to-year basis and disbursements are

    made on a pro-rata basis. Though a student may be eligible

    for uppermost loan limit he should exercise prudence while

    filling the loan amount. If the course for which the loan is

    being taken enables better earnings then it may more than

    justify the loan.

    Loan

    amount

    Moratorium-

    period

    Loan

    repayment

    period

    Interest

    rate

    Loan

    amount

    after

    moratorium

    EMI Gross

    Salary

    Net

    Salary

    50% of

    Net

    Salary for

    servicing

    debt

    Amount

    left in

    hand

    after

    paying EMI

    500,000 3 7 11% 657,500 11,085.89 25,000 22,000 11,085.89 10914.11

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    A Career is a Life KNOW ALL ABOUT EDUCATION LOAN

    Interest rate of education loan depends on whether you

    are studying in India or abroad, the course that you are

    applying for, your loan amount and the tenure. Students

    getting admission to highly rated institutions are offered

    loans with a lower rate of interest. There have been talks

    that IBA will soon come up with comprehensive ratings of

    the institutes to guide banks in making right decisions while

    granting educational loans. From a students perspective, the

    irony of it is that they will have to shell out more for Equated

    Monthly instalments (EMI) due to high interest rates in case

    institutes have been rated on the downside. On the other

    hand its likely they would be placed at lower packages from

    such institutes! Special concessions on interest rates of 0.5

    percent are available for women students.

    Two types of interest ratesThese comprise fixed interest and floating interest rate.

    Usually, nationalised banks offer variable interest rates for

    student loans, while private and foreign banks offer fixed

    interest rates. Interest rates vary between 12 to 16 percent.

    Considering the present macro-economic environment it is

    advisable to go for floating interest rate loans. SBI is the lead-

    ing player with 25 percent share in education loan segment.

    Simple vs. compound interest

    Simple interest is to be charged during the study periodand up to commencement of repayment. There have been

    complaints that banks charge compound interest. Servicing

    of interest during the moratorium period is optional and

    students can avail one percent rebate on interest rate if they

    decide to pay.

    INTEREST RATE OF EDUCATION LOAN

    EDUCATION LOAN RECKONER

    l Education loan procurement is easy if the pro-gramme is recognised and the college/ universityis government affiliated/ approved. Education loansanction is easy for job-oriented professional/tech-nical courses. Students applying in private collegeswhich have good placement record are entertained.

    l Banks lend up to Rs. 10 lakh for studies in India andRs. 20 lakh for education overseas.

    l Banks provide loans only between 75 to 90 per centdepending on the total cost of the course and therest of the fund percentage you have to generatefrom your own sources. Credila, however, providesloans above Rs. 20 lakhs and without any marginmoney

    l Education loan interest rate varies from bank to

    bank, which could be anywhere between 11-14%

    l Banks may claim to offer loan up to Rs 4 lakh withoutcollateral, however, thats usually on paper. Banksask for collateral.

    l Collateral includes assets like national securitycertificates, insurance policies, bonds and propertypapers.

    l How much credit to take? Check the placement re-cord of the institution and do a rough calculation onthe expected monthly income you are likely to drawas fresh employee. Dont forget to take into account

    the running expenses.

    l A few banks allow a moratorium on interest payment,but under this option, the interest is compoundedquarterly and added to the principal sum for repay-ment. Banks offer lower interest rates (usually onepercent if you start repayment during the morato-rium period).

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    A Career is a Life KNOW ALL ABOUT EDUCATION LOAN

    The education loan repayment period is between five

    and seven years and it starts from one year after the

    course completion or six months after securing a job,

    whichever is earlier.

    Considering that the default is unintentional, when a stu-

    dent foresees hiccups arising in loan servicing then he/she

    should request the lender to re-schedule the payoff before-

    hand. If the lender agrees - as they did in quite a few cases

    in early 2009 when the employment markets was adversely

    hit - then it is fine. Otherwise there is no real option. In case

    the student is not able to pay education loan, the default

    will be reflected in his credit information report. Default

    gets reported in the Credit Information Bureau Limited

    (CIBIL) as well, which can affect the credit history of the

    student. Legal proceedings take place in case of defaults.

    Also, the collateral can be confiscated in case of the default.

    If students are regular in servicing the loan then access to

    DEFAULT ON EDUCATION LOAN REPAYMENT

    future loans like auto Loans, housing loans can be negotiated

    at competitive rates, based on the good credit history. So,

    follow the golden rules and approach your dreams in good

    faith. Set off now.

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    A Career is a Life KNOW ALL ABOUT EDUCATION LOAN

    lA completed and signed application form

    l Two passport size photographs applicant

    l Photo id of the applicant. The applicant can submit one of

    the following

    a) Passport

    b) Pan card

    c) Voters ID card

    d) Driving license

    e) Employee ID (if working)

    f) Defence ID card

    g) Aadhar Card

    h) Photo ID issued by central or state government

    i) Bank passbook with photograph of the account attested

    by the bank

    l Residence proof of the applicant

    a) Passport with address

    b) Driving license with address

    c) Bank statement with address

    d) Ration card (except Maharashtra)

    e) Aadhar card

    DOCUMENT CHECKLIST TO APPLYFOR EDUCATION LOAN

    f) Telephone/ electricity/ water bill not older than three

    months

    g) Voters ID card

    lAdmission documents

    a) Printed admission offer letter from the university/insti-

    tute. The letter must be on their letter head and must be

    signed by the authority

    b) I-20 form for students going to the US for higher studies

    c) Fee details of the institute/ university

    lAcademic documents

    a) Mark sheets and certificates of Class 10 and Class 12

    b) Mark sheets and certificates of graduation (if the candi-

    date is going for post graduate studies)

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    A Career is a Life KNOW ALL ABOUT EDUCATION LOAN

    c) Documents of scholarships (if the candidate obtained

    one)

    d) Documents of any entrance exam take- GRE, GMAT,

    IELTS, TOEFL

    l Income proof of the applicant

    a) In case of a salaried employee:

    i. Salary certificate on employers letterhead or latestthree months salary slip

    ii. Last two years Form 16 from the employer

    iii. Last two years Income Tax Returns

    iv. Any other valid income proof

    b) In case of self employed person

    i. Last two years Income Tax Returns

    ii. Last two years Certified Financial Statements or

    Provisional Financial Statements Duly Certified by

    CA

    iii. Proof of office

    iv. Any other valid income proof

    l Income proof of the guarantor if the applicant is notemployed. The same documents mentioned above is

    required for guarantor also

    l Declaration/ affidavit confirming that the candidate has

    not obtained any other loan from other banks

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    A Career is a Life KNOW ALL ABOUT EDUCATION LOAN

    l The candidate must be a citizen of India

    l The candidate must have obtained a place to study in one

    of the recognised universities/ institutes abroad

    l The candidate must be aged between 16 and 26 years old

    l The candidate must have good academic record

    l The candidate must submit all the required documents for

    education loan

    l The co-applicant/ guarantor must be either primary

    (parents, spouse, siblings) or secondary (father-in-law,

    mother-in-law, brother-in-law, paternal/maternal uncles/

    aunts)

    ELIGIBILITY CRITERIA TO TAKE EDUCATION LOAN

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    A Career is a Life KNOW ALL ABOUT EDUCATION LOAN

    The State Bank of India is one of the top education

    loan providers in India. Every year the bank grants

    loans to the students who secured admissions in

    various recognized universities in India and abroad with no

    processing fee. Here are the details of obtaining a studentloan from SBI.

    Eligibility to get education loan from SBIThe candidate must be a citizen of India

    l The candidate must have obtained admission in any of the

    recognised universities in the world

    EDUCATION LOAN FROM STATE BANK OF INDIA

    l The candidate must have obtained admission to one of the

    following courses:

    a) Job oriented professional degree courses

    b) Job oriented professional diploma courses

    c) Job oriented technical degree coursesd) Courses conducted by CPA (Certified Public Account-

    ant) in USA and CIMA (Chartered Institute of Man-

    agement Accountants) London

    Education loan amount given by SBISBI provides education loan for upto Rs. 30 lakhs for stu-

    dents who wish to go abroad for higher studies. The expenses

    covered in the student loan are:

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    A Career is a Life KNOW ALL ABOUT EDUCATION LOAN

    l Tuition fee payable to the university/ college

    l Examination/ library fee

    l Caution deposit/ refundable deposit

    l Travel expenses

    Documents required to takeeducation loan from SBI

    l Completed application form

    l Two passport size photographs

    l Letter of admission from the University

    l Documents on the cost of studies

    l PAN card of the candidate

    l Proof of identity (any one)

    a) Passport

    b) Driving license

    c) Voters ID card

    d) Aadhar card

    l Proof of residence

    a) Passport

    b) Driving license

    c) Voters ID card

    d) Electricity bille) Telephone bill

    l Student/ co-borrower/ guarantors bank account state-

    ment for the last six months

    l Statement of assets and liabilities of student/ co-borrow-

    er/ guarantor

    l Student/ co-borrower/ guarantors proof of income

    Security needed to take education loan from SBIIf the candidate is taking a student loan up to four lakhs,

    the only security needed is the parent or guardian as the

    co-borrower. If the loan amount is between 4 lakhs and 7.5

    lakhs, the candidate must provide parent or guardian as the

    co-borrower and collateral security in the form of the details

    of the Gross Annual Income of the parent or guardian. If the

    candidate is applying for an education loan above 7.5 lakhs,

    the parent or guardian must be the co-borrower and the can-

    didate must show tangible collateral security.

    Repayment of education loan from SBI

    The candidates who take educational loan upto 4 lakhs or

    between 4 lakhs and 7.5 lakhs will get 10 years to repay the

    amount. The repayment period for the loan amount above

    7.5 lakhs is 20 years.

    The rate of interest of education loan is given below:

    Loanamount

    Above BaseRate

    CurrentRate

    Upto Rs. 4 lakhs 3.50% 13.50%

    4-7.5 lakhs 3.75% 13.75%

    Above 7.5 lakhs 1.75% 11.75%

    * Girls will have 0.50% concession

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    A Career is a Life KNOW ALL ABOUT EDUCATION LOAN

    The Punjab National Bank provides various schemes

    to issue education loan for the students who want to

    go abroad for higher studies. The educational loan

    to study abroad by the PNB is called PNB Saraswati. The

    bank provides education loan for upto Rs. 20 lakh for stud-ies abroad.

    Courses covered for PNB education loanThe Punjab National Bank provides student loan for the

    below given courses:

    l Job oriented professional courses offered by reputed uni-

    versities

    EDUCATION LOAN FROM PUNJAB NATIONAL BANK

    l Job oriented technical courses offered by reputed univer-

    sities

    l Post graduation courses such as MBA, MCA and MS

    l Courses conducted by CIMA- London and CPA in USA

    l Diploma and degree courses such as pilot training, ship-

    ping, aeronautical etc. Provided by recognised regulatory

    bodies abroad. The diploma courses other than these will

    not get an education loan from PNB

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    A Career is a Life KNOW ALL ABOUT EDUCATION LOAN

    Eligibility to take education loan from PNBThe eligibility criteria for education loan from PNB are:

    l The candidate must be an Indian citizen

    l The candidate must have obtained admission in a reputed

    university/ institute abroad

    Application checklist for educationloan from PNB

    l Completed application form

    l Passport size photograph

    l Proof of address

    a) Passport

    b) Driving license

    c) Voters ID card

    d) Electricity bill

    e) Telephone bill

    l Proof of age

    lAcademic transcripts and certificates of the latest degree

    l Prospectus of the university/college the applicant is going

    to join which explains the tuition fee, examination fee and

    hostel fee

    l Information about the assets and liabilities of the parents

    or guarantor

    l Copy of passport and visa

    Expenses considered for the educationloan from PNB

    l Fee payable to the university/ college

    l Examination fee

    l Travel expenses from the home country to the host country

    l Caution deposit

    l Purchase of books etc.

    Security needed to take education loan from SBIThere is no security needed to take education loan for upto

    Rs. 4 lakh. However, the guardian or parent must be the co-

    borrower. The candidates taking loan between Rs. 4 lakh

    and Rs. 7.5 lakh must provide collateral security in the form

    of suitable third party guarantee. For the loans above 7.5

    lakh, the candidate must provide tangible collateral security

    suitable value acceptable to bank along with the assignment

    of future income of the student for payment of installments.

    Interest rate for education loan by PNB

    Amount of Loan Repayable inless than 3 yrs

    Repayable in3 yrs & above

    Upto Rs 4 lakh BR+3.00%(13.25%)

    BR+2.50%+TP (13.25%)

    Between Rs 4 lakhand Rs 7.50 lakh

    BR+4% (14.25%) BR+3.50%+TP (14.25%)

    AboveRs 7.50 lakh

    BR+2.00%(12.25%)

    BR+2.00%*(12.25%)

    Loan repaymentThe students who are taking the loan upto Rs. 7.5 lakh will

    get 10 years repayment period. The repayment period of

    the education loan above that is 15 years. The moratorium

    period to start repaying the loan is six month to one year after

    completing the course or getting a job (whichever is first).

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    A Career is a Life KNOW ALL ABOUT EDUCATION LOAN

    Canara Bank offers various educational loan schemes

    for the students doing higher studies in India and

    abroad. The bank provides upto Rs. 20 lakh loan to

    the students who go abroad for higher studies.

    Eligibility to apply for education loan fromCanara Bank

    l The candidate must be a citizen of India

    l The candidate must have obtained admission in a reputed

    university/ institute abroad

    l The candidates must be going abroad to study:

    a) Job oriented professional courses

    b) Job oriented technical courses

    c) Post graduation courses such as MBA and MCA

    d) Courses conducted by CIMA- London and CPA in

    USA

    EDUCATION

    LOAN FROM

    CANARA BANK

    e) Diploma and degree courses such as pilot training,

    shipping, aeronautical etc.

    The processing charge for the loans to study abroad is 1% of

    the loan amount. In case the sanctioned loan amount is taken

    by the candidate, the amount will be reimbursed.

    The education loan amount will be directly disbursed to the

    university/ institute. There is no margin for the candidates

    who take education loan for upto Rs. 4 lakh. The margin for

    the candidates who take loan for above Rs. 4 lakh is 15%.

    Documents checklist for educationloan from Canara Bank

    l Completed application form

    l Mark sheets of all qualifying exams

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    A Career is a Life KNOW ALL ABOUT EDUCATION LOAN

    Cedilla is a HDFC Limited Company that provides

    education loan for students. Credila provides loans in

    Indian rupees that can be converted to the currency

    of the country the student goes for higher education. The

    repayment of the loan will be in Indian rupee. Credila loans

    start from Rs. One lakh upto Rs. 20 lakh.

    Eligibility to get education loan from Credila

    l The candidate must be an Indian citizen

    l The candidate must be above the age of 18 years

    l The co-borrower must have a bank account in one of the

    Indian banks with cheque writing facilities

    l The candidate must have obtained admission in a recog-

    nised university abroad

    Co-borrowers eligibility

    l The co-borrower must be an Indian citizen

    l The co-borrower must be a relative of the applicant such

    as father/ mother/ brother/ sister/ spouse (for married

    candidates)

    l Co-borrowers has co-extensive liability with the candi-

    date

    l The co-borrower must provide valid proof to establish therelationship with the candidate

    l In case the collateral security cannot be provided by the

    relatives mentioned above, the candidate can also bring

    father-in-law/ mother-in-law/ sister-in-law/ brother-in-

    law/ maternal or paternal uncle/ aunt/ grandparents/ first

    cousins

    EDUCATION LOAN FROM CREDILA

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    A Career is a Life KNOW ALL ABOUT EDUCATION LOAN

    Education Loan:The Myths

    Study abroadEducation loan:

    How it works toyour advantage

    Educationloan FAQ

    OTHER USEFUL RESOURCES

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