Monday, 14 January 2013

Educational loan for PGDM program at NIILM CMS: Do's, dont's and FAQs

Prof. Sunil Joshi,
Professor of finance, NIILM CMS                                        

Students desirous of pursuing higher studies can go for scholarships, grants and aids in terms of tuition waiver being offered by various institutions. However, if this option is not there then the student can definitely go for education loan. This loan is a very viable option for students in the sense that it gives benefits on tax and help in reducing the cost of the loan. The student can claim a deduction under section 80E of the income tax act for the interest paid on an educational loan. However, the student will get the tax benefit on an education loan only if the loan is raised in his/her name for the purpose of higher education. Tax benefits are available only if the course is a full time studies and not part time. Under this loan scheme, the students need not pay any amount during their study. They get a moratorium of 6 months after the completion of their study before the repayment of this loan starts. During this period, the interest charged on this loan is simple rate of interest. The repayment period ranges from 5 to 7 years. Thus a student does not feel the financial burden on this loan as he can repay it in such a long time because the monthly installment comes out to be very low. Students can get this loan from Govt Banks, Private sector Banks, NBFC's ( HDFC etc ) and private players in the market like APNA LOAN, DEAL4LOAN CREDILA etc.

Success rate of education loans

These loans are gaining currency in the market. Banks are aggressively  marketing this loan product under their retail asset business. For banks, it is a very safe loan and helps in building their retail portfolio with minimum impairment in this category. Loans up to Rs 4 lac requirement do not require any collateral security. Therefore, the demand for loan in this segment is very high and banks are also financing up to 90% of the loan requirement.

These loans are available for international studies also. The students are supposed to submit I-20 form along with admission letter from the international university. Loans up to Rs 20 lac is permissible to the students subject to availability of collateral security.


Student should have got admission through a merit criteria. No management quota admission is entitled for a  education loan. The institutes should be either AICTE approved or UGC approved or an institute of repute offering the higher education courses like engineering, medicine , management etc.

List of banks with RoI

Most of the banks are offering this loan at an interest rate ranging from 12% to14 % depending on the cost of funds of each bank. All the banks with their ROI are available in the website.

Dos and Donts

·         Dos:
The student should avail this loan only after confirming the ROI from all the banks.
They should also check if the rate of interest is on floating rate basis or on fixed basis as it can affect their financial viability.
Try to pay the interest component during the currency of loan as it gives incentive in the sense that you get a rebate of 1 % on your loan interest.
Before seeking admissions, check the authenticity of the institute thoroughly through market survey.

·         Donts:

Avoid going to the private players for loan as their interest rates and processing charges are higher as compared to the banks and other financial institutions.

FAQs: Getting educational loans for studying at NIILM CMS

Q1. Can I get Education Loan for my studies from NIILM CMS?
-Yes, You can approach any of the banks for education loan.

Q2. What is the maximum loan amount I can get?
      - Maximum amount of loan one can get is Rs 10 lac.

Following are the expenses considered for loan:
  • Fee payable to College / Hostel
  • Examination / Library fee.
  • Purchase of books s.
  • Caution Deposit / Building Fund / Refundable Deposit supported by Institution Bills / Receipts, subject to the condition that the amount does not exceed 10% of the total tuition fee for entire course.
  • Purchase of computers - essential for completion of the Course.
  • Insurance premium for student borrower.
  • Boarding and lodging expenses in recognized Boarding Houses / private accommodations.
  • Any other expense required to complete the course - like study tours, project work, thesis etc
Q3. How much margin is required by students?

Upto Rs.4.00 lac

Above Rs.4.00 lac
Studies in India

Q4. What is the security required for this loan?

Upto Rs.4.00 lac:
Co-Obligation of Parents. No Security
Above Rs 4.00 lac and Upto Rs 7.5 lac:
Co-Obligation of Parents together with collateral security in the form of suitable 3rd party guarantee acceptable to the Bank
Above Rs 7.5 lac:
Co-Obligation of Parents. Collateral Security of suitable value along with Assignment of future income of the student for payment of installments
The security can be in the form of land / building / Govt. Securities / Public Sector Bonds / Units of UTI, NSC, KVP, LIC Policy, Gold, Shares/ Mutual Funds/ Debentures, Bank Deposit in the name of the student parent / guardian or any other third party with suitable Margin.
The document should be executed by both the student and the parent/guardian.

(Know more about Prof. Joshi and other finance faculty at NIILM CMS or


  1. NIILM CMS is one of the best management colleges, I have come across. Here I got good campasing with reasonable fee that surely didn't blow a whole on my pocket.

    Raina Ray

  2. Educational loan looks good alternative, plus it gives tax benefits .

  3. The education loan helps the poor students alot to continue there higher studies. It now become the necessity for the education loans in india so that india will get the most deserving students who doesnot contine because of the economic problem. Thanks for providing this knowledge...