Prof. Sunil Joshi,
Professor of finance, NIILM CMS
snjoshi4@rediffmail.com
snjoshi4@rediffmail.com
writes...
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.
Pre-requisites
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.
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
|
Nil.
|
Above Rs.4.00 lac
|
Studies in India
|
5%
|
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
i like your blog very much.
ReplyDeleteNIILM 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.
ReplyDeleteRegards,
Raina Ray
Educational loan looks good alternative, plus it gives tax benefits .
ReplyDeleteThe 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...
ReplyDelete