Define Education loan, eligibility criteria

If insufficient funds or poor financial condition is shattering your dream of higher education then you just need not to worry. Now, most of the commercial banks in India are providing the education loan to complete your whole education. To apply for the education loan you have to fulfil certain eligibility criteria which are set by each bank for providing you the education loan.

What is education loan?

In simple language, we can define this loan as the financial assistant provided by the bank to the students to complete their whole education if the students fulfil certain criteria. The main objective of this loan is that each deserving student in India can fulfil his or her dream of study irrespective of his financial status. The main criterion which makes this loan different from home loan or other types of loan is the easier terms and conditions for education loan.
In other words, this loan is meant to provide the basic education for poor and to provide the higher study to the deserving students on nominal interest rates.

Education loan eligibility criteria

The government has set certain eligibility criteria for this loan so that only deserving candidates can avail this facility of this loan. Eligibility criteria for this loan can be broadly divided into following categories.

Courses for education loan in India

Here is the list of courses eligible for education loan in India.
  • Whole school education from class one to higher secondary is eligible for the same.
  • Graduation courses like B.A., B.Sc., B.Com etc. are eligible for the same.
  • Masters and Ph.D. programmes are also covered under the this loan.
  • Any professional course in India including Engineering, Veterinary, Law, Medical, Management, Computer, Dental etc. are also eligible for the same.
  • Computer certificate courses of reputed institutions accredited to department of Electronics or affiliated to a university are also eligible for the same.
  • Courses like CA, ICWA, CFA etc. are also financed by this loan.
  • Any course conducted in IIT, IIM, IISc, XLRI or NIFT is also eligible for this facility.
  • Courses offered by reputed foreign Universities in India are also eligible for this loan.
  • Any evening course approved by a reputed institute can also have the benefit of this loan.
  • Other courses leading to a diploma or degree etc. conducted by colleges or university and which are approved from UGC/AICTE/AIBMS/ICMR/Govt. also come under the education loan.
  • Courses offered by the National Institutes or other reputed private institutes or Universities. In such cases, Bank has the authority to check the future prospects of that course and recognition of that institute.

Courses eligible for education loan abroad

  • Any job oriented professional degree course from a reputed foreign University is eligible for this loan.
  • Post-graduation courses like MBA, MS, MCA etc. can also have this facility.
  • Courses conducted by CIMA- London or CPA in USA are also eligible for the same.

Student's eligibility for the education loan

A student fulfilling the following conditions are eligible for this loan.
  • Student must be an Indian National.
  • The admission to the professional or technical course should be made through an entrance test or selection process.
  • Student should have secured admission to the foreign University or Institutes.
  • Student should have scored minimum 60% marks (50% for SC or ST) in the qualifying examination for the admission to any graduation course.

Expense covered in the Education loan

This loan covers the following expenses of a student during the course of the study.
  • Whole fee payable at college or School or Hostel is financed by the same.
  • Examination or Library or Laboratory charges are also paid through this loan.
  • The expense of books, equipments, uniforms and instruments required are also covered under the this loan.
  • Travel expenses for studying abroad are also beard by the bank.
  • Any sort of refundable security which is deposited by the bank is also paid by the bank.
  • If the computer or laptop is necessary for the completion of the course then the expense of it is also taken by the bank.
  • Any other expense which is not included above but required for the completion of the course like study tours, project work etc. are also paid by the Bank.

Security required for the education loan

For a loan amount of upto 2 lakhs there is no need of any security.But, for the loan amount of more than 2 lakhs, a collateral security equal to 100% of the loan amount and a guarantee of the third person known to the bank for 100% loan amount is required. If the land or home of the student is already mortgaged then unencumbered portion can be taken as security provided it covers the required amount of this loan.
The security can be in the form of a land or building or public sector bonds or units of UTI, NSC, KVP, LIC policy, gold, shares or debentures, bank deposit in the name of student or any other third party with suitable margin. There is one more regulation regarding the security that if the loan is given for the purchase of a computer then the same to be hypothecated to the Bank.
For the detailed knowledge of disbursement and repayment of the education loan, you can read the given article- Disbursement and repayment of education loan

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