UNIVERSITY OF MUMBAI

A RESEARCH PROJECT ON
“STUDY ON EDUCATIONAL LOANS PROVIDED BY
NATIONALISED BANK”

LALA LAJPATRAI COLLEGE OF COMMERCE And ECONOMICS,

MAHALAXMI, MUMBAI-400034.

SUBMITTED BY
SONAL JAYESH PATEL

ROLL NO. 1819454

T.Y.B.A.F – SEMESTER VI

UNDER THE GUIDANCE OF

DR. MINUM SAKSENA

YEAR OF SUBMISSION
2020-2021

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 CERTIFICATE
I, DR. MINUM SAKSENA, herby certify that MS. SONAL JAYESH PATEL,
Student of T.Y.BAF OF Lala Lajpatrai College of Commerce and Economics has
successfully completed her research project on the topic “STUDY ON
EDUCATIONAL LOANS PROVIDED BY NATIONALISED BANK” in semester –
VI for the academic year 2020-2021.
I further certify that the entire project work has been done by the learner under my
guidance and it is her own work and facts reported by her personal findings and
investigation.

____________________ _________________
Signature of External Examiner Signature of Internal Examiner

________________ _______________
Signature of Project Guide Signature of Principal

Date of Submission:- __________________

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 DECLARATION
I, MS. SONAL JAYESH PATEL student of Third Year B.A.F. of Lala Lajpatrai
College of Commerce and Economics hereby declare that I have completed the
project on the topic STUDY ON EDUCATIONAL LOANS PROVIDED BY
NATIONALISED BANK in Semester VI for the academic year 2020-2021, as per the
requirements of MUMBAI UNIVERSITY as part of Bachelors in Accounting and
Finance (B.A.F.) Programme.

I, hereby further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.

The information provided in this project is True and Original in best of my

knowledge.

Date : ________________ _______________________

Student’s Signature.

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 ACKNOWLEDGEMENT

Learning is a process which never ends. With great pleasure I would like to thank the
following people for constantly supporting and guiding me throughout the process. I
would like to acknowledge the following as being idealistic channels and fresh
dimension in completion of this project.

I, MS. SONAL JAYESH PATEL would like to take this opportunity to thank
University of Mumbai for providing me an opportunity to study on my research
project STUDY ON EDUCATIONAL LOANS PROVIDED BY NATIONALISED
BANK, thus has been a great learning experience.

I would like to thank my principal, Dr. Neelam Arora for providing the necessary
facilities required for completion of this project.

I would like to express my sincere gratitude towards my project guide Dr. Minum
Saksena, with the help of whose guidance and care made this project successful.

Lastly, I would like to thank each and every person who directly or indirectly helped
me in the completion of the project, especially my Parents and Peers who supported
me throughout my project.

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 EXECUTIVE SUMMARY
Educational loan is a loan that provide for the student who is unable to complete his or
her study due to the lack of money. The difference in the educational loan from other
modes of loans is this was used to the purpose of education. Educational loan have
interest rate is less in compared to other mode of loan. And also get a time for repaying
only after the completion of study. That is the borrower didn’t make repayment at the
time of study. He should repay the amount after the completion of the course. The
educational loan provides a good support for the student by helping them to pay the
university fees, tution fees, hostel fees etc.

The major purpose of educational loan is to accompanying assistance for the student
to complete their education. The major important benefits of educational loan are that
the interest rate is less than that of the other types of loan. So the people can choose the
educational loan for the purpose of study. The other advantage of educational loan is
which is needed to repaying only after the completion of the study. The other benefits
of the educational loan are that it can help the student without cash to study his
ambitious course and to full fill his dream. The educational loan not only covered with
tution fees but also covered with the entire expense that is needed to full fill the higher
education. The other benefits of educational loan are that it helps to get reduction in tax
payment. The borrower can claim the interest from the tax.

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 INDEX

CHAPTER TOPICS PAGE NO.

1 INTRODUCTION
1.1 Introduction to Bank 7
1.2 History of Bank 9
1.3 Introduction of Education Loan 10
1.4 History of Education 11
1.5 Problems of Education Loan in India 13
1.6 Top 5 Nationalized Bank providing Education Loan 14
2 RESEARCH METHODOLOGY
2.1 Objectives of the study 56
2.2 Hypothesis 56
2.3 Sample size 56

2.4 Methods of Data collection 57

2.5 Scope of the study 57
2.6 Limitations of the study 58
3 Review of literature 59
4 Case study 62
5 Results and Data interpretation 68
6 Conclusion 78
7 Biblography 78
8 Annexure 79

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 CHAPTER NO. 1

INTRODUCTION TO STUDY

Government Of India In Consultation With Reserve Bank Of India (RBI) And Indian
Banker's Association (IBA) Has Framed A Comprehensive Educational Loan Scheme
To Ensure That No Deserving Student In The Country Is Deprived Of Higher Education
For Want Of Finances. The New Scheme Covers All Type Of Courses Including
Professional Courses In Schools And Colleges In India And Abroad. There Exist
Association Between Educational Qualification Of The Fathers Respondents And
Level Of Satisfaction. There Exist No Association between Age and the Level of
Satisfaction

Higher Education is essential to have a sustainable social, economic and political

development of a society. Investments in Higher education makes a vital contribution
to accelerate the process and the rate of economic growth through human productivity.
During the last five decades there has been a sharp increase in the number of
Universities and Colleges offering general and technical education in India. The strong
wave of globalization and internationalization of higher education has led to reinforce
and develop a strong and vibrant education system in the country.

According To Section 5B, BANKING REGULATION ACT 1949, Defines, Banking

As Accepting For The Purpose Of Lending, Investment or Deposit of Money from
Public Repayable On Demand or Otherwise Withdrawer by Cheese, Draft

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INTRODUCTION TO THE TOPIC
1.1 INTRODUCTION TO THE BANK :-

According to section 5B, banking regulation act 1949, defines, banking as accepting
for the purpose of lending, investment or deposit of money from public repayable on
demand or otherwise withdrawal by cheese, draft or otherwise.

Banking in its modern sense evolved in the 14th century in the rich cities of Renaissance
Italy but in many ways was a continuation of ideas and concepts of credit and lending
that had their roots in the ancient world. In the history of banking, a number of banking
dynasties — notably, the Medici’s , the Fugger’s, the Welders, the Bahrenberg’s and
the Rothschild’s — have played a central role over many centuries. The oldest
existing retail bank is Banka Monte die Paschal di Siena, while the oldest
existing merchant bank is Berne berg Bank.

Banks act as payment agents by conducting checking or current accounts for customers,
paying cherubs drawn by customers on the bank, and collecting cherubs deposited to
customers' current accounts. Banks also enable customer payments via other payment
methods such as Automated Clearing House (ACH), Wire transfers or telegraphic
transfer, EFTPOS, and automated teller machines (ATMs).

Banks borrow money by accepting funds deposited on current accounts, by

accepting term deposits, and by issuing debt securities such as banknotes and bonds.
Banks lend money by making advances to customers on current accounts, by
making installment loans, and by investing in marketable debt securities and other
forms of money lending.

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Banks provide different payment services, and a bank account is considered
indispensable by most businesses and individuals. Non-banks that provide payment
services such as remittance companies are normally not considered as an adequate
substitute for a bank account.

DEFINITION AND MEANING OF BANK: -

BANK is a financial institution that accepts deposits from the public and creates credit.
Lending activities can be performed either directly or indirectly through capital
markets. Due to their importance in the financial system and influence on
national economies, banks are highly regulated in most countries. Most nations have
institutionalized a system known as fractional reserve banking under which banks hold
liquid assets equal to only a portion of their current liabilities. In addition to other
regulations intended to ensure liquidity, banks are generally subject to minimum capital
requirements based on an international set of capital standards, known as the Basel
Accords.

1.2 HISTORY OF BANK: -

The history of banking refers to the development of banks and banking throughout
history, with banking defined by contemporary source as an organization which
provides facilities for acceptance of deposits and provisions of loans.

Banking in India, in the modern sense, originated in the last decades of the 18th century.
Among the first banks were the Bank, which was established in 1770 and liquidated in
1829-32; and the General Bank of India, established in 1786 but failed in 1791.

The largest bank, and the oldest still in existence, is the State Bank of India (S.B.I). It
originated as the Bank of Calcutta in June 1806. In 1809, it was renamed as the Bank
of Bengal. This was one of the three banks funded by a presidency government; the
other two were the Bank of Bombay and the Bank of Madras. The three banks were
merged in 1921 to form the Imperial Bank of India, which upon India's independence,
became the State Bank of India in 1955. For many years the presidency banks had acted
as quasi-central banks, as did their successors, until the Reserve Bank of India was
established in 1935, under the Reserve Bank of India Act, 1934.

In 1960, the State Banks of India was given control of eight state-associated banks
under the State Bank of India (Subsidiary Banks) Act, 1959. These are now called
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its associate banks. In 1969 the Indian government nationalized 14 major private
banks. In 1980, 6 more private banks were nationalized. These nationalized banks are
the majority of lenders in the Indian economy. They dominate the banking sector
because of their large size and widespread networks.

The Indian banking sector is broadly classified into scheduled banks and non-scheduled
banks. The scheduled banks are those included under the 2nd Schedule of the Reserve
Bank of India Act, 1934. The scheduled banks are further classified into: nationalized
banks; State Bank of India and its associates; Regional Rural Banks (RRBs); foreign
banks; and other Indian private sector banks. The term commercial banks refer to both
scheduled and non-scheduled commercial banks regulated under the Banking
Regulation Act, 1949.

Generally banking in India is fairly mature in terms of supply, product range and reach-
even though reach in rural India and to the poor still remains a challenge. The
government has developed initiatives to address this through the State Bank of India
expanding its branch network and through the National Bank for Agriculture and Rural
Development (NBARD) with facilities like microfinance.

1.3 Introduction of Education Loan:-

Education is central to the Human Resources Development and empowerment in any

country. National and State level policies are framed to ensure that this basic need of
the population is met through appropriate public and private sector initiatives. While
government endower to provide primary education to all on a universal basis, higher
education is progressively moving into the domain of private sector. With a gradual
reduction in government subsidies higher education is getting more and more costly
and hence the need for institutional funding in this area.

The scope of education has widened both in India and abroad covering new courses in
diversified areas. Development of human capital is a national priority and it should be
the endower of all that no deserving student is denied opportunity to pursue higher
education for want of financial support. Loans for education should be seen as an
investment for economic development and prosperity. Knowledge and information
would be the driving force for economic growth in the coming years.

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Based on recommendations made by a Study Group, IBA had prepared a Model
Educational Loan Scheme in the year 2001 which was advised to banks for
implementation by Reserve Bank of India vide circular No.
RPCD.PLNFS.BC.NO.83/06.12.05/2000-01 dated April 28, 2001 along with certain
modifications suggested by the Government of India. In line with the announcement
made by the Hon'ble Finance Minister in his Budget Speech for the year 2004-05, IBA
had communicated certain changes in the security norms applicable to educational loans
with limits above Rs.4 lakhs and up to RS. 7.5 lakhs.

An Education loan is designed to help students pay for college tuition, books, and living
expenses. It differs from other types of loans in that the interest rate is substantially
lower and the repayment terms are easy. An education loan is a form of financial
support from any bank or financial institution that enables a student for taking higher
education. Availability of the education loan, at the appropriate time can help millions
of deserving bright young Indians to achieve their dreams come true. All graduation,
post-graduation and professional courses from institutes approved by the state and
central government and also from foreign universities are eligible for a loan.

MEANING AND DEFINITION OF EDUCATION LOAN

Money borrowed to finance education or school related expenses. Payments are often
deferred while in school and for a six-month grace period after graduation. There are a
variety of federal and private student loans available.

1.4 HISTORY OF EDUCATION: -

The education in India has a rich and interesting history. It is believed that in the ancient
days, the education was imparted orally by the sages and the scholars and the
information was passed on from one generation to the other.

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After the development of letters, it took the form of writing using the palm leaves and
the barks of trees. This also helped in spreading the written literature. The temples and
the community centers formed the role of schools. Later, the Guru Kul system of
education came into existence.
The Gurukuls were the traditional Hindu residential schools of learning which were
typically in the teacher's house or a monastery. Even though the education was free, the
students from well-to-do families paid the Gurudakshina which was a voluntary
contribution after the completion of their studies. At the Gurukuls, the teacher imparted
knowledge on various aspects of the religion, the scriptures, the philosophy, the
literature, the warfare, the statecraft, the medicine astrology and the history. This
system is referred as the oldest and the most effective system of education.
In the first millennium and the few centuries preceding, there was a flourishing of
higher education at Nalanda, Takshashila University, Ujjain, and Vikramshila
Universities. The important subjects were mainly the art, the architecture, the painting,
the logic, the grammar, the philosophy, the astronomy, the literature, the Buddhism, the
Hinduism, the arthashastra, the law, and the medicine. Each university specialized in a
particular field of study. For instance, the Takshila specialized in the study of medicine,
while the Ujjain laid emphasis on astronomy.
The Nalanda, being the biggest center, had all the branches of knowledge, and housed
up to 10,000 students at its peak. The British records reveal that the education was
widespread in the 18th century, with a school for every temple, mosque or village in
most regions of the country. The main subjects were the arithmetic, the theology, the
law, the astronomy, the metaphysics, the ethics, the medical science and the religion.
The school had the student representatives from all classes of the society.
The present system of education was introduced and founded by the British in the
20th century, by the recommendations of Macaulay. It has western style and content.
The British government did not recognize the traditional structures and so they have
declined. It is said that even Gandhi described the traditional educational system as a
beautiful tree which was destroyed during the British rule.
The first medical college of Kerala was started at Calicut, in 1942-43, during World
War II. As there was a shortage of doctors to serve the military, the British Government
opened a branch of Madras Medical College in Malabar, which was under Madras
Presidency then. After independence, the education became the responsibility of the

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states and the Central Government coordinated the technical and higher education by
specifying the standards.
In 1964, the Education Commission started functioning with 16 members of which 11
were Indian experts and 5 were foreign experts. The Commission also discussed with
many international agencies, experts and consultants in the educational as well as
scientific field. Later in 1976, the education became a joint responsibility of both the
state and the Centre through a constitutional amendment.
The central government through the Ministry of Human Resource Development's
Department of Education and the governments at the states formulated the education
policy and planning. NPE 1986 and revised PoA 1992 envisioned that free and
compulsory education should be provided for all children up to 14 years of age before
the commencement of 21st century. Also, the Government of India made a commitment
that by 2000, 6% of the Gross Domestic Product (GDP) will be spent on education, out
of which half would be spent on the Primary education.
In November 1998, Prime Minister Atal Bihari Vajpayee announced setting up of Vidya
Vahini Network to link up universities, UGC and CSIR. The general marks-based
education system is now being replaced by the grades-based system.

1.5 PROBLEMS OF EDUCATION LOAN IN INDIA:-

The problem of default is worse, in the case of overseas education; as students change
their address without informing the bank (Vidyalaxmi 2006). But, because of political
pressures, public sector banks cannot simply stop giving study loans, or stop building
their non-performing assets (NPAs), due to loan repayment default. Hence, to minimize
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the risk, most banks have now made it mandatory for the student's parents or guardians
to be co-borrowers and therefore liable for repayment. The Reserve Bank of India is
giving thrust on extending educational loans and the government has proposed to take
over the interest burden during the moratorium period, for students from families,
whose income is less than 2.5 lakhs per-annum; besides, banks prefer giving loans to
meritorious students in order to be doubly sure that the applicant will not turn into a
defaulter (Ghosh and Mousumi 2008). The list consists only of public sector banks. In
the official websites of the private sector banks, education loan does not appear in the
product offerings; probably because of high chances of default, education loans do not
seem to be a lucrative area of business for them. Education being the priority sector,
orders are issued by the government from time to time, to keep the interest rates on
loans very low. This makes it less profitable business, simultaneously loaded with risk
of default. This explains the behavior of 7 private sector and foreign banks in India, to
virtually ignore this segment

1.6 TOP 5 NATIONALISE BANKS PROVIDING EDUCATION LOAN.

1. SATE BANK OF INDIA.

State Bank of India is an Indian multinational financial service company that

was founded in 1921. State Bank of India has an operational presence of over
14000 branches in India serving millions of happy customers. The bank has a
much diversified portfolio that includes services in personal banking, business
banking and international banking services. India’s largest public sector banks
is also a firm favorite when it comes to education loan.

SBI Education loan scheme is provided by State Bank of India for the benefit
of the students, under this scheme student can avail the loan facility to sponsor
their studies till the completion of the course and can repay the loan value after
they get a job on behalf of their educational qualification. SBI education loan
proves to be beneficial in their education. The interest rate is also reasonable to
the students applying for it and it differs from each scheme.

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 SBI Education loan has the following 4 education loan scheme for different
sections of peoples:

1.SBI Student Education Loan

2.SBI Scholar Loan
3.Vocational loan
4.Global Ed- vantage

1.SBI Student Education Loan

SBI Student loan is granted to Indian Nation for pursuing higher education in
India or Abroad where they have taken admission. SBI student education loan
repayment period is up to 15 years after the course period + 12 months of
repayment holiday SBI will charge no processing or any upfront charges on the
levied education loan.

COURSES COVERED

Studies in India

● Graduation, Post-Graduation including regular technical and professional

degree/diploma courses conducted by colleges/Universities approved by
UGC/AICTE/IMC/Government etc.
● Regular degree/diploma courses conducted by an autonomous institution like IIT, IIM,
ETC. Others regular degree/diploma courses like Aeronautical, pilot training, shipping
etc. approved by director General of civil.
● Teacher training/Nursing courses approved by central government or state government

Studies abroad

● Job oriented professional/Technical Graduation degree courses/Post Graduation

degree and diploma courses like MCA, MBA, MS, offered by reputed universities.

● Courses conducted by Chartered Account of Management Accountants (CIMA),

Certified Public Accountant in USA etc.

Expenses covered
● Colleges/School/Hostel fees

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● Examination/library/laboratory fees
● Purchase of books/equipment/instrument/uniform, purchase of computers essential for
completion of the courses
● Caution deposit/building fund/refundable deposit
● Travel expenses/ passage money for the studies abroad

SBI Education Loan Interest Rate

The applicants can avail the following given Loan amount and the rate of interest on
the loan amount is discussed below.

● For Studies in India - 10 lakhs maximum

● Studies abroad – 20 lakhs maximum

Particular Interest Rate Security

Up to RS. 7.5 Lacs 2% above MCLR, Only Parent/Guardian as

currently 11.10% p.a. co-borrower. No
Collateral Security or
third party guarantee

Above RS. 7.5 lacs 1.85% above MCLR Parent/Guardian as co-

currently 10.75% p.a. borrower and tangible
Collateral Security

Repayment of SBI Education loan

● Repayment will start one year after the completion of the course
● The loan should be repaid in 15 years after the commencement of
repayment
● In case the second loan is available for higher studies later, to repay the
combined loan amount in 15 years after the completion of the second
years.
2.SBI Scholar Education Loan

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 SBI Scholar Education Loan provides 100% financing fees, no processing fees,
quick sanction at Designated Campus Branch or more than 5000 selected
branches all over the country.
Repayment period: up to 15 years after the course period +12 months of
repayments holidays. In case the second loan is availed for higher studies later,
to repay the combined loan amount in 15 years after the completion of the
second course.

Courses covered
● Regular full- time degree/diploma courses through entrance
test/selection process.
● Full-time executive management courses like PGPX
● No certificate/ part time courses

Expenses covered
● Colleges/School/Hostel fees
● Examination/library/laboratory fees
● Purchase of books/equipment/instrument
● Caution deposit/building fund/refundable deposit 10% of the tuition fees
the entire courses.
● Travel expenses / expenses on exchange program
● Purchase of computer / laptop
● Any other expenses related to education

Loan Amount and Security

The loan amount is different for the category given in the list of the institution,
and the maximum loan amount is provided in the table below:

Category y Maximum Loan Limit

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 No Security , only parent / With tangible collateral or
guardian as co-borrower full value and parent /
guardian as co-borrower

List AA Rs.30 lacs

List A Rs.20 lacs Rs.30 lacs

List B Rs.7.5 las -

List c Rs.7.5 lacs Rs.30 lacs

3.SBI Global Ed- vantage Scheme

SBI Global Ed- vantage is an overseas education loan exclusively for those who wish
to pursue full- time regular courses at foreign colleges / universities. The key features
of SBI Global Ed-vantage scheme are:
● Faster: online application process
● Lighter: attractive interest rate
● Higher: loan amount through EMI up to RS. 1.5 crore
● Easier: repayment through EMI up to 15 years

Courses covered

Regular Graduate Courses / Post Graduate / Doctorate courses in any discipline offered
by foreign institutes / Universities in USA , UK, Canada, Australia, Europe, Singapore,
Japan, Hong Kong and New Zealand.

Expenses covered

● College / school / hostel fees. Examination / library / laboratory fess

● Purchase of book / equipment / instruments / Uniforms / computer at reasonable cost,
if required for courses completion and any other expense required to complete the

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 course – like study tours, project work, thesis, etc. can be considered for loan subject
to the condition that these should be capped at 20% of the total tuition fees payable
for completion of the course.
● Caution Deposit / Building fund / refundable deposit supported by institution bills /
receipts the amount considered for loan should not exceed 10% of the tuition fees for
the entire courses.
● The premium of RiNn Raksha (IRDA License No:UIN: 11N 078V01): Finance for
that will improve insurance coverage of the loan.

SBI Loan Interest Rate

The applicants can avail the following given loan amount, and the rate of interest on
the loan amount is discussed below:
● Minimum amount: RS.
● Maximum amount: RS. 1.5 crore
18.5% above MCLR, currently 10.75% per annum. SBI Global Ed- vantage scheme
includes concession for girl students and for students availing SBI Rinn Raksha

Repayment

● Accrued interest during the moratorium to be added to the principal and repayment
in EMI fixed.
● Repayment will commence six months after completion of course
● Repayment up to maximum of 15 years.

4.SBI Global Ed- vantage Scheme

SBI Global Ed- vantage Scheme are granted to the Indian Nationals for pursuing skills
development courses in India.

Courses Offered
● Training Institutes courses: The courses run by Industrial Training Institute (IT IS),
Polytechnics, training partners affiliated with National Skill Development
Corporation (NSDC)/ Sector Skill Councils, state skill Mission, state skill
corporation, preferably leading to a certificate/ diploma /degree issued by such
organization as per National Skill Qualification Framework (NSQF) are eligible for
a Skilling Loan.

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● Schools recognized by Central or state Education Boards or Collages affiliated to
recognized university leading to a certificate / diploma / degree issued by such
organization as per National Skill Qualification Framework (NSQF) is eligible for
skilling loan.

Expenses covered

● Tuition / course fee

● Examination / library / laboratory fee
● Caution deposit
● Purchase of books, equipment and instruments

Any other reasonable expenditure found such as localized boarding may not be
necessary for completion of the Course. However, wherever it is found necessary, the
same could be considered on merits.

Interest Rate
The application an avail the following given loan amount, and the rate of
Interest on the loan amount is discussed below
● The minimum loan amount RS. 5000
● The maximum loan amount RS. 1,50,000

Repayment Tenure

Loan Amount Repayment Period in years

Loan up to RS. 50,000 Up to three years

Loan between RS 50,000 to 1

Up to 5 years
lakh

Loans above RS 1 lakh Up to 7 years

Documents required to apply for the SBI Education Loan

The following documents will be required for all those who are applying for the
above given SBI Education Loan Scheme:

● Admission Letter
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● Filled in Loan Application Form
● Two passport size photographs
● Statement of cost of study
● PAN card of the Student and Parent / Guardian
● AADHAR Card of the Student and Parent / Guardian
● Identity Proof (Driving License /Passport / Electricity bill / Telephone bill)
● Students / co-borrower / guarantor’s bank accounts statement for last 6 months
● IT returns / IT assessments order, of previous 2 years of Parent / Guardian / other co-
borrower (if IT payee)
● Brief statement of assets and liabilities of Parent / Guardian / other co-borrower

Eligibility to get education loan from SBI

● The candidate must be a citizen of India

● The candidate must have obtained admission in any of the recognized universities in
the world
● 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 courses
d) Courses conducted by CPA (certificate public Accountant) in USA and CIMA
(Chartered Institute of Management Accountants)- London

2. HDFC Bank

HDFC set up as a private sector bank in 1994, the Housing Development Finance
Corporation Limited(HDFC) offers tailor made education loan products catering to
students applying for admission in India and abroad. HDFC promises complete
transparency to customers while sanctioning an education loan. As a market leader in
retail loan products, HDFC provides education loan with fast disbursement, easy
documentation and higher loan amount with competitive rates and charges. Students
can benefit immensely with a HDFC education loan as it covers all major expenses
incurred during the tenure of a course.

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 HDFC offers students an opportunity to follow their dreams and pursue a course of
study of their choice with comprehensive education loan products. HDFC education
loans can be availed with preferential interest rates for financing admission in premier
institution in India and abroad with doorstep service for borrowers.

Borrowers are also entitled to tax rebates for the interests they will pay on education
loans under section 80-E of Income Tax Act 1961.

HDFC Bank education loans are available in two variants-

1. Education Loan for Indian Education

2. Education Loan for Foreign Education

1. Education Loan for Studies in India

Students aspiring to seek admission in top institution recognized by UGC, AICTE,
AIBMS OR ICMR and in disciplines of their choice can do so without any hassles as
HDFC presents a topnotch financial solution with multiple benefits. Offering faster loan
processing with easy documentation, HDFC education loan are customize as per the
applicant’s requirements. HDFC is also provides an additional benefits of life insurance
coverage for students under the Insurance Protection. HDFC education loans taken for
studies in India will be disbursed directly to the institution as per the given fee structure
HDFC Bank sanction education loans up to RS. 10 lakhs for studies in India.

Expenses Covered

● Along with the tuition fees, HDFC education loan also covers examination fees, lab
fees, caution deposit, building fund, books and equipment fees and other travel
expenses.

Loan Amount and Security

● No collateral is required to submitted as security for loan up to RS. 7.5 lakhs. Any loan
amount exceeding that would require a collateral security in the form of residential
properties, HDFC Bank Fixed deposit, LIC, NSC, or a KVP policy.
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● Applicants are not requiring to bring in any margin amount for loans up to RS. 4 lakhs
but for loans above RS. 4 lakhs, a margin of 5% is required
● Customers need to pay up to 1% of the loan amount as processing fees.
● If the education loan is pre-closed during the moratorium period, then up to 4% of the
outstanding balance has to be paid as prepayments charges. If the loan is foreclosed
after the expiry of the moratorium period, no prepayments penalty will be levied
● Borrowers and co- borrowers will be required to sign a loan agreement with HDFC
after the education loan is sanction.
● Additional stamp duty has to be borne by the borrower.

Other Associated Charges

No Due Certificate / No Objection Nil

Certificate

NOC Nil

Solvency Certificate Not applicable

EM Return Charges RS. 550/- per instance

Legal / incidental Charges As per actuals

Late Payment of EMI 24% p.a. on overdue EMI amount

Credit Assessment Charges Not applicable

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 Duplicate Repayment Schedule RS. 200/-
Charges

Loan Re- booking Charges Up to RS. 1000/-

Loan Cancellation Charges Nil

Non- standard Repayment Charges Not applicable

Cheques / ECS Swapping Charges RS. 500/- per instance

Stamp Duty / Other Statutory Charges As per applicable law

2. Education loan for Studies Abroad

HDFC Bank collaboration with Credila offers customized education loan solutions
enabling students to pursue a degree of their choice in over 4000 premier institutions
across 36 countries worldwide. Credila provides 100% finance with attractive interest
rate, flexible repayments and loan tenures. Getting an educational loan is very easy and
simple with Credila’s hassle free documentation process and personalized service like
delivering loan at the customer’s doorstep. HDFC also improve their admissions to help
them plan their finance and also improve their chances of getting admission.

Expenses Covered
● A HDFC education loan for foreign education covers expenses like hostel fees, book
fees and travel along with the tuition fees.

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● The Hostel fees tuition fees will be disbursed directly to the institution where the
student has been admitted to.

Loan Amount and Security

● Credila offers a range of interest rates for different borrowers depending o the
academic background, institution, co-applicant details and the collateral security
furnished.
● Credila finances up to 100% of the cost of education and also approves loan amount
above RS. 20 lakhs.
● Borrowers need to pay up to1.5% of the loan amount as processing fess
● If the education loan is pre-closed within 12 months from the date of agreement, then
up to 4% of the principal amount plus taxes has to be paid as prepayments charges.
● If the loan is foreclosed after 12 months, then 2% of the principal amount plus taxes
has to be paid as prepayments charges.
● No collateral is required to be submitted as security for loan up to RS.4 lakhs to 7.5
lakhs. Any loan amount exceeding RS. 7.5 lakhs would requirea collateral security.
● For loan amount up to RS. 4 lakhs, borrower do not have to bring in any loan margin.
But for loans exceeding that, the applicant has to put in a loan margin of 15%.
● Education loan taken for studies abroad have to be repaid as monthly installments via
ECS debits.

Other Associated Charges

No Due Certificate / No Objection Nil

Certificate

NOC Nil

Solvency Certificate Not applicable

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 Late Payment of EMI 2% per EMI plus taxes

Credit Assessment Charges Not applicable

Non- standard Repayment Charges Not applicable

Cheques / ECS Swapping Charges Up to RS. 500/- per instance plus

taxes

Chequesbouncing Charges Up to RS.400/- per bouncing

Legal / incidental Charges At actual

Stamp Duty / Other Statutory Charges As per applicable law

Loan Cancellation Charges 1% of the unveiled sanction loan

amount plus taxes

Eligible Courses

Graduation and post-graduation courses with any of the following disciplines-

● Management
● Engineering (graduation only)
● Medicine
● Architecture
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● Hotel and Hospitality
● Agriculture
● Pure science
● MCA / MCM

HDFC Bank Education Loan Eligibility

The student who are applied for education loan in HDFC Bank should meet all the
student eligibility criteria’s and the applicant should get admission in eligible courses
as mention below:

● The student should be resident of India and also an Indian national.

● The applicant should have obtained entree in recognized university / institute.
● The age criteria should be minimum of 16 years and maximum of 35 years.
● All the loans in between 4 to 7.5 lakh the parents would become a joint borrower and
3rd party guarantee is essential.

Required Documents / HDFC Bank Application Process

The eligible candidates who are going to pursue higher esteem with the help of HDFC
Bank Education Loan should carry all the required and mandatory documents for the
successful completion of loan formalities without any faults / errors.

● Age proof / Birth certificate

● Residential proof / Gas bill / latest electricity bill / recent mobile recharge bill.
● Income proof / existing house legal documents.
● Signature proof
● Identity proof like aadhar card, pan card driving license, voter id, passport etc.

For salaried applicant:

● Last 2 years pay slips and last 6 months’ bank account statements etc.
● Completed application form
● Latest recognizable photograph with a signature signed across
● Completed Loan agreement to be signed by applicant and co-borrower / parents
● Proof of qualification
● Last two years ITR and audited balance sheet for self- employed applicants.
● Proof of turnover is required for self- employed professionals.
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● Subsequent disbursement request letter from the applicant and co-applicant
● University fees demand letter.

3. Central Bank of India

Central Bank of India was established in 1911 and was the first commercial bank in
India to be wholly managed by Indians. Central Bank of India caters to a diverse
clientele by offering banking and financial service including agri banking, MSME
services, deposits, loans and NRI banking. Education loan offered by Central Bank of
India, CentVidyarthi, empowers meritorious students to pursue a professional course of
their choice without money being a constraint.
Central Bank of India is one of the largest banks in our county in terms of customers
and branch network with plan India presence of 4,741 branches all of which are engaged
in core banking activities. The bank has already completed 105 glorious years of its
existence and caters to a diverse clientele by offering banking and financial services.

There are four different types of Central Bank of India education loan :

1. Cent Vidyarthi.
2. Cent Vidyarthi – Vocational Education and Training.
3. Central Bank’s Special Education Loan for IIMs.
4. Vidyarthi Scheme for IDA members & their children.

1.Cent Vidyarthi:
● A Central Bank of India education loan scheme for deserving candidate for higher
studies within India and abroad.
● Central Bank of India student education loan is available only for students of Indian
nationality
● The candidates should have got admission to any courses for higher education in
recognized educational institution in India or overseas through Merit Based selection
or Entrance Test post completion of higher secondary.
● For admission secured on the marks and there is no entrance test / merit based selection
process. A minimum achievement of 50% marks in the qualifying examination is
mandatory to avail this Central Bank of India student scheme.
● The maximum loan amount for studies in Indian institution is RS. 10 lakhs.
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● The maximum amount of education loan for overseas education is RS. 20 lakhs.
● The maximum amount cap is fixed as per the regulation of Government of India and
RBI
● In case of 100% collateral security against the loan amount there is no maximum
ceiling.
● Interest concession of 1% can be offered on loan during the period of course, provided
interest is paid during the study tenure and succeeding moratorium period earlier to
commencement of repayment.
● Interest is computed on simple interest during Repayment Holiday or moratorium
Period.
● Compounded Interest will be calculated from the due date of 1st instalment on monthly
rests.
● The loan amount is paid directly to college in appropriate cases.
● The loan disbursement is made available to the borrowers post submission of original
receipts & other satisfactory evidences.
● Repayment period starts after 12 months of course completion or 6 months post
securing any job, whichever is earlier
● The repayment period can be stretched up to Maximum 10 years for loan amount up
to RS. 7.50 lakhs.
● For Central Bank of India education loans beyond RS. 7.50 lakh, the repayment period
can be offered up to maximum 15 years.
● The loan is repaid on EMI basis.
● A life insurance policy is mandatory for the student borrowers availing Central Bank
of India Educational Loan.
● The insurance sum assured and policy tenure should be equivalent to loan amount and
tenure of loan including moratorium period and repayment period
● The insurance should be assigned in the bank’s favor.
● Nil Processing fee or upfront charges are levied on Central Bank of India education
loans for studies within India under the scheme.
● For studies overseas charge of RS. 500/- for loan amount till RS. 10 lakh and RS.
1,000/- for loan amount above RS. 10 lakh is charged while processing the
applications. However, the same is refunded back when loan is availed by the
borrower.

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 Eligible Expenses to be covered under Central Bank of India education loan:

● College/ school and hostel Fee. Fees payable as Examination/ Laboratory/ Library fee
● Fees payable as Examination/ Laboratory/ Library fee. Relevant Travel expenses
including passage money required for studies overseas
● Expenses towards Insurance premium applicable in case of student borrower.
● Other deposits such as Caution deposit or any other refundable deposit should be duly
supported by the Institution receipts or bills.
● Cost towards the purchase of books/ uniforms and equipment's or instruments.
● Other relevant expenses required for course completion such as study tours or
project/thesis work etc.
● Scholarships and fee waiver etc. are taken into account while sanctioning the loan.

Margin

Amount Studies In India Studies in overseas

Up to RS. 4 lakh Nil Nil

More than RS. 4 lakh 5% 15%

Security

Amount Joint borrower Security / Income assignment

Collateral

Up to RS. 4 lakh Parent / No Yes, student

Guardians borrowers needs to
assign future income

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 for the payment of
instalments

Above RS 4 lakh Parent / Suitable / Yes, student

to RS. 7.5 lakh Guardians acceptable borrowers needs to
third assign future income
partyguarantee for the payment of
instalments

Above 7.5 lakh Parent / Tangible Yes, student

Guardians collateral borrowers needs to
security with assign future income
appropriate for the payment of
value instalments

2.Cent Vidyarthi Scheme for Vocational Education & Training.

● A financial assistance scheme for Vocational Education and Training to such
deserving candidates who have achieved the minimum educational qualification as per
the prerequisites of the institution / organization offering the course. The candidate
should be a resident Indian National
● The loan for vocational education scheme is available for courses conducted by either
Union or state Ministry / Department or Organization affiliated to the Government or
a company or society supported by National Skill Development Corporation or State
Skill Missions & Corporations.
● The vocational education and training course should provide students with a degree /
diploma or certificate etc. issued by a Government organizations or any other affiliated
bodies.
● No explicit restriction on the minimum age for the loan eligibility. However, for minor
students, the parent will have to provide all necessary documents for the processing of
vocational education loan and vocational training loan.
● The bank will further obtain a ratification letter from the student post attaining
majority.

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 Eligible Expenses
● College/ school and Hostel fee. Fees payable as Examination / Laboratory / Library
fee
● Relevant Travel expenses including passage money required for studies overseas
● Expenses towards Insurance premium applicable in case of student borrower
● Other deposits such as Caution deposit or any other refundable deposit should be duly
supported by the Institution receipts or bills.
● Cost towards the purchase of books/ uniforms and equipment's or instruments
● Other relevant expense required course completion such as study tours or project /
thesis work etc.
● Scholarships and fee waiver etc. are taken into account while sanctioning the loan

Margin

Amount
studies in India Studies in overseas

Up to RS. 4 lakh
Nil Nil

More than RS. 4 lakhs.

Nil Nil

Loan Repayment
● The Loan is repaid in the form of Equated Monthly Instalment
● The Repayment will start post the moratorium period is over.
● The moratorium period is 6 months post completion of courses having duration up to1
year.
● The moratorium period is 12 months post completion of courses having duration more
than 1 year.

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 Loan Amount Repayment Tenure

Max. 2 Years
Up to RS. 50,000/

RS. 50,000/- to RS. 100,000/- 2 years to 5 years

Above RS. 100,000/- 3years to 7 years.

3.Central Bank’s Special Education Loan to IIM Students

● A special Central Bank of India education loan initiative for those students who have
secured admission in the reputed courses offered by Indian Institute of Management
● The student loan scheme covers 4 more reputed institutes apart from IIMs.
● Available to students who have secured admission through the Common Admission
Test to IIMs for 2 years full time management course.
● The Central Bank of India student loan scheme is also pertinent to students enrolled
under full time management course by qualifying XAT/CAT in 4 other reputed
institutes.
● This Central Bank of India student loan scheme is not available for any part-time or
distance learning courses or 1 year courses.
● The maximum loan amount is RS. 20 lakhs. However higher amount may be
sanctioned subject to bank’s discretion and 100% tangible liquid collateral equivalent
to the loan amount.
● Zero margin percentage is applicable on this loan scheme.
There is no requirement of collateral Security or third party guarantee for loan amounts
up to RS. 20 lakhs.
● However, assignment of future income is required and the salary of the student needs
to be credited in the account maintained with Central Bank branch.
● A life insurance policy is mandatory for the student borrowers availing this Central
Bank of India educational Loan.
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● The insurance sum assured and policy tenure should be equivalent to loan amount loan
term including moratorium period and repayment period.
● The insurance should be assigned in the bank’s favor.
Nil Processing fee or upfront charges are levied on education loans for studies within
India under the scheme.

Eligible Expenses

● College / school and hostel Fee of the educational institutions. Fees payable as
Examination / Laboratory / Library fee
● Relevant Travel expenses including passage money required for studies overseas
● Expenses towards Insurance premium applicable in case of student borrower
● Other deposits such as Caution deposit or any other refundable deposit should be duly
supported by the Institution receipts or bills.
● Cost towards the purchase of books / uniforms and equipment’s or instruments.
● Other relevant expense required for course completion such as study tours or project /
thesis work etc.
● Scholarships and fee waiver etc. are taken into account while sanctioning the loan

4.Cent Vidyarthi (IDA members & their children)

● Central Bank offers a special educational loan scheme to the IDA members and their
ward for pursuing higher studies, in India or Abroad.
● The student loan scheme is exclusively available for certified members of IDA and
their children who are Indian national and have secured admission in courses either
through entrance examination or merit based selection process.
● The original and photocopy of the membership certificate is required with loan
application. Post verification, the original certificate shall be returned.

Eligible Expenses
● College / school and Hostel fee. Fees payable as Examination / Laboratory / Library
fee
● Relevant Travel expenses including passage money required for studies overseas
● Expenses towards Insurance premium applicable in case of student borrower

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● Other deposits such as Caution deposit or any other refundable deposit should be duly
supported by the Institution receipts or bills
● Cost towards the purchase of books / uniforms and equipment’s or instruments.
● Other relevant expense required course completion such as study tours or project /
thesis work etc.
● Scholarships and fee waiver, etc. are taken into account while sanctioning the loan.

Loan amount
● Maximum loan amount is RS. 10 lakhs for studies in India and RS. 20 lakhs for studies
overseas.
●
Margin
Amount studies in India Studies in overseas

Up to RS. 4 lakh Nil Nil

More than RS. 4 5% 15%

lakhs.

Security

Amount IDA Members Children of IDA

member

Up to RS. 4 lakh 1.No Collateral 1. No Collateral

2. IDA member 2. Co-obligation

needs to assign from IDA member

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 future income for 3. Assignment
the loan repayment. future income of the
student for the loan
repayment.

Above RS. 4 lakhs Suitable/ acceptable 1.Suitable/

to RS. 7.5 lakh third party acceptable third
guarantee. party guarantee.

2. Co-obligation
from IDA member.

3. Assignment
future income of the
student for the loan
repayment

Above RS. 7.5 Tangible collateral 1.Tangible collateral

lakh security with security with
appropriate value. appropriate value.

2. Co-obligation
from IDA member

3. Assignment
future income of the
student for the loan
repayment

Central Scheme of Interest Subsidy on student loan scheme to students belonging to

economically weaker sections of society:

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 This Central Scheme of Interest Subsidy has been announced by the Ministry of
Human Resource and Development for granting interest on education loans to students
for professional and technical course study in India under IBA model education loan
scheme.
The scheme is meant for students from economically weaker sections of society
whose annual parental income is less than or up to RS. 4.50 lakh per annum. The
scheme is applicable from the academic year 2009-10 onwards.

Applicability of subsidy scheme:

● This subsidy scheme available on Central Bank of India education loan is applicable
only for study program from reputed educational institutions or some professional
degree courses in India. The interest subsidy is linked with the educational loan plan
of IBA and is limited to student who are enrolled in job oriented courses from the
educational institutions established by an act of Parliament or recognized by other
statutory bodies or is affiliated to state or central government.

Criteria for interest subsidy scheme:

● The advantage of this scheme would be restricted only to students who belong to
economically weaker sections of the society with an annual gross family income with
upper limit of RS. 4.5 lakh annually from every source.

Eligibility:
Listed below are the criteria for education loan eligibility in Central Bank of India:
● The student must be an Indian national to avail this loan for course offered by the bank
● The student must have secured admission to a higher education course in alleged
educational institutions in India or overseas through any kind of entrance test held by
the institution or has been selected on basis of merit.
● Student must be able to produce all the educational documents and other loan
documents as demanded by the bank

Rate of Interest

● The interest rate for male students is MCLR +2%, whereas the interest rate for female
borrower or candidates from SC / ST categories is MCLR +1.50%.
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● Interest concession of 1% can be offered on loan during the period of course, provided
interest is paid during the study tenure and succeeding moratorium period earlier to
commencement of repayment.
● Interest is computed on the basis of simple interest during Repayment Holiday or
moratorium Period.
● Compounded Interest will be calculated from the due date of 1st instalment on monthly
rests.
● The loan amount is paid directly to college in appropriate cases.
● The loan disbursement is made available to the borrowers post submission of original
receipts& other satisfactory evidence

4. Bank of Maharashtra
The cost of education has been steadily rising and consequently, education loans are
gaining more popularity. Students are finding it the one-stop solution to cope with the
rising fee structure of higher studies from recognized educational institutions. The
scheme for education loans first came into existence in 1995, having been initiated by
State Bank of India. Many other public and private sector banks started offering student
loan schemes thereafter. The momentum increased in the beginning of the 21st century
after RBI included education loans as part of priority sector lending for banks. Soon
after, the Indian banking sector actively started including loan for courses in their
banking solutions.
Bank of Maharashtra is one of the prominent public sector banks in our country. It
offers a spectrum of banking services to its customers ranging from deposits schemes
to savings account to home loans, personal loans and education loans. It also focuses
on providing debit cards and credit cards facilities to its customers. A Bank of
Maharashtra education loan helps students to continue their higher education from
educational institutions in India or abroad of their choice without having to worry
about their finances.
Bank of Maharashtra offers Education loan to students to enable them to pursue higher
education both in India and abroad without the worry of finances. The bank finances
the Education undertaken by the students when they avail of the Education Loan.

The bank offers two types of Education Loans

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 One is the basic Education Loan to students and the other is the Loan under Interest
Subsidy scheme as mandated by the Government.

1.Education Loan –
A student loan scheme issued to students to pursue higher studies in India or abroad.
The features of the loan are as follows:
● For studies in India, the eligible courses covered under the loan are graduation courses
from colleges under Universities approved by the UGC, other courses leading to a
diploma or degree conducted by colleges or universities approved by UGC /
Government / AICTE / AINMS / ICMR, etc.
● For studies abroad, the list of courses covered under Bank of Maharashtra education
loan includes job oriented professional, technical, PG courses or Post-graduation like
MBA, MCA, MS, etc.
● The maximum amount of Bank of Maharashtra education loan that a student can avail
for studying in India is Rs.10 lakhs for studying abroad, the maximum amount of
available loan is Rs.20 lakhs
● Up to a loan amount of Rs.4 lakhs, no security is required to be pledged to the bank
against the loan
● Above Rs.4 lakhs and up to Rs.7.5 lakh, a security in the form of a guarantor is
required. An agreeable third party guarantee is enough in these cases. For loan amounts
above Rs.7.5 lakh, a collateral security is required whose value should be the quantum
of loan granted after providing the margin requirement of the bank along with 2
acceptable guarantors.
● If computers are purchased for the course, the same should be hypothecated to the
bank.
● Up to Rs.4 lakh of the loan amount there is no requirement of any margin money. For
loans above Rs.4 lakhs, a 5% margin is required for studies in India which increases
to 15% for studies abroad.
● During the moratorium period, simple interest is charged on the loan. A discount of
1% can be availed on the interest if regular interest is paid by the borrower during the
moratorium period. This concession is applicable only during the moratorium period
or the repayment holiday mentioned in the tenure of loan.

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● There is no loan processing fee charged by the bank from the borrower for processing
the loan.
● For loan amount of up to Rs.7.5 lakhs, repayment period can be up to 10 years and for
the loans of above Rs.7.5 lakhs, repayment period can be up to 15 years.
● The moratorium period is calculated as the course duration plus 1 year/6 months after
getting a job whichever is earlier.

Eligibility:
The education loan eligibility criteria are provided below.
● The student should be a Resident Indian and must have secured admission through an
Entrance test or merit based selection process.
● The parent or guardian of the student should act as a co-borrower to avail the loan

Rate of Interest:
The current interest on education loan is listed hereunder:

For loans up to Rs.4 Base Rate + 2.50% MCLR+ 2.50%

lakh

For loans above 4 lakhs Base Rate + 2.00% + 2.00%

and up to Rs.7.5 lakh

For loan above Rs.7.5 Base Rate + 1.25% 1.25%

lakh

3. Interest Subsidy on Education Loans –

This student loan scheme has been initiated by the Government to help the weaker
sections of the society.
The terms and conditions of the scheme are as follows:
● Under this Bank of Maharashtra student loan scheme, full subsidy is provided on the
interest charged during the moratorium period for students belonging to the weaker
sections of the society.
● The Bank of Maharashtra student loan scheme is applicable only for studies in
recognized technical and professional courses in India.
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● The student loan scheme is applicable on the above mentioned Education Loan scheme
offered by the bank for students pursuing courses in India in institutions established
by the Acts of Parliament, other institutions recognized by the concerned statutory
bodies, IIMs and other institutions set up by the Central or the State Government.
● The Bank of Maharashtra student scheme is available to students once either for
graduation course or for post-graduation course and also for integrated courses.
● The subsidy will not apply if the student leaves the course mainstream or is expelled
from the institution for reasons other than on medical grounds.
● The subsidy is applicable only during the moratorium period which is calculated as the
course duration plus 1 year or 6 months after getting a job whichever is earlier. After
the completion of the moratorium period, the interest on Education Loan will be
applicable and will have to be duly paid
● The subsidy can be availed by students belonging to the weaker sections of the society
with an annual gross family income of not more than Rs.4.5 lakh per year from all
sources based on the economic index.
● Income proof should be availed by the students from such public authorities as are
authorized by the State Government to certify the income status for this scheme
including Central and State Sector Schemes
● The subsidy can be claimed under the Bank of Maharashtra student loan scheme only
if subsidy was not claimed from any other State Government scheme

The students should undertake the following steps in order to avail the subsidy of
Education Loan:
● They should procure the authorized income statement from the respective authorities
● They should produce all required loan documents and educational documents to the
respective bank.
● They should ensure that all necessary certificates have been availed by them and then
approach the bank branch
● They should obtain the application from the branch officials and after filling it up
properly should submit the same with all the respective documents and certificates.
Bank of Maharashtra of Student Education Loan: Guidelines on Interest Subsidy on
Education Loans

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 Relevance of the scheme:
This scheme under Bank of Maharashtra education loan is applicable only if the
student is pursuing higher studies from recognized educational institutions and
professional course study in India. This initiative by the Government of India is
currently linked with existing model of student loan scheme with the bank. In addition,
it is restricted to students who are enrolled in professional and technical courses in
India that are provided by education organizations that are established under acts of
Parliament or by other concerned statutory body, or are Central or State Government
universities.

Eligibility for Interest Subsidy:

● The interest subsidy under a Bank of Maharashtra student education loan will be
applicable to students only once either during the undergraduate program or post
graduate program or diploma.
● However, the benefits of this scheme are also admissible for integrated courses (i.e.,
graduate and post graduate). Interest subsidy is not provided to those students who
discontinue the course in the middle or are expelled from the institute for poor
academic records or any other disciplinary behavior.
● However, interest subsidy is available if discontinuation is on the medical grounds.
The bank in that case will demand all the necessary documentation from the head of
the institute for evidence and satisfaction.

Subsidy Period of Applicability:

The interest subsidy scheme under Bank of Maharashtra education loans is available
for the student who belongs to economically weaker sections of the society. The subsidy
for students who are availing Bank of Maharashtra education loans for higher studies,
is for the period of moratorium plus six months or one year after getting the job,
whichever is earlier. Once this period of interest suspension is over, the interest on the
amount of education loan shall be paid by students, in conformity with the provision of
the existing Bank of Maharashtra student loan scheme or as it may be modified from
time to time.

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Applicable academic years:
This interest subsidy scheme on Bank of Maharashtra education loan for economically
weaker sections of society will be from the financial year 2009-2010 (i.e., starting from
1st April). Only the loan amount which is taken in the starting of 2009 shall be covered
under the interest subsidy scheme. Any amount of education loan disbursed before the
mentioned year will not qualify under the scheme of interest subsidy.

Income limit:
The Government of India has also specified an income limit under the interest subsidy
scheme. The benefits of this scheme will be applicable only to those students who have
an annual income upper limit of RS. 4.5 lakh per year (from all sources). This scheme
is designed by the Government of India to provide financial aid to students in pursuing
their higher studies. The students must come from economically weaker sections of the
society and the annual parental income from all sources should be below the
aforementioned limit. This guideline highlights that the subsidy criteria is based on
economic index and not on social background.
Skilled authority for issuing certificate: The bank before providing the benefits of
interest subsidy scheme will ask for income certificate from the students. The
designated authority under the State Government should provide the certification of
income status under this scheme, just as they do for other state and central sector
schemes. For instance, in the state of Maharashtra, the tehshildar is a prescribed
authority for issuing the income certificate. Similarly, other states may have other
authority figures assigned for the certification. There may be a difference in the name
but the role and function will be similar for these authorities. Students who belong to
other states are requested to visit the branch officials for more information.

3. Bank of Maharashtra Vocational Education and Training Loan:

The objective of this scheme is to provide loan for vocational education to individuals
to want to study skill development courses and specialize in certain trades.

Eligibility:
The criteria for availing Bank of Maharashtra loan for vocational education and training
is provided below:

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● The applicant should be a citizen of India
● Applicant should have enrolled himself or herself in the alleged training institution and
in a course which will help them land a job once the course is completed. The institute
must be recognized by state and central education boards. Vocational education and
training institutes must be affiliated to National Skill Development Corporation / State
Skill Corporation or sector skill councils

Course eligible for vocational education and training loan:

The following courses are eligible for vocational education loan and vocational
training loan:
● Any professional skill base courses which are run by above mentioned training
institutions and are coordinated with the national skill framework shall be covered
under schemes of loan for vocational education. There is no minimum course duration
specified.
Margin for a vocational education and training loan:

● The bank may charge nominal margin money as a down payment from students who
have taken the vocational education and training loan to keep them disciplined enough
to stay and complete the course. However, the interest charged on the loan and down
payment amount together should not exceed 10% of the total loan amount.

EMI Calculator
The bank website provides the facility of calculating the EMI for its customers who
are willing to take a loan from the bank. Here are some examples:
1) ‘A’ avails a loan of Rs.3.5 lakh to pursue higher education in India for his post-
graduation course. The repayment tenure chosen by him is 12 months. The bank
charges him an EMI of RS. 31,179 which will be payable once the moratorium period
is over
2) B needs Rs.6 lakhs to take admission in the post-graduate management course
conducted by IIM – A. he approaches the Bank of Maharashtra and requests for the
loan amount. At the rate of interest of 12%, the Equated Monthly Instalment payable
by B for a period of 24 months works out to be RS.28,244 approximately
3) C needs Rs.10 lakhs to complete his graduation from a foreign university based out of
USA. He approaches the bank with his requirement and agrees to pay off the loan after
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 the moratorium period is over within 5 years. At the rate of interest of 11.25%, his
Equated Monthly Instalment works out to be RS. 21,867 approximately.

Applicant Loan Amount Interest Term EMI

Rate

A Rs.3.5 lakh 12.50% 12 months 31,179

B Rs.6 lakh 12.00% 24 months 28,179

C Rs.10 lakh 11.25% 60 months 21,867

5. Bank of Baroda

Established in the year 1908, Bank of Baroda is an Indian state-run banking and
financial services organization and also the second largest bank in India in terms of
assets. Under its range of loan products, Bank of Baroda offers different types of
education loans which have been specially designed to finance different levels of
academic needs. Be it basic school education (nursery to 10+2), graduation or post-
graduation degree, the Bank of Baroda education loan scheme has something for
everyone.
Under its range of loan products is the Bank of Baroda education loan. It helps
students looking to pursue quality education from educational institutions in India or
abroad. Keeping in mind this need, Bank of Baroda offers various schemes for
education loans to students for pursuing higher education either in India or in a foreign
country.

The various types of education loans offered by the bank.

1) Baroda Vidya –

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 A unique student loan scheme offered to parents for students pursuing school
education. The key loan features are as follows:
This Bank of Baroda education loan is available for studies from Nursery to Senior
Secondary School.There is no processing fees or documentation charges. There is no
margin or security required to avail the loan. The loan covers a range of expenses
including college tuition fees, fees for Laboratory/library/examination, hostel charges,
equipment/uniform purchase, cost of laptop/PC and various refundable deposits.
The maximum loan amount is RS. 4 lakhs with no collateral or guarantor requirement.
The loan sub-limit of each year is payable in 12 EMIs starting from 12 months after
the first disbursement of each year’s loan component
0.50% concession on regular interest rate for girl students.

Eligibility:
The following criteria help determine education loan eligibility:
● The individual should be a Resident Indian
● The students should have secured admission in a school, high school or junior college
for Nursery to XII Standard
● The parents must be residing in the current place for a minimum of 3 years except in
case of a transferable job.
● In case of loan for purchase of computers, the computer should be hypothecated to the
bank
●
Documentation:
The table below gives you the list of loan documents required for availing a Bank of
Baroda student education loan:

Objective Salaried Others

Proof of identity ● Voter ID card ● Passport

● Driving license ● Voter ID card
● Passport ● Pan card
● Pan card, or ● Aadhar Card

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 ● Any Govt.
department ID
card

Proof of income ● Latest salary ● IT return of

slip from the past 2 years
organization and
you are computation
currently of income for
working past two years
showing all the certified by a
deductions, or CA

● Form 16 along
with latter
salary
certificate

Proof of residence ● Latest ● Current bank

electricity bill / account
telephone bill / statement
● Latest bank ● Credit card
account statement
statement ● Latest
● Latest telephone bill
statement of / mobile bill /
credit card or electricity bill,
● Existing house or
lease ● Actual house
agreement lease
agreement

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 Passbook or bank Required for the last 6 Required for the last 6
account where salary is months months
credited

Insurer form Not mandatory but Not mandatory but

optional optional

Other ● Copy of fee slip ● Copy of

documents/educational ● Admission admission
documents letter to the proof to the
educational educational
institutions institution
● Pass certificate along with
● School leaving fees structure,
certificate and and
matriculation ● Fee slip /
certificate mark sheet /
pass
certificate /
school leaving
certificate /
degree
courses
especially for
those opting
loan for
courses

Note
The loan documents required for various Bank of Baroda student scheme loan is
almost same.

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 Interest Rate
Interest on education loan is calculated as 1yr. MCLR +2.5% + Strategic Premium as
determined by the bank.

2) Baroda Gyan –
A student loan scheme for students pursuing Graduation, post-Graduation,
Professional and other courses.

The features of the loan is as follows:

● There are no processing charges
● No requirement of margin for loans up to RS. 4 lakhs and above RS. 4 lakhs there is a
margin of 5%
● The Bank of Baroda education loan covers expenses for fees payable to school or
college, examination/library/laboratory fee, hostel fees and charges, purchase of
books/equipment/instruments or uniforms, personal computers or laptops, caution
deposit or building fund or refundable deposits. The account offers free Debit Card
● The maximum amount of loan offered is RS. 10 lakh
● For a loan amount up to RS. 7.5 lakh, the repayment period is 10 years and for amounts
higher than RS. 7.5 lakh it is 15 years
● For a loan amount above RS. 4 lakhs and up to RS. 7.5 lakh, collateral security is
required which shall be a suitable third party guarantee and assignment of future
income. For loans above RS. 7.5 lakh, a tangible collateral security equivalent to 100%
of the loan amount is required along with assignment of future incomes

Eligibility
● The student should be a Resident Indian
● The student should have secured admission in any of the eligible courses like
Graduation, Post-Graduation, professional courses, computer certificate courses, CA,
CS, ICWA, CFA, regular degree or diploma courses, etc.
● The strategic premium component is dependent on individual client profiles and would
vary from one loan applicant to another.
●
3) Baroda Scholar –

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 A student loan scheme offered to students going abroad to pursue higher studies.

The features of the loan are as follows:

● The Bank of Baroda student education loan covers expenses like admission or tuition
fees payable to the College or University, hostel or Mess charges, examination / library
/ laboratory fees, purchase of books / equipment/ instruments, caution deposit /
building fund / refundable deposit supported by institution bills or receipts, one-way
travel expense or passage money, purchase of computers if essential to complete the
course, any other relevant expenses like study tours, project work, etc.
● The maximum amount of education loan granted is RS. 15 lakhs. There is a
requirement of margin which is 15%
● For a loan amount up to RS. 7.5 lakh, repayment period is 10 years and for amounts
higher than RS. 7.5 lakh it is 15 years
● For a loan amount above RS. 4 lakhs and up to RS. 7.5 lakh, collateral security is
required which shall be a suitable third party guarantee and assignment of future
income. For loans above RS. 7.5 lakh, a tangible collateral security equivalent to 100%
of the loan amount is required along with assignment of future incomes

Eligibility:

The eligibility criteria of Bank of Baroda education loan are provided below:

● The student should be an Indian National

● He or she should have secured admission to a Professional or Technical courses
offered by reputed Universities overseas
● The courses which are covered include graduate, post-graduate, doctorate, job oriented
professional course study in India, technical courses, regular degree or diploma
courses like aeronautical, pilot training, shipping, etc. The Institute should be
recognized by the local aviation or shipping authority and Director General of Civil
Aviation or Shipping in India

4) Baroda Education Loan for Vocational Education and Training –

A loan for vocational education or training purpose.

The features of vocational education loan and vocational training loan are as follows:

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● This vocational education and training loan is specifically granted to students who are
pursuing specific trade or occupation program from reputed educational institutions
such as craftsmanship, technicians, nursing, etc.
● Loan for vocational education was first initiated by Indian Banks Association and later
it was adopted by major public sector and private sector banks. The reason why they
came up with this student loan scheme was because of maximum dropouts of students
from such vocational education and training program was due to lack of financial
support and the high fee structure.
● The amount of education loan offered is based on the need of the individual and the
amount is RS. 20,000 for courses with duration of up to 3 months, RS. 50,000 for
courses above 3 months and up to 6 months, RS. 75,000 for courses above 6 months
and up to 1 year and RS. 1.5 lakh for courses above 1 year
● Expenses covered under the vocational education and training loan scheme are tuition
or course fees, examination / library / laboratory fees, caution deposit, cost of books /
equipment and instruments, any other reasonable expense necessary to complete the
course
● There is no margin requirement under the loan for vocational education and training
● There is no processing charge or documentation charge under the scheme for Bank of
Baroda vocational education and training loan
● A guarantor or collateral security is not required to avail the loan under vocational
education and training. However, the parent or guardian of the student is required to
execute the loan document along with the student as a co-borrower
● Repayment of loan starts 6 months post the completion of course for courses with
durations of up to 1 year. For courses above 1 year, the repayment period will start 12
months post the completion of the course.
● The maximum period of repayment depends on the amount of loan availed. For loans
up to RS. 50,000, the repayment period is up to 2 years, for amounts between RS.
50,000 to 1 lakh the repayment period is 2-5 years and for amounts above RS. 1 lakh,
the repayment period is 3-7 years
● The Bank of Baroda loan for vocational education and training can be prepaid anytime
as per the discretion of the borrower. There will be no application of any sort of
prepayment charges for early repayment.

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● A Group Credit Life Insurance cover is available at the choice of the borrower who
will have to pay the subsequent premium if the coverage is availed. The bank will
include the relevant amount of premium in the cost of the loan and charge it from the
customer.

Eligibility
● The borrower should be an Indian National who has secured admission in a course
approved or supported by a Ministry / Department / Organization of the Government
or a Company / Society / Organization which has support from National Skill
Development Corporation or State Skill Corporations/Missions which preferably leads
to a certificate, diploma or degree issued by a Government organization or an
organization that is recognized or authorized by the Government.
● The eligible list of courses include vocational / skill development courses of durations
from 2 months to 3 years which is run or supported by a Ministry / Department /
Organization of the Government or a Company / Society / Organization supported by
National Skill Development Corporation or State Skill Missions / State Skill
Corporations preferably leading to a certificate / diploma / degree issued by a
Government organization or an organization recognized / authorized by the
Government to do so. State Level Banker’s Committee (SLBC)/ State Level Co-
ordination Committee may add other skill developing courses or programs having
good employability.
● The student should not be a minor and if he or she is a minor, then the loan documents
should be executed by the parents and the bank a letter of ratification from the student
when he or she attains majority. There is no maximum age specification to avail the
loan.

5) Baroda Education Loan to Students of Premier Institutions –

A loan granted to students who have secured admission in any one of the premier
institutions mentioned in the bank’s pre-set list of institutions. The features are as
follows:
● The institutions are sorted in two lists called List A and List B
● The expenses covered by the loan includes fees payable to the College / University /
hostel / school / Institution, examination / library / laboratory fees, hostel fees and

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 charges, purchase of books / equipment/ instruments, caution deposit / building fund /
refundable deposit supported by institution bills or receipts provided the amount does
not exceed 10% of the tuition fees of the entire course, purchase of computers or
laptops if essential to complete the course, insurance premium for student borrower,
any other relevant expenses like study tours, project work, etc.
● For List A institutes, the maximum amount of loan available is RS. 15 lakhs with no
security but only the obligation of parents or guardians to act as a co-borrower and RS.
30 lakhs with a tangible collateral security of the equivalent amount of loan and the
obligation of the parents or guardians to act as a co-borrower. For List B Institutes, the
maximum amount of loan granted is RS. 7.5 lakh with no security but only the
obligation of parents or guardians to act as a co-borrower and RS. 30 lakhs with a
tangible collateral security of the equivalent amount of loan and the obligation of the
parents or guardians to act as a co-borrower
● There is no requirement of margin for the loan
● For loans up to RS. 7.5 lakh, the repayment period consists of a maximum of 120
instalments while for loans above RS. 7.5 lakh, the repayment period consists of a
maximum of 180 instalments.
● The progress report of the student is required to be submitted to the bank regularly
● For loans up to RS. 10 lakhs, there is no processing charge but for loans above this
amount, a processing charge of 0.50% of the sanctioned amount is levied which is
refunded after availing the first instalment of loan.

Eligibility
● Full-time regular courses conducted by the mentioned Premier wEducational
Institutions are eligible for Bank of Baroda education loan
● The student should be a Resident Indian who has secured admission to the professional
or technical course of the listed Institution
●
6) The National Skill Certification and Monetary Reward Scheme under Bank of
Baroda Vocational Education and Training Loan:
This student loan scheme is an attempt from the National Skill Development
Corporation which is indented to stimulate Indian youth with monetary rewards after

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 they have successfully completed the skill development program as part of their
approved training course.

As part of Bank of Baroda education loan for vocational education and training, it offers
loans to deserving students who wish to pursue specific skill development courses as
part of national skill certification and for brighter future job prospects.

The salient features of this special Bank of Baroda student loan scheme are:
The acclaimed National Skill Development Corporation is the implementer of this
course

● The complete list of accepted expertise development course and their associated
training institutions can be taken from the National Skill Development Agency website
as well as from National Skill Development Corporation website
● Minimum training duration provided is for 30 days. The tenure of loan depends on the
duration of the course and will vary accordingly for each course. An entire spectrum
of job training, social skills and other such skill training may also be comprised in this
program.
● Once the job and other training are completed, an approved body will conduct the
assessment and issue the certificate.

Interest Rate on Bank of Baroda Education Loan

Interest rate for this Bank of Baroda student scheme is up to RS. 7.5 lakh is 1yr MCLR
+ 2.5% + Strategic Premium .Interest rate for loans above RS. 7.5 lakh is 1yr. MCLR
+ 1.75% + Strategic Premium

TAX BENEFITS ON EDUCATION LOANS UNDER SECTION 80 E

An education loan can not only fund your higher studies but also help save tax. The
interest paid on the education loan can be claimed as deduction, as per Section 80E of
the Income Tax Act, 1961

The income tax benefit can only be claimed on interest part of the loan. The
principal part does not qualify for tax benefit.
However, the entire interest part of the loans repaid can be deducted while
calculating your taxable income. There is no upper limit for grant of deduction in
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respect of interest on loan for higher education. Also, there is no upper limit of the
rate of interest which will be allowed as a deduction.
An individual can avail of tax benefit if he/she has taken an education loan to
support higher studies of self, spouse, children or for the student of he/she is the legal
guardian. So education loan taken for siblings or other relatives don't qualify for
Section 80E benefit.
Remember, deduction can be claimed by an individual only if the loan has been
taken in his/her name.
This special deduction is also allowed even for education loan availed for study
abroad.
This tax deduction is allowed only if the education loan has been availed from any
bank or notified financial institution or any approved charitable institution. So no
deduction under Section 80E would be available if the education loan is taken from
employer, family or friends.

Under the earlier provisions, the deduction on education loan was available only
for pursuing full time studies for any graduate or post-graduate course in engineering,
medicine, management or for post-graduate course in applied sciences or pure
sciences including mathematics and statistics. However, the list has been expanded to
even include vocational studies now. It now covers "all fields of studies (including
vocational studies) pursued after passing the Senior Secondary Examination or its
equivalent from any school, board or university recognized by the Central
Government or State Government or local authority or by any other authority
authorized by the Central Government or State Government or local authority to do
so".
The deduction on education can be claimed only when you start the repayment and
is available up to eight years, or until the payment of interest in full, whichever is
earlier. This means, if you repay the loan within, say, five years, you can claim
deduction only till such period.
Most education loans come with a moratorium period during which you opt not to
service the loan. This period is usually until one year after the completion of the
course or six months after the student gets a job, whichever is earlier. Accrued interest
during the moratorium gets added to the principal and repayment in EMIs gets fixed.

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 CHAPTER 2. RESEARCH METHODOLOGY

2.1) OBJECTIVES OF THE STUDY

▪ To know the various schemes and services which are provided by the
banks to students.
▪ To ascertain the procedure for sanctioning an educational loan.
▪ To suggest suitable measure for improving the level of satisfaction
among students.
▪ To ascertain the level of satisfaction about the education loan schemes.
▪ Deserving / meritorious students to get loans for pursuing higher
education in India and abroad.

2.2) HYPOTHESIS

H0 There is no relationship between frequency of taking loan and process

involved/formality
H1 There is relationship between frequency of taking loan and process
involved/formality

H0 There is no relationship between annual income and sanction of loan

H2 There is relationship between annual income and sanction of loan

H0 There is no relationship between educational loan and schemes.

H3 There is relationship between educational loan and schemes.

2.3) SAMPLE SIZE

As the topic is educational loan provided by nationalised bank so the research is
conducted only for students who are appearing for higher education that is post
graduation MBA etc
For the purpose of this study , I have collected data from 50 respondents

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2.4) METHOD OF DATA COLLECTION
a) Primary Data :- Primary Data was obtained from the respondents by
administering the questionnaire and evaluating the feedback.
b) Secondary Data :- Secondary data included information collected from various
internet downloads such as case study from indiankanoon.com

2.5)SCOPE OF STUDY:-
With the cost of various professional courses going up rapidly, the demand for
educational loans has gone up substantially in the recent times, lenders must
understand the quality of the course and institute and also the student's potential
employability, which are vital for the quality of the loan portfolio. The education loan
industry is growing and the current outstanding of education loan is about R43,000
crore. Apart from banks, Credila is the only specialised player in the educational loan
market. What banks are offering is the very basic product, which has been in
existence for around eight years now. So, there is a lot of scope for innovation like
offering mid-course funding and funding for shorter terms. No doubt, the pace needs
to catch up with the rate of growth in the cost of education and education sector
supply. That means a lot of talented Indian students (and their parents) may
increasingly find it difficult to afford the education on their own. At the same time,
institutes are also facing the challenge of attracting talented students who can afford
the higher fees and living expenses.

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2.6) LIMITATIONS OF THE STUDY
Every loan has intrinsic drawbacks. In the unfortunate event of being unable to
service an education loan- meaning pay regular EMIs, you can face immense
problems. These may prove detrimental to futures of family and student.

A poor credit score

Nowadays banks, lenders look at credit ratings of individuals before advancing a loan.
Education loan dents your credit ratings by some degree. Your prospects of a future
loan to buy office or home can be severely marred.

Heavy penal interest

A missed EMI also attracts interest. You may end up paying much higher in
repayment to the lender than initially planned, adding to overall cost of education.

Financial hardships

Your parents may be forced to cough up stiff EMI amounts should you fail to get a
job that buffers this monthly expense. While education loans are availed for a good
purpose, they can soon become a bane.

Abrogation of the loan

Several genuine reasons may force you to default on the loan. The bank reserves
rights to cancel your loan and seek full and immediate repayment of the outstanding
amount.

Inability to buy essential goods

Educational loan may force you to postpone or abandon plans to buy a bike or vehicle
that could be essential to commute between home and college.

Bad rating of college/ university

Your education loan may go waste if the degree earned has no standing in
employment market. As pointed out earlier, some universities are “mere degree
granting portals.”

Inability to change course

Education loans are given to study at specific universities. Options to change

university or course, becomes restricted when studying on education loan.

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CHAPTER 3. REVIEW OF LITERATURE

Shatrugna, (2004)

Analysis the review and restructure of the norms for financing the education sector.
Since 1950's higher education has been financed, mainly by the central and state
governments has financed higher education. After the inauguration of new economic
policy 1991, there is a major change in financial commitment of the government. The
demand for higher education has been rise over the years from all sections of the
society. To examine the pattern of utilization of the grants, the committee recommended
that the UGC may find a mechanism of providing an appropriate incentive grant,
perhaps in the nature of marching grant as an incentive to universities generating their
own resources. The committee recommendations are more or loss the same in regard to
the aided deemed universities. While, it is true the expenditure on higher education has
gave up over the years, the major expenditure on higher education has gave up over the
years, the major expenditure has mostly been on the non-plan side

Tilak. (2005)

Analysis the need for continuation of the crucial role of the state in funding higher
education. There is a need to raise more resources in the regard included fees and loans.
He observed that the costs of higher education are three components, academic costs,
academic costs, academic support cost, and student welfare costs. He argued that the
industrial sector was ready to make huge investment in higher education and research
development. The state should continue to play the dominant role in financing higher
education. There is need to improve the mechanism of UGC and governments growth
to universities and institution of higher education. Efforts can be made to raise resources
from non-government sources. The conclusion is that all aspects of higher education is
grants, costs, fees, cost of recovery scholarship, other direct and indirect subsides,
generation of other internal resources etc., should be completely transparent.

Terri Fried line (2012)

The topic of student loans is being debated in the senate this week, with lawmakers on
both sides of the aisle hoping to pass legislation that would curb rising interest rates.

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Without legislation, interest rates on federal student loans will double from their current
rate of 3.4% to 6.8% beginning on July 1st. A recent article in the New York
times provides a good summary of this debate.

Rising interest rates may make obtaining and paying off student loans more
burdensome, particularly for students from financially disadvantaged households.
Students from lower income households rely on federal loans more heavily than their
higher income counterparts, meaning that students from households with fewer
financial resources may be disproportionately affected by increases in interest rates. For
instance, over half of all lower income students pay for college with federal loans
(ranging from 48% to 56%), whereas less than half of all higher income students pay
with federal loans (ranging from 27% to 49%). while some research suggests that the
overall percentage of students is small who report substantial problems with repaying
their loans, those with lower current and lifetime earnings report the greatest difficulty
and are perhaps overburdened. given this, it is critical to find ways of reducing students'
reliance on loans—particularly for those from households with fewer financial
resources.

Recent research has examined the relationship between household financial resources
(e.g., net worth), student loans, student credit card debt, and college graduation. The
results and their implications, which are summarized below, suggest the potential for
interventions to improve college graduation and reduce students' reliance on loans. This
research study entitled the impact of youth debt on college graduation was conducted
by min Zhan as part of the assets and education research symposium held in Lawrence,
Ks on march 29th and 30th. The symposium was sponsored by the university of Kansas
school of social welfare and the center for social development at the George warren
brown school of social work at Washington university and supported by the asset
building program at the new America foundation. Zhan's paper is available for
download here and other related papers from the symposium can be found at the assets
and education website.

By Richard fry (2012)

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In 2012, a record share of the nation’s new college graduates (69%) has taken out
student loan to finance their education,

And the typical amount they had borrowed was more than twice that of college
graduates 20 years ago. A new Pew Research Center analysis of recently released
government data finds that the increase in the rate of borrowing over the past two
decades has been much greater among graduates from more affluent families than
among those from low-income families. Fully half of the 2012 graduates from high-
income families borrowed money for college, double the share that borrowed in 1992-
93.

The rise in the rate of borrowing was also substantial among upper-middle-income
graduates, with 62% of 2012 graduates from upper-middle-income households leaving
college with debt, compared with 34% roughly 20 years ago.

While graduates from the highest income homes saw a faster rate of increase in
borrowing, those from low-income families continue to be more likely to graduate with
student loans, with 77% graduating with debt in 2012, compared with 50% of their most
affluent peers. And the share of low-income graduates who borrow has also increased
in recent decades, rising from 67% to 77% over a period of roughly 20 years. But
the rate of increase in the likelihood of borrowing has been much more modest among
graduates from the lowest income group than it has among middle- and high-income
graduates over the past 20 years

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CHAPTER 4. CASE STUDY

G.Dhivya vs The Branch Manager on 28 October,2010

COMMON ORDER Both the Writ Petitions are filed praying to issue a Writ of
Mandamus directing the first respondent to issue the educational loan application
sought for by the respective petitioners for pursuing their Bachelor Degree in
Engineering at Veltech Hi-tech Engineering College, Avadi, Chennai, as per the
representation submitted on 30.6.2010.

2. Petitioners in both the writ petitions are sisters. The relief sought for in both the
writ petitions are one and the same. Hence, both the writ petitions are taken up
together for disposal.

3. The grievance of the two petitioners is that the first respondent bank is refusing
to issue the education loan application in spite of representation to the concerned
Bank Manager. The petitioners' father has obtained no due certificate from all other
banks in the place of residence. In respect of one bank where the father has taken a
loan for poultry farm, the loan amount has been indicated. Since, the loan sought
for in the present writ petitions is for educational purpose, the first respondent bank
should consider the petitioners' claim as they have not taken any education loan
from any other bank. The denial of giving application and indirectly refusing to
grant the education loan is arbitrary. The petitioners' claim is that they are eligible
for education loan as they satisfy all other requirement.

4. A counter-affidavit has been filed by the first respondent bank stating as follows:-

"I respectfully submit that it is true to state that the petitioner approached the
respondent herein for pursuing for 3rd year Engineering Course. As per the norms
governing the Educational Loan, the petitioner was directed to produce NOC from
the other Banks. Accordingly the petitioner produced duly filled up NOC
application. It is seen from the same, the petitioner's father availed Poultry loan
facilities from Indian Bank at Gudiyatham, and as on 06-01-2010 his liability with
Bank is Rs.3,57,168/-. In view of the said liability to the Joint Borrower the
respondent Bank instructed the petitioner to produce N.O.C. from Indian Bank for
educational loan. The said act of the respondent bank is well within the ambit of the
policy of the Government. As per the new norms, the applicant as well as the
coobligant has to file an affidavit to that effect no loan facilities availed from any
other bank. Hence, it is crystal clear that educational loan is not an automatic, it
must be routed through the method enshrined in the policy of the Government.
Hence, the question of violation of Article 14, 15 and 21 of the Constitution of India
does not arise for consideration. The petition deserves no merits and as such the
same is liable to be dismissed."

The plea of the first respondent stems from a misconception of the Government
policy to extend education loan to deserving students.

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5. The Government considering the importance of education and its pivotal role in
human resource development and to drive the economic growth of the country has
formulated the Model Educational Loan Scheme as early as in the year 2001. The
Reserve Bank of India has also issued circular
No.RPCD.PLNFS.BC.NO.83/06.12.05/2000-01 dated April 28, 2001 together with
certain modifications suggested by the Government of India. This was based on the
Hon'ble Financial Minister's Budget Speech in the year 2004-2005. The educational
loan is being extended by all Nationalised Banks and the Government of India has
impressed upon the banks to extend facility to deserving/meritorious students to
avail educational loan on certain affordable terms for pursuing higher education in
India and abroad. The basis for introducing the scheme and the objectives is as
follows:-

"1. INTRODUCTION:

Education is central to the Human Resources Development and empowerment in

any country. National and State level policies are framed to ensure that the basic
need of the population is met through appropriate public and private sector
initiatives. While government endeavour to provide primary education to all on a
universal basis, higher education is progressively moving into the domain of private
sector. With a gradual reduction in government subsidies higher education is getting
more and more costly and hence the need for institutional funding in this area.

The scope of education has widened both in India and abroad covering new courses
in diversified areas. Development of human capital is a national priority and it
should be the endeavour of all that no deserving student is denied opportunity to
pursue higher education for want of financial support. Loans for education should
be seen as an investment for economic development and prosperity. Knowledge and
information would be the driving force for economic growth in the coming years.

Based on recommendations made by a Study Group, IBA had prepared a Model

Educational Loan Scheme in the year 2001 which was advised to banks for
implementation by Reserve Bank of India vide circular
No.RPCD.PLNFS.BC.NO.83/06.12.05/2000-01 dated April 28, 2001 along with
certain modifications suggested by the Government of India. In line with the
announcement made by the Hon'ble Finance Minister in his Budget Speech for the
year 2004-05, IBA had communicated certain changes in the security norms
applicable to educational loans with limits above Rs.4 lakhs and upto Rs.7.5 lakhs.

We have been receiving enquiries from members seeking clarifications on the

various provisions of the scheme based on feedback received from the branches.
With a view to ensure that the scheme is implemented in letter and spirit, it was
decided to review the scheme and make modifications in the scheme to facilitate
smooth operation at bank branches. Towards this, a Working Group of General
Managers drawn from select banks was constituted at IBA. This revised model
scheme has been prepared based on the suggestions made by the Group.

(emphasis supplied)
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2. OBJECTIVES OF THE SCHEME:

The Educational Loan Scheme outlined below aims at providing financial support
from the banking system to deserving/meritorious students for pursuing higher
education in India and abroad. The main emphasis is that every meritorious student
though poor is provided with an opportunity to pursue education with the financial
support from the banking system with affordable terms and conditions. No
deserving student is denied an opportunity to pursue higher education for want of
financial support."

3. APPLICABILITY OF THE SCHEME:

The scheme detailed below could be adopted by all Commercial Banks. The scheme
provides broad guidelines to the banks for operationalising the educational loan
scheme and the implementing bank will have the discretion to make changes suiting
to the convenience of the students/parents to make it more customer friendly.

The scheme details are as under:

4. ELIGIBILITY CRITERIA:

4.1.Student Eligibility:

Should be an Indian National.

Secured admission to professional/technical courses in India or Abroad through

Entrance Test/Merit Based selection process.

4.2.Courses eligible:

a. Studies in India:(indicative list) Graduation courses: B.A., B.Com., B.Sc., etc.,

Post Graduation courses: Masters & Phd.

Professional courses: Engineering, Medical, Agriculture, Veterinary, Law, Dental,

Management, Computer, etc., Computer certificate courses of reputed institutes
accredited to Dept. of Electronics of Institutes affiliated to university.

Courses like ICWA, CA, CFA, etc., Courses conducted by IIM, IIT, IISc, XLRI,
NIFT, etc., Regular Degree/Diploma courses like Aeronautical, pilot training,
shipping etc., approved by Director General of Civil Aviation/Shipping, if the
course is pursued in India. In case the course is pursued abroad, the Institute should
be recognized by the competent local aviation/shipping authority.

Courses offered in India by reputed foreign universities.

Evening courses of approved institutes.

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Other courses leading to diploma/degree etc., conducted by colleges/universities
approved by UGC/Govt./AICTE/AIBMS/ICMR etc. Course offered by National
Institutes and other reputed private Institutions, Banks may have the system of
appraising other institution courses depending on future prospects/recognition by
user institutions.

Courses, which are not covered under the criteria mentioned above, individual banks
may take a view to consider extending.

education loan under the scheme taking into account the future
prospects/recognition by user institution.

b. Studies abroad:-

Graduation: For job oriented professional/ technical.

Courses offered by reputed universities.

Post graduation: MCA, MEA, MS, etc., Courses conducted by CIMA-London, CPA
in USA etc., 4.3.Expenses considered for loan:

Fee payable to college/school/hostel Examination/Library/Laboratory fee.

Purchase of books/equipments/instruments/ uniforms.

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 fees for the entire course.

Travel expenses/passage money for studies abroad.

Purchase of computers essential for completion of the course.

Insurance premium for student borrower.

Any other expense required to complete the course like study tours, project work,
thesis, etc.,

6. In order to consider the plea of the petitioners, it will be relevant to refer to clause
15 of the Revised Model Educational Loan Scheme For Pursuing Higher Studies in
India and Abroad. Clause 15 reads as follows:-

15. OTHER CONDITIONS:

a. Meritorious Students Banks which wish to support highly and exceptionally

meritorious/deserving students without security may delegate such powers to a
fairly higher level authority.

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b. Multiple Loans In case of receipt of application for more than one loan for student
borrower from a family, the 'family' as a unit has to be taken into account for
considering the loan and security taken in relation to the total quantum of finance
disbursed, subject to margin and repaying capacity of the parent/student.

c. Minimum Age xxxx

d. Change of address xxx
e. Top up loans

Banks may consider top up loans to students pursuing further studies within the
overall eligibility limit, with appropriate re-schedulement, subject to taking required
security.

f. Co-obligator xxx No due certificate No due certificate need not be insisted upon
as a pre-condition for considering educational loan. However, banks may obtain a
declaration/an affidavit confirming that no loans are availed from other banks.

Disposal Application Loan applications have to be disposed of within a period of

15 days to 1 month, but not exceeding the time norms stipulated for disposing of
loan applications under priority sector lending.

Flexibility in terms In order to bring flexibility in terms like eligibility, margin,

security norms, banks may consider relaxation in the norms on a case-to-case basis
delegating the power to a fairly higher level authority."

7. In this case the first respondent's plea is that a "no due certificate" has been
produced by the petitioners/students. In the "no due certificate" it is stated that the
father of the students has taken loan from the Indian Bank, Gudiyattam for poultry
purpose. Hence, the first respondent bank requires a "no objection certificate" from
the Indian Bank, Gudiyattam for grant of educational loan to the wards.

8. There is no clause in the above scheme that if the co-obligant has taken a loan for
other than educational purpose, for example agricultural or business purpose, the
ward will not be entitled to educational loan. This will be contrary to the scheme for
providing educational loan. In the scheme, the emphasis is that "no due certificate"
need not be insisted upon as a pre-condition for grant of educational loan. It is
indicated that the bank may obtain declaration/an affidavit confirming that no loans
are availed from other banks. The purport of this clause in the scheme is to ensure
that no student avails more than one educational loan from different banks. This
should not be confused with the loan availed by the father from a bank for his
business purpose. The education loan and commercial loan are independent of each
other and operate on different parameters and terms.

9. The one other aspect which needs to be considered is that clause 7 of the scheme
provides the nature of security and it reads as follows:-

"7. SECURITY:
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Upto Rs.4 lakhs Co-obligation of parents. No security.

Above Rs.4 lakhs and upto Rs.7.5 lakhs Co-obligation of parents together with
collateral security in the form of suitable third party guarantee. The bank may, at its
discretion, in exceptional cases, waive third party guarantee if satisfied with the net-
worth/means of parent/s who would be executing the document as "joint borrower".

Above Rs.7.5 lakhs Co-obligation of parents together with tangible collateral

security of suitable value, along with the assignment of future income of the student
for payment of instalments"

Therefore, if loan amount is only Rs.4 lakhs, no security is required. It is, therefore,
clear that the scheme of education loan is independent of other loans, for instance
(i.e.) business or agriculture. The insistence of no objection certificate from the
Indian Bank, Gudiyattam for grant of education loan is totally unnecessary and
unwarranted. It is a misreading of the scheme.

10. The emphasis is that no deserving/meritorious students of this country should

be denied the opportunity to pursue higher education for want of financial support.
The first respondent bank cannot deny the petitioners, their legitimate right to get
educational loan under the scheme if they qualify and are eligible. If the bank adopt
this narrow interpretation it will be retrograde and go against the State's endeavour
to promote education. The scheme is intended to improve the human capital of the
nation and the banks are given a role in the development of the human resources of
our country.

11. The emphasis in the scheme is that the bank should adopt a customer friendly
method to cater the needs of the meritorious students. In this background, the two
petitioners are justified in approaching this Court for a direction to the bank to issue
the loan application form. The respondents bank ought to have given the same
promptly and immediately. The attitude of the Bank should be positive and
encourage students to avail education loan and pursue their education. The role of
the Bank Manager in rural India is even more important to promote this scheme.

12. Considering the laudable purpose of this scheme, the Chairman of all the
Nationalised Banks/Commercial Banks should suitably instruct the Bank Managers,
especially at the rural areas to ensure that as and when eligible and poor students
seek application form and apply for educational loan, their case should be
considered sympathetically and in a customer friendly manner to promote the cause
of education and nation building as the scheme is intended to fill up the vacuum that
the State is feeling difficult to fill. The education loan should not be denied on hyper
technicalities. The authority should not forget that it is because of education that he
is holding the post of Manager. The educated youth are the bulwark of the nation.
They are the building blocks of the nation. If their eyes are opened by proper
education, it will benefit our country and uplift the family. Education is still a far
dream to millions in this country and that is why the scheme has used the words
"endeavour of all" in the "Introduction" to the Scheme.

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 CHAPTER 4. RESULTS AND DATA INTERPRETATION

23 survey questions were initially sent to students and people in general , among them
only 50 peoples have filed the survey from with good response. The people who filled
the form are friends, seniors and actual loan takers.

1) Age :-
Option Responses in %
10 – 18 0%
18 – 25 88%
25 - 40 12%

2) Education :-
Option Responses in %
Under graduate 60%
graduate 40%

3) Occupation
Options Responses in %
Student 72%
Self employed 20%
Employed 4%
Business 4%

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4) Income
Options Responses in %
Below 1,00,000 60%
1,00,000 - 5,00,000 20%
5,00,000 - 10,00,000 8%
10,00,000 & above 0%
other 12%

5) Are you aware of education loan?

option Reponse in %
yes 84%
no 16%

6)Do you have bank account?

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 option Response in %
yes 100%
no 0%

7)Do you know about various Education Loan offered by Nationalized Bank?

option Response in %
Yes 60%
No 40%

8)Are you aware about process of Education Loan?

options Responses in %
Yes 88%
No 4%
May be 8%

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9) Have you ever applied for Education Loan?

Option Responses in %
Yes 44%
No 56%

10). Why did you take Education Loan?

options Responses in %
Educational loan for abroad 42.1%
Post-graduation 10.5%
Engineering 2%
Higher studies 26.3%
other 19.1%

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11)Which of the following Nationalized bank would you be most likely to choose for
Education Loan?

options Responses in %

State bank of india 40%

Punjab national bank 8%

HDFC bank 24%

Canara bank 12%

IDBI bank 0%

Bank of baroda 8%

Central bank of india 0%

Bank of Maharashtra 8%

Axis bank 0%

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12)Reason for taking loan from Nationalized bank ?
options Responses in %
Convenient location 12%
Lower interest rate 40%
Better service 24%
Less formality 16%
Less value of security 8%

13)Are you able to submit the Securities Demanded by bank for obtaining education
loan?

option Responses in %
yes 78.9%
no 21.1%
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14)Which of the following Security Documents is required by bank?
option Responses in %
House property 63.2%
shares 0%
gold 31.6%
other 5.2%

15)Kindly tick your amount of educational loan

option Responses in %
50,000 – 1,00,000 45%
1,00,000 – 5,00,000 25%
5,00,000 – 1,00,0000 25%
10,00,000 – 20,00,000 5%
20,00,000 and above 0%

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16)Are you confident to repay the loan after completion of Education?

option Responses in %
Yes 80%
no 20%

17)Are you aware about franking Charges?

option Responses in %
Yes 56%
no 44%

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18)How much time is taken for process of Education loan?

option Responses in%

1 day 4.7%
2 day 14.3%
1 week 52.4%
2 weeks 28.6%

19)Do you think the bank you have chosen for Education loan providing best service?
Option Responses in %
Yes 42.9%
No 5%
May be 52.4 %

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20)Do you recommended this bank to your friends or relatives for taking Education
loan?
Option Responses in %
Yes 52%
No 4%
May be 44%

Tabulation of data (Areas of data collection)

The data for the study on “STUDY ON EDUCATIONAL LOANS PROVIDED BY
NATIONALISED BANK” is collected from different areas of Mumbai. The research
study on “STUDY ON EDUCATIONAL LOANS PROVIDED BY NATIONALISED
BANK” was restricted only till India. In order for easy understanding about the area of
data collection, the areas of India were divided into zones while collecting primary data
through questionnaire these were South India, East India, West India, North India and
Central India.

Explanation of Hypothesis
1.On the basis of above results it is found that null hypothesis is accepted and alternative
hypothesis is rejected because the frequency of taking loan and process
involved/formality are not related to each other
2.On the basis of above results it is found that alternative hypothesis is accepted and
null hypothesis is rejected because depending upon the annual income loan is sanction
by bank
3. .On the basis of above results it is found that alternative hypothesis is accepted and
null hypothesis is rejected because there is relationship between educational loan and
schemes.

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 CHAPTER 6. CONCLUSION:

● The banks are provide a good service for the society by providing educational loan for
the student who unable to continue their higher education due to lack of cash. There is
a good advantage for availing the bank loan, besides there is some disadvantage too.
Some time the borrower may not able to repay the payment in the period. Or they may
not get sufficient salary as they expected. This may lead to brake in the repayment and
thus may lead to the suicide of the borrower. So always take an extra care before take
any educational loan from any bank. And also should search for the better offer and
analyze before availing the loan.
● Most of the people are not aware about the procedure of education loans in India, so
the banks have to take initiative and give them free advices for those who are not aware
of education loan so they can easily know the procedure of education loan.
● I understand that most of the student are prefer Bank of Maharashtra for education
loan because of lower rate of interest compare to another nationalized bank.
● I understand that most of the lower income group of people taking education loan for
studies in abroad.
● I also understand that most of the student are taking loan between 50,000 -20,00,000.

CHAPTER 7 .Bibliography
● Loan information: Wikipedia.Com/Loan_Bank_India
● Valuable Advised from Project Guide.
● Other project information search from Google
● http://www.iba.org.in/educational_loan.asp
● http://business.mapsofindia.com
● Plan to put student loans on government’s books drawing industry’s ire,
Article by de SenerpontDomis, olaf
● https://www.financialexpress.com/archive/theres-a-lot-of-scope-for-
innovation-in-education-loans/900342/
● https://indiankanoon.org/doc/1292302/

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CHAPTER 8. ANNEXURE

SAMPLE QUESSIONAIRE

1.NAME:-

2. GENDER:-

Male

Female

3.EMAIL ID

4. AGE GROUP:-

10-18

18-25

25-40

5. EDUCATION:-

Under Graduate

Graduate

Other

6.OCCUPATION:-

Student

Self employed

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Employed

Others

7. INCOME

Below 1,00,00

1,00,000 – 5,00,000

5,00,000 – 10,00,000

10,00,000 & above

8. Are you aware about educational loan ?

Yes
No

9. Do you have a bank account ?

Yes

No

10.Do you know about various Education Loan Offered by Nationalized Bank?
Yes
No

11. Are you aware about process of Education Loan?

Yes
No
May be

12. Have you ever applied for Education Loan?

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Yes
No

13. Why did you take Education Loan?

Education Loan for Abroad
Post-Graduation
Engineering
Higher Studies
Other

14. Which of the following Nationalized bank would you be most likely to choose for
Education Loan?
State Bank of India
Panjab National Bank
HDFC Bank
Canara Bank
IDBI Bank
Bank of Baroda
Central Bank of India
Bank of Maharashtra
Axis Bank
Oriental Bank of commerce
Other

15.Reason for taken loan from Nationalized Bank.

Convenient Location
Lower Interest Rate
Better Service
Less formality
Less value of security

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16.Are you able to submit the Securities Demanded by bank for obtaining education
loan?
Yes
No

17. Which of the following Security Documents is required by bank

House property
Shares
Gold
Other

18.Kindly tick your amount of education loan

50,000 – 1,00,000
1,00,000 – 5,00,000
5,00,000 – 10,00,000
10,00,000 – 20,00,000
20,00,000 & above

19. Are you confident to repay the loan after completion of Education?
Yes
No

20. Are you aware about franking Charges?

Yes
No

21. How much time is taken for process of Education loan?

1 day
2 days
1 week
2 weeks
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22.Do you think the bank you have chosen for Education loan providing best service?
Yes
No
Maybe

23.Do you recommended this bank to your friends or relatives for taking Education
loan?
Yes
No
Maybe

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