Kochi> When the huge possibilities of global education reach students directly through smartphone windows, UK, US, Russia, Canada etc. are the preferred education centers of Malayalee children. Studying abroad is expensive. Bank loans are the main source of support for almost everyone. However, before approaching banks for a loan, there are some things to know.
1. Credit Qualifications
Those admitted to study abroad can apply for a loan from any bank. Loans up to Rs 20 lakhs are sanctioned subject to Indian Bankers Association terms and loans above that are subject to Banks’ terms and conditions. Marks obtained in qualifying examination, credit rating (eg CIBIL), country of study and ranking of admitted university are also considered for sanction of loan.
2. Preference and loan amount
It is better to make a decision following researching whether the country is difficult to get a loan from. Those admitted to universities in European countries, Canada, America, Australia and New Zealand can easily get loans. There is a requirement for medical courses to be from Medical Council of India (MCI) approved countries.
The loan amount is determined by calculating the total amount required for the study. That is, tuition fees, living expenses, cost of books etc., travel expenses etc. will be included in the cost of study.
Generally 85 to 90 percent of this amount will be sanctioned. The balance is to be paid as the applicant’s share at each stage. For example, if a student takes a loan of Rs 20 lakh for a two-year study costing Rs 40 lakh, the first installment fee is Rs 10 lakh from the loan and the applicant’s share of Rs 20 lakh is paid to the university.
3. Required, approved collateral
Loans are usually sanctioned once morest collateral such as property, bank deposit, LIC policy etc. A collateral worth 110 percent of the loan amount and interest during the study period is to be paid.
One year moratorium will be given following the study period. Then repayment is allowed up to 15 years. Loan arrears in the applicant’s name may lead to loan denial.
4. Interest on withdrawn amount only
Interest is generally charged from the date of withdrawal on the amount withdrawn from the sanctioned loan. So it is better to borrow the maximum amount and withdraw only the required amount. Banks generally charge 10 to 12 percent interest at present.
5. Concessions and Subsidies
Many banks offer interest concessions to girls and insurance takers. Patho Paradesh, Dr. Interest subsidy is available under Ambedkar Central Sectoral Scheme. Apply through the website www.jansamrth.in. More information at www. Available at minorityaffairs.gov.in website.
(The author is State Bank of India Alappuzha Regional Manager. Opinions are personal).
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