A large Number of students feel handicapped for accessing the higher avenues of education particularly the professional courses on account of the high costs involved at the admission stage and the recurring annual fees. While the government does tries to help through its scholarships, the numbers are not enough to meet the requirements of all the deserving and talented students. Under these circums-tances, the facility of educational loans being advanced by the banks comes.
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.
The Salient features of the scheme are as under:-
* The scheme envisages loans up to Rs.7.5 lakh for studies in India and up to Rs. 15 lakh for studies abroad.
* For loans up to Rs. 4 lakh no collateral or margin is required and the interest rate is not to exceed the Prime Lending Rates (PLR). For loans above Rs. 4 lakh the interest rate will not exceed PLR plus 1 percent.
* The loans are to be repaid over a period of 5 to 7 years with provision of grace period of one year after completion of studies.

Tax Benefits

Repayment of an education loan is deductible under section 80E of the Income Tax Act. The yearly limit for deduction is Rs. 40,000 (for both the principal and the interest). Only loans taken for higher education - fulltime studies in any graduate or post-graduate, professional, and pure and applied science courses - may claim deduction. The deduction will be available for a maximum of eight years starting from the day you start repaying.
Equitable Access to quality higher education has been a concern of the University Grants Commission. To this purpose the Commission, besides encouraging colleges and universities to provide for liberal financial support to the meritorious but needy students, has also been instrumental in educational loan scheme. The Reserve Bank of India (RBI) has issued guidelines in this regard to all commercial banks. A large number of banks have already launched educational loan schemes. Provided below are links to the respective website of individual banks offering such facilities.
Salient features of the Loan schemes of some Banks are listed below:
For studies in India, & For studies abroad

You should be an Indian National. You should have secured admission to professional/ technical courses through entrance test/selection process. You should have, secured admission to foreign university/ institutions.
For studies in India : Maximum Rs.10.00 lac                        
For studies abroad : Maximum Rs. 20.00 lac
There is no margin up to Rs.4.00 lac.
For loans above Rs. 4.00 lac.
For studies in India : 5%   For studies abroad : 15%
This may include own contribution as well as scholarship.
No security required upto Rs.4.00 lac loan. Above Rs.4.00 lac securities are required to be furnished as under either singly or in combinations-
* Government securities, public sector bonds. * Units of UTI, Shares (as per our approved list from time to time), Debentures. * L.I.C. Policies. * NSCs/KVPs, Banks own deposits * Mortgage of land and Building.
The eligible securities are as above. However terms apply. Value of collateral security after providing requisite margin, as stated above should be equal to the Quantum of finance.
You get a repayment holiday of one year after completion by EMI of the course selected or 6 months after getting a job (after which your repayment will start). The loan is then to be repaid in 5 years after commencement of repayment.
Expenses Considered
Tuition fees, hostel expenses, purchase of books equipments/instruments etc. Travel expenses for studies abroad & other essential expenses.
Courses      Studies in India
*   School education including plus 2 stage of CBSE & State Education Boards.
*   Graduation courses/Colleges under universities approved by UGC.
    o     B.A, B.Com, B.Sc. etc.
    o     Post graduation courses, Masters and PhD
    o     Professional courses, Engineering, Medical, Agriculture, Veterinary, Law, Dental, Management, Computer etc.
*   Computer certificate courses of reputed institutes accredited to Dept.of Electronics or institutes affiliated to university.
*   Courses like ICWA, CA, CFA etc.
*   Courses offered in India by reputed foreign universities.                                                
*   Courses conducted by IIM, IIT, IISC, XLRI, NIFT etc.
*   Evening courses of approved institutes recognized by State/Central Govt.
*   Other courses leading to diploma/degree etc. conducted by colleges/universities approved by UGC /Govt/AICTE/ICMR etc.
Studies abroad
*     Graduation : For job oriented professional/ technical courses offered by reputed universities.
*     Post graduation : MCA, MBA, MS etc.
*     Courses conducted by CIMA - London, CPA in USA etc.
Documents to be Furnished
* Proof of being an Indian national i.e., School Leaving Certificate.
* Letter confirming selection through Entrance Test.
* Letter confirming admission to foreign university/institutions.
* Brochure of the educational institution stating the amount of fees charged.

Vidyasagar Loan for Students : Rate of Interest :
(Subject to changes as advised by Bank/RBI from time to time) :

(1) Student satisfying DRI norms 4.00%
(irrespective of quantum of loan) (DRI:annual income less than Rs 7200 p.a)
(2) Others
-Upto Rs.4 lakhs 12.50%
- Above Rs.4 lakhs upto Rs. 7.50 lacs 13.50%
- Above Rs. 7.50 lacs upto Rs. 15 lacs 11.25% (studies abroad)*
- For students secured admission in IIT / IIM / ISB* 10.75%
* for loans granted w.e.f. 9.7.2005
1)  0.50 % concession in ROI for prompt servicing of interest during study period.
2) Reduction of 1 % for all courses in all slabs / category for girl students for loans granted from 1.12.2005 to 30.6.2008.

Eligibility criteria.

* You should be an Indian National. * You should have secured admission to professional/technical courses or other academic courses. * You should have secured admission to foreign University/Institution (in the case of overseas study)
What can I use the loan for ?

You can avail the loan for your school education including plus 2 stage/Graduation/Post graduation/Diploma/Computer education in any recognised State/Central Government/University. Professional courses including Engineering, Medical, Agriculture, Veterinary, Law, Dental, Management, courses like ICWA, CA, CFA, etc., courses conducted by IIM, IISC, XLRI, NIFT etc. Courses offered in India by reputed foreign universities/Evening courses of approved institutes.
How much can I get ?

You can get a maximum of Rs. 7.50 lakh for studying in India and Rs. 15.00 lakh for studying abroad. What rate of Interest will I have to pay ?
Present Interest rate is as follows: - Up to Rs. 4.00 lakh PLR (at the time of availing of loan). Presently 11% (Flat). - Above Rs. 4.00 lakh PLR+1% (at the time of availing of loan). Presently 12% (Flat). - The rate of Interest prevailing at the time of first availment shall prevail throughout the repayment period. - Interest to be debited quarterly/half yearly on simple basis during the repayment holiday/moratorium period.
What is the margin for the loan ?

For loans upto Rs. 4.00 lakh      Nil
For loans above Rs. 4.00 lakh   Studies within India 5%    For studies abroad 15% Scholarship/assistantship to be included in margin.
What security do I need to provide ?
For loans upto Rs. 4.00 lakh Nil
For loans above Rs. 4.00 lakh Satisfactory personal guarantee and up to Rs.7.50 lakh of a third pary
For loans above Rs.7.50 lakh Collateral security in the form of NSC/KVIP, LIC Policy, Gold, Shares/Debentures or immovable properties Bank Deposits in the name of student/Parent/Guardian or any other third party with suitable margin/co-obligation of third party/parent/guardian along with assignment of future income.

Since the rules, regulations, eligibility conditions, repayments and interests rates etc are revised by the banks from time to time in keeping pace with the changing capital market conditions, students and parents are advised to thoroughly check the terms and conditions of educational loan scheme on offer at the time of application. The list of Bank loans is indicative and other Banks also have educational loan schemes.
(The writer is a management consultant and a practicing advocate with Delhi High Court)Courtsey- EN

Author: Ms. Versha Singh