Know you eligibility & rights before seeking education loans, advise experts

Students should learn their rights well before approaching banks for education loans and it helps if they are going to study at an institution with high accreditation scores, according to bankers and educationists.
At a session titled ‘funding dreams’ as part of Mission Admission, The Times of India’s online conclave on higher education, S Kanimozhi, deputy general manager, Canara Bank, said the credit guarantee fund scheme for educational loans (CGFSEL) provided finance up to ?7.5 lakh without any collateral, with premium of 0.5% and service tax are available for students.
The cost of borrowing ranges between 7% and 15% depending on the bank. A few banks offer 0.5-1% concession on interest rates for girl students. She advised students to opt for colleges with highest accreditation as employability after passing out is much better.

M Aruna, deputy general manager, Indian Bank, said the demand for education loans has come down compared to previous year. This is due to delay in re-opening of colleges due to the lockdown.

Many bank managers are unaware of changes to the rules for sanctioning education loans, according to Srinivasan, education activist and convener at Education Loan Task Force, Prime Point. “Most banks ask for location certificates, that is the location where the borrower resides. They then decline loans saying the location is part of their service area. But the RBI has said that the service area rule is not applicable to education loans,” he pointed out. He too advised students to opt for colleges with highest accreditation.

K Seetharaman, chief manager at the State Bank of India, said there is no restriction on providing loans for post-graduation, if the students have already taken a loan for the under-graduation course. However, the gap between the two loans should not be too wide.