Educational loans

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Educational Loans
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Getting education loans despite tougher norms
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• The cost of higher studies has moved up
  substantially in recent years. Taking loans for
  courses in higher education in both India and
  abroad is almost a necessity. While these are
  more easily available than six to eight years
  ago, students who are not from reputed
  institutions might still have to struggle for a
  bank nod.
• Speaking recently at the Business Standard
  Banking Round Table, Arundhati Bhattacharya,
  chairman of State Bank of India, the country's
  largest public sector lender, admitted banks were
  comfortable giving loans to students from top
  institutes but reluctant when it came to less
  recognised ones.
• Educational loans are not a problem at all for
  professional institutes such as the IITs, IIMs
  and even good colleges in tier-1 or tier-2
  cities. The problem lies in giving loans to
  students in general streams and also studying in
  tier-3 and tier-4 institutions. Banks are unsure
  of these institutions' standards and whether the
  money will come back," she said.
• The reluctance has grown in recent months because
  of the high level of banks' non-performing assets
  (NPAs) in the sector. It is estimated
  that NPAs as a percentage of education loans for
  public sector banks (PSBs) was as high as eight
  to nine per cent.

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• Generally speaking, the assessment of a loan is
  based on the student's earning potential upon
  completion of the course. Banks look at
  reputation of the institute and its job placement
  record, employability from the course and the
  student's academic record.
• Banks do not say so in public but they do have a
  list of courses and institutions that they will
  be comfortable lending to. If your college or
  institution does not fall under this list, your
  loan request might get rejected.
• Students also have the option to approach a
  non-banking finance company (NBFC). "We are
  getting good demand for domestic as well as
  overseas courses. We offer loans of anywhere
  between Rs 1 lakh and Rs 50 lakh, and offer
  competitive interest rates vis-a-vis banks," said
  Saxena. Sectoral officials believe NBFCs could
  charge anywhere between half a per cent and one
  per cent more than banks for education loans.
• Students with a family income of less than Rs 4.5
  lakh can even apply for education loans under the
  Central Scheme for Interest Subsidy.

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• Under this, the interest payable by a student
  availing an educational loan for technical
  professional courses for the period of moratorium
  (i.e course period plus one year or six months
  after getting a job, whichever is earlier) under
  the Educational Loan Scheme of the Indian Banks'
  Association shall be borne by the government.
• After the period of moratorium, the interest on
  the dues shall be paid by the student, in
  accordance with the provisions of the existing
  Educational Loan Scheme.
• There are few more things to consider. Most
  students who apply for loans don't have a credit
  track record. If a student has been using a
  credit card, he should pay his dues and remain
  debt-free before applying for a loan.
• This will increase the bank's confidence, albeit
  in a small way, in the student's repayment
  capability. Students would also do well to go for
  secured loans and make their parents
  co-applicants.
• If the parent's house is put up as security, the
  interest rates charged could be lower by 150-250
  basis points, say experts

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• source http//www.business-standard.com/article/
  pf/getting-education-loans-despite-tougher-norms-1
  14121500011_1.html

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