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Educational Loans

Once you pay the specified fee as per the offer letter, you can procure from ASB the documents to arrange an educational. Almost all banks provide educational loan for study in ASB and most of our students have been availing loan.


Some Input for Raising Educational Loan

The inputs in this section is meant to give you some guidance on taking an educational loan. You should find out the exact details from the bank from which you want to take the loan.

Most, if not all, banks provide educational loans. If you are an MBA student, you should take a loan to study even if your parents can afford the fee. This would show your independence and ability to take risks. Such an attitude is required to succeed in a managerial career.

You can apply for an educational loan through the website https://www.vidyalakshmi.co.in/Students/ . But it is not necessary that you apply through this. The only advantage is that if you apply through this, the bank has to give a firm reply of granting it or not granting it. One of the best option is to contact the bankers of your parents and arrange for the loan.

Educational loans cover the tuition fees, hostel fee, cost of books, examination fee and can even cover the cost of purchasing a two wheeler for educational purpose. However, the discretion of the bank is crucial in educational loan, just as in the case of other loans.

Maximum educational loan available in the normal process for study in India is Rs. 10 Lakhs, but for study in some reputed institutions such as IIMs, you may be able to avail higher loans. Loan upto Rs. 4 lakhs does not need any collateral or co-borrower. For loan amount of 4 lakhs to 7.5 lakhs, the student needs a co-borrower, who should normally be the parent of the student. It can be spouse in case of a married student. You don’t need a collateral for this amount. A collateral normally means giving your (or that of the co-borrower) property as a guarantee. If your loan is above 7.5 lakhs, you need a collateral.

In order to avail a loan, the student and the co-borrower should have PAN cards. So, if you don’t have a PAN card, make it immediately by going to any PAN center. In other words, both you and your parent/co-borrower should have PAN cards. It is preferable to avail loan from the bank in which your parents have transactions. You will get loan in two or three instalments as per the payment method in the institute. The interest rate of educational loan varies from time to time. However, it is usually in the range of 11 to 12 percent.


Paying back the loan.

You need to service the interest every year, but you need to start paying back the principal only after you get a job or after one year of completion of your study. What does this mean? For example, imagine you are a student in Asian School of Business, Trivandrum. Your total fee plus hostel fee (if you are residing in the hostel) would be approximately Rs. 6.8 lakhs for the program starting in 2019. Of this, you have to pay approximately Rs. 3.8 lakhs including Rs. 1 lakh hostel fee in the first year. Assume that you have taken a loan for the same at 11.5 percent interest and the bank has given you Rs. 3.8 lakhs July. For the financial year 2019-20, the interest on it would be approximately for 9 months. So you would have to pay an interest of approximately Rs. 32,775 by March 2020. Similarly, you have to pay at the end of second year also. After you get the job (or one year after completion of your study) you have to pay the interest and the principal amount in equated monthly instalment or EMI just like you do for other loans. These calculations are only examples to give you an idea on raising and repaying an educational loan.

If you have a good credit history, it is easy to get a loan. Credit history means history of borrowing and repaying the borrowed amount regularly without defaulting. Please don’t think that you can hide any default from the bank. For example, if you have borrowed from Bank A (say for housing, two wheeler loan etc) and defaulted some payment and then go to Bank B for educational loan, you should not think that Bank B will not know about the default in Bank A. This is because once, your PAN and address details are given, banks can check something called CIBIL score. To get a credit, your CIBIL score should be satisfactory. If not, you will find it difficult, if not impossible, to get a loan. Usually only bankers can check your CIBIL score. To get an idea, you may also be able to do so through the site https://www.cibil.com/freecibilscore. Do take adequate caution before you fill the details and contents in this site and you should not consider this as a recommendation to use the site.

CIBIL score is not everything in getting a loan. If you have not borrowed any money or if you have never used a credit card, your CIBIL score may be low or even minus. All that it means is that there is no credit history to estimate the score. This may happen in the case of a student who has never borrowed through the banking system. In case of an educational loan, the CIBIL score of the co-borrower (usually your father/mother) is more important than your own CIBIL score. Of course you need a PAN card to get your CIBIL score and similarly your co-borrower also would need a PAN card to get his/her CIBIL score.

This note is only to give you some idea about educational loans. It is best to get the advice of your bankers for availing a loan.