Education loans - more accessible and cheaper

The primary reasons are: rising fees, easy availability of loans and low interest rates. The standard interest rate varies between 12 to 14 percent. Some banks offer 25 to 100 basis points relaxation in interest rates to female applicants. Banks have also become proactive in marketing their products.

It is expected that once the RBI increases the repayment period for EMIs, even more students will seek loans and repayment will become easier.

How much loan should one take?

The loan amount should depend on the course fees and the capacity of generating the down payment (payment from own pocket) towards it. For a loan above Rs. 4 lakhs, a minimum down-payment of 5% for studies in India and 15% for studies abroad is required. For a loan below Rs. 4 lakhs, the entire fees can be obtained as education loan. For amounts more than Rs. 4 lakhs banks generally grant loan ranging from 75 to 90 percent of the amount.

What costs are covered by educational loans?

Educational loans usually cover the costs of tuition fees, hostel fees, mess fee and examination fees. Some banks may also finance the cost of books, equipments and other instruments required by the student for that course. For studies abroad, banks may provide one-way air fare.

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