The cost of education has been steadily rising and consequently, education loans are gaining more popularity. Students are finding it the one-stop solution to cope with the rising fee structure of higher studies from recognized educational institutions. The scheme for education loans first came into existence in 1995, having been initiated by State Bank of India. Many other public and private sector banks started offering student loan schemes thereafter. The momentum increased in the beginning of the 21st century after RBI included education loans as part of priority sector lending for banks. Soon after, the Indian banking sector actively started including loan for courses in their banking solutions.
Bank of Maharashtra is one of the prominent public sector banks in our country. It offers a spectrum of banking services to its customers ranging from deposits schemes to savings account to home loans, personal loans and education loans. It also focuses on providing debit cards and credit cards facilities to its customers. A Bank of Maharashtra education loan helps students to continue their higher education from educational institutions in India or abroad of their choice without having to worry about their finances.
Bank of Maharashtra offers Education loan to students to enable them to pursue higher education both in India and abroad without the worry of finances. The bank finances the Education undertaken by the students when they avail of the Education Loan. The bank offers two types of Education Loans. One is the basic Education Loan to students and the other is the Loan under Interest Subsidy scheme as mandated by the Government. Let us discuss each one of them in details.
- Education Loan – A student loan scheme issued to students to pursue higher studies in India or abroad. The features of the loan are as follows:
- For studies in India, the eligible courses covered under the loan are graduation courses from colleges under Universities approved by the UGC, other courses leading to a diploma or degree conducted by colleges or universities approved by UGC / Government / AICTE / AINMS / ICMR, etc.
- For studies abroad, the list of courses covered under Bank of Maharashtra education loan includes job oriented professional, technical, PG courses or Post-graduation like MBA, MCA, MS, etc.
- The maximum amount of Bank of Maharashtra education loan that a student can avail for studying in India is Rs.10 lakh. For studying abroad, the maximum amount of available loan is Rs.20 lakh
- Up to a loan amount of Rs.4 lakh, no security is required to be pledged to the bank against the loan
- Above Rs.4 lakh and up to Rs.7.5 lakh, a security in the form of a guarantor is required. An agreeable third party guarantee is enough in these cases. For loan amounts above Rs.7.5 lakh, a collateral security is required whose value should be the quantum of loan granted after providing the margin requirement of the bank along with 2 acceptable guarantors.
- If computers are purchased for the course, the same should be hypothecated to the bank.
- Up to Rs.4 lakh of the loan amount there is no requirement of any margin money. For loans above Rs.4 lakh, a 5% margin is required for studies in India which increases to 15% for studies abroad
- During the moratorium period, simple interest is charged on the loan. A discount of 1% can be availed on the interest if regular interest is paid by the borrower during the moratorium period. This concession is applicable only during the moratorium period or the repayment holiday mentioned in the tenure of loan.
- There is no loan processing fee charged by the bank from the borrower for processing the loan
- For loan amount of up to Rs.7.5 lakhs, repayment period can be up to 10 years and for the loans of above Rs.7.5 lakhs, repayment period can be up to 15 years.
- The moratorium period is calculated as the course duration plus 1 year/6 months after getting a job whichever is earlier.
Eligibility: The education loan eligibility criteria are provided below:
- The student should be a Resident Indian and must have secured admission through an Entrance test or merit based selection process
- The parent or guardian of the student should act as a co-borrower to avail the loan
Rate of Interest: The current interest on education loan is listed hereunder:
| For loans up to Rs.4 lakh | Base Rate + 2.50% | MCLR+ 2.50% |
| For loans above 4 lakh and up to Rs.7.5 lakh | Base Rate + 2.00% |
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| For loan above Rs.7.5 lakh | Base Rate + 1.25% |
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2. Interest Subsidy on Education Loans – This student loan scheme has been initiated by the Government to help the weaker sections of the society. The terms and conditions of the scheme are as follows:
- Under this Bank of Maharstara student loan scheme, full subsidy is provided on the interest charged during the moratorium period for students belonging to the weaker sections of the society.
- The Bank of Maharstara student loan scheme is applicable only for studies in recognised technical and professional courses in India.
- The student loan scheme is applicable on the above mentioned Education Loan scheme offered by the bank for students pursuing courses in India in institutions established by the Acts of Parliament, other institutions recognized by the concerned statutory bodies, IIMs and other institutions set up by the Central or the State Government.
- The Bank of Maharashtra student scheme is available to students once either for graduation course or for post-graduation course and also for integrated courses.
- The subsidy will not apply if the student leaves the course mainstream or is expelled from the institution for reasons other than on medical grounds.
- The subsidy is applicable only during the moratorium period which is calculated as the course duration plus 1 year or 6 months after getting a job whichever is earlier. After the completion of the moratorium period, the interest on Education Loan will be applicable and will have to be duly paid
- The subsidy can be availed by students belonging to the weaker sections of the society with an annual gross family income of not more than Rs.4.5 lakh per year from all sources based on the economic index.
- Income proof should be availed by the students from such public authorities as are authorised by the State Government to certify the income status for this scheme including Central and State Sector Schemes
- The subsidy can be claimed under the Bank of Maharashtra student loan scheme only if subsidy was not claimed from any other State Government scheme
- The students should undertake the following steps in order to avail the subsidy of Education Loan:
- They should procure the authorised income statement from the respective authorities
- They should produce all required loan documents and educational documents to the respective bank.
- They should ensure that all necessary certificates have been availed by them and then approach the bank branch
- They should obtain the application from the branch officials and after filling it up properly should submit the same with all the respective documents and certificates.
Bank of Maharashtra of Student Education Loan: Guidelines on Interest Subsidy on Education Loans
- Relevance of the scheme: This scheme under Bank of Maharashtra education loan is applicable only if the student is pursuing higher studies from recognised educational institutions and professional course study in India. This initiative by the Government of India is currently linked with existing model of student loan scheme with the bank. In addition, it is restricted to students who are enrolled in professional and technical courses in India that are provided by education organisations that are established under acts of Parliament or by other concerned statutory body, or are Central or State Government universities.
- Eligibility for Interest Subsidy: The interest subsidy under a Bank of Maharashtra student education loan will be applicable to students only once either during the undergraduate programme or post graduate programme or diploma. However, the benefits of this scheme are also admissible for integrated courses (i.e., graduate and post graduate). Interest subsidy is not provided to those students who discontinue the course in the middle or are expelled from the institute for poor academic records or any other disciplinary behaviour. However, interest subsidy is available if discontinuation is on the medical grounds. The bank in that case will demand all the necessary documentation from the head of the institute for evidence and satisfaction.
- Subsidy Period of Applicability: The interest subsidy scheme under Bank of Maharashtra education loans is available for the student who belongs to economically weaker sections of the society. The subsidy for students who are availing Bank of Maharashtra education loans for higher studies, is for the period of moratorium plus six months or one year after getting the job, whichever is earlier. Once this period of interest suspension is over, the interest on the amount of education loan shall be paid by students, in conformity with the provision of the existing Bank of Maharstara student loan scheme or as it may be modified from time to time.
- Applicable academic years: This interest subsidy scheme on Bank of Maharashtra education loan for economically weaker sections of society will be from the financial year 2009-2010 (i.e., starting from 1st April). Only the loan amount which is taken in the starting of 2009 shall be covered under the interest subsidy scheme. Any amount of education loan disbursed before the mentioned year will not qualify under the scheme of interest subsidy.
- Income limit: The Government of India has also specified an income limit under the interest subsidy scheme. The benefits of this scheme will be applicable only to those students who have an annual income upper limit of Rs. 4.5 lakh per year (from all sources). This scheme is designed by the Government of India to provide financial aid to students in pursuing their higher studies. The students must come from economically weaker sections of the society and the annual parental income from all sources should be below the aforementioned limit. This guideline highlights that the subsidy criteria is based on economic index and not on social background.
- Skilled authority for issuing certificate: The bank before providing the benefits of interest subsidy scheme will ask for income certificate from the students. The designated authority under the State Government should provide the certification of income status under this scheme, just as they do for other state and central sector schemes. For instance, in the state of Maharashtra, the tehsildar is a prescribed authority for issuing the income certificate. Similarly, other states may have other authority figures assigned for the certification. There may be a difference in the name but the role and function will be similar for these authorities. Students who belong to other states are requested to visit the branch officials for more information.
3. Bank of Maharashtra Vocational Education and Training Loan: The objective of this scheme is to provide loan for vocational education to individuals to want to study skill development courses and specialise in certain trades.
Eligibility: The criteria for availing Bank of Maharashtra loan for vocational education and training is provided below:
- The applicant should be a citizen of India
- Applicant should have enrolled himself or herself in the alleged training institution and in a course which will help them land a job once the course is completed. The institute must be recognised by state and central education boards. Vocational education and training institutes must be affiliated to National Skill Development Corporation / State Skill Corporation or sector skill councils
Course eligible for vocational education and training loan: The following courses are eligible for vocational education loan and vocational training loan:
- Any professional skill base courses which are run by above mentioned training institutions and are coordinated with the national skill framework shall be covered under schemes of loan for vocational education. There is no minimum course duration specified.
Margin for a vocational education and training loan: The bank may charge nominal margin money as a down payment from students who have taken the vocational education and training loan to keep them disciplined enough to stay and complete the course. However, the interest charged on the loan and down payment amount together should not exceed 10% of the total loan amount.
- EMI Calculator
The bank website provides the facility of calculating the EMI for its customers who are willing to take a loan from the bank. Here are some examples:
- A avails a loan of Rs.3.5 lakh to pursue higher education in India for his post-graduation course. The repayment tenure chosen by him is 12 months. The bank charges him an EMI of Rs.31,179 which will be payable once the moratorium period is over
- B needs Rs.6 lakh to take admission in the post-graduate management course conducted by IIM – A. he approaches the Bank of Maharashtra and requests for the loan amount. At the rate of interest of 12%, the Equated Monthly Instalment payable by B for a period of 24 months works out to be Rs.28,244 approximately
- C needs Rs.10 lakh to complete his graduation from a foreign university based out of USA. He approaches the bank with his requirement and agrees to pay off the loan after the moratorium period is over within 5 years. At the rate of interest of 11.25%, his Equated Monthly Instalment works out to be Rs.21,867 approximately.
| Applicant | Loan Amount | Interest Rate | Term | EMI |
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A
|
Rs.3.5 lakh |
12.50%
|
12 months |
31,179
|
| B | Rs.6 lakh |
12.00%
|
24 months |
28,244
|
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C
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Rs.10 lakh |
11.25%
|
60 months |
21,867
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