What is the interest of education loan?

Answer 1

As is the case with every type of Loans, the interest rate differs from bank to bank.For example in India, the Educational loans are available from Nationalised banks as well as from Co-operative banks.Now all nationalised banks charges the educational loans the rate of interest varies from 12 to 14.5%.But if you approach the co-operative banks the interest rate is generally 11%.(All this refers to Mumbai region, and my personal experience in this matter).Allahabad Bank for example gives Edu.loan at 11%.But the best bank to avail Edu.loan in my view is 'Corporation Bank',which gives loan at 10.5%.Generally all bank charges 0.5% less( than their normal lending rate ) for the girl student.

If you are planning to study at USA, try to avail this loan from different USA lenders in this field, as the loan is really very cheap over there.But the only problem in that case is, you should have somebody in USA who is Either Permanent Citizen or a Green Card holder and having a good credit history and is willing to sign your application for the loan as a Co-borrower.In that case you can avail the loan at 7 to 8.5% interest rate.A private lender there is one 'Sallie Mae'.(Visit www.salliemae.com) There are many others also.

The major difference between Indian Banks and Private lenders in USA are as follows.

1)In India, Loan will be given upto Rs. 20 Lacs for foreign study, subject to your keeping of an savings bank A/c with that bank for atleast 2 years(Or at a discretion of bank Manager). You will be asked to share 15% of your margin.So for a 20Lacs loan, you need to provide 3.0Lacs from your pocket.(So effectively they give you only 17 Lacs)

2) Your repayment start after 24 months(Considering 2 years period of Master's Degree) or within 6 months of your getting a job.But in any case total time for Repayment is given as maximum 84 Months(7 Years) 3) To avail this loan of Rs. 20L, Banks will ask you to keep 150% of 20L ( which will be about 30L) by way of Collateral Security,mainly Immovable property like Residence(Which will be in name of Parents),Shop or any commercial property is to be mortgauged.If one is not able to pay back,they will sell these properties at market rate and will recover their Money,is the main idea).As against it in USA 1)No limit like 20L etc..2)Rate of interest is low(Linked to LIBOR rate) 3)Repayment period is 20 Years.So even if you are not getting an immediate good job after completion of your study, you are not in danger.Sufficient time is available to you to repay.

Private bank like ICICI provide all sorts of loans, like Car Loan,Personal Loan etc...but do not provide any educational loan.In my view,it is every bank's social resposibility to provide loans to most of our Indian deserving students.One should not be deprived to get higher Education for want of money. Ashwin Mehta Tel: 9867726090(M)

e mail : ashwin53@Yahoo.com