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Education Loan

There is a well-known adage that says “an investment in knowledge pays the highest interest”. Education is a path that leads you to a life with better standards and helps in fulfilling all your dreams. However, with the hike in tuition fee and rise in the overall cost of education, it is becoming impossible for students to pursue their studies further from recognized educational institutions. Thankfully, there are ways to overcome this obstacle and achieve your dreams. Scheme for education loans is offered by banks such as Karur Vysya that enable students to pay for their higher studies from educational institutions in India and abroad.
 
Karur Vysya made a modest beginning in 1916 with a primary capital of Rs 1 lakh in the textile town of Karur. From there it has grown tremendously over the last 100 years and extended its footprint with branches in different parts of the country. It provides a range of products including student loan schemes, and other loan offerings. KVB education loan has made it possible for students to fulfil their educational dreams. The KVB student loan scheme is structured in a way that tends to provide you the right financial help for any educational course you want to pursue.
 
The Bank offers Karur Vysya educational loans to students so that they can pursue higher education either in India or abroad without having to worry about the required funds as they are available as loan from the bank. So, a better education will not be just a dream for students who can easily avail the Karur Vysya student scheme offered by the bank at attractive rates and simplified terms and conditions.
 

Features of the Educational Loan offered by the bank:

The KVB Educational Loan offered by the bank has the following features:

  • It is a term loan which is repayable within a specified tenure
  • Loan is given to students for higher studies either in India or Abroad
  • KVB education loan is available to students who are Indian Nationals and who have availed admission to professional or technical courses in India through a Common Entrance Test or have secured admission to a Foreign University or Institution
  • In case of individual applicants, the father or guarantor of the student will have to act as a guarantor. A guarantor is someone who guarantees to pay the loan himself/herself if the applicant fails to repay the loan himself. Under the Educational Loan scheme, the bank requires a guarantor who should undertake to guarantee the loan repayment.
  • The maximum loan amount that an individual can avail for studying in India is Rs. 10 lakhs. For studying abroad, the maximum limit is extended and students can avail a loan of  Rs. 20 lakhs  at max for studying abroad.
  • The bank does not keep any margin requirement for loans up to the value of Rs. 4 lakhs. For loans above the value of Rs. 4 lakh, a margin of 5% is required in case of loans availed for studying in India and a margin of 15% is required in case of loans availed for studying abroad
  • The loan should be repaid within 5-7 years after the repayment holiday is completed. A repayment holiday is granted under the loan which includes the total course duration plus 1 year or 6 months after the student gets a job whichever is earlier
  • If the loan amount is used to buy equipment or instruments, the corresponding equipment or instruments should be hypothecated to the bank as primary security.
  • A collateral security is also required under the loan scheme which depends on the amount of loan availed.
  • The bank also provides KVB vocational education and training loan to students pursuing vocational education and training courses from educational institutions.
  • Loan for vocational education was started by the bank under the name KVB loan for vocational education and training after the modal scheme loan for vocational education and training was launched by the RBI.
  • For loans up to Rs. 4 lakhs, no collateral is additionally required. Only the parent or guardian should act as a co-applicant
  • For loans above Rs. 4 lakhs and up to Rs. 7.5 lakh, parents are required to act as co-applicants and a collateral security will also be required. The collateral security will be in the form of a third-party guarantee to undertake the repayment of the loan. The bank may waive off the requirement of a third party guarantee if the net worth of the parents as co-applicants or the means of parents acting as joint borrowers is satisfactory as per the bank’s standards
  • For loans above the value of Rs. 7.5 lakh, parents will have to act as co-borrowers and a tangible security will be required as collateral the value of which should be sufficient to cover the loan. Moreover, the future income of the student should be assigned to the bank as for repayment purposes
  • Students eligible under the Management quota are also eligible for the loan but they have to comply with other norms or guidelines with regard to the education loan eligibility criteria laid down by the State or Central Government.
  • There are no processing charges under the KVB student loan scheme.
  • All the expenses related to further studies are covered under the loan which include fees payable to the college, school or hostel, examination / library or laboratory fees, purchase of books / equipment / instruments or uniforms, caution deposit / building fund / refundable deposit if supported by the bills or receipt of the institution, travel related expenses or passage money for studying abroad, purchase of computers if it is essential in completing the course, any other expenses required to complete the course like project work, study tours, thesis, etc.

Rate of Interest:

The interest rate card on KVB student loan scheme is based on segregation by sector and gender. Interest rate may vary based on the course taken from educational institutions and the loan amount undertaken.

The bank charges the following rates of interest for its Educational Loan scheme:
 

Loan scheme

Interest rate for boys

Interest rate for girls

Loans up to Rs. 7.5 lakh

One year MCLR+ 3.10%

One year MCLR + 2.60%

Loans above Rs. 7.5 lakhs and up to Rs. 10 lakhs for studying in India and up to Rs. 20 lakhs for studying abroad

One year MCLR + 2.85%

One year MCLR + 2.30%

Loans above Rs. 10 lakhs for studying in India and above Rs. 20 lakhs for studying abroad

One year MCLR + 2.60%

One year MCLR + 2.10%

As noted above, the actual interest rate on KVB education loan is a blend of MCLR (common of lending products) and a fixed constituent on the basis of the type of loans. Do inquire from the nearest branch for periodic offers and campaigns for specific degrees / programmes.

Loan Security:

The KVB education loan has its own terms and conditions regarding collateral security. A snapshot of the slabs has been provided below for citation:

Loan Amount

Security / Co-Applicant Details

Up to Rs. 4 lakh

  • No collateral security is required
  • Parents need to sign as co applicants

From Rs. 4 lakh to Rs. 7.50 lakh

  • Parent(s) need to sign as co applicant(s)
  • A third party guarantee is to be provided as collateral security

Over Rs. 7.50 lakh

  • Parents need to sign as joint applicants
  • The security should be of a pertinent value
  • Assignment of student’s future income from employment as loan security

Students undertaking vocational education and training and students who have secured admission using management quota are also eligible for KVB education loan on the basis of state, central or government norms.
 

Repayment Options:

A KVB education loan has a flexible repayment option and tenure ranging from 5 years to an upper limit of 7 years. The payment can be made in the form of monthly instalments. The repayment holiday period comes to an end upon completion of 1 year after the course or 6 months after getting a job, whichever is earlier. A student loan scheme generally has three repayment options available:
 

  • Education loan with option of repayment holiday as explained in above lines.
  • Only interest is paid during the loan tenure. Once you complete your studies, you start paying the EMIs that is principal + interest.
  • Apart from this bendable repayment options, KVB education loans also provide insurance cover on the amount of education loan.

How to Choose the Right Education Loan

These KVB education loans can be repaid by the students once they get jobs after completing their education. However, an education loan can become a reason for high stress if it is not chosen well. Here are few tips to consider while planning your KVB student education loan:
 

· Choose your desired course: Taking a loan just so that you can finance your education and studying abroad should not be the only factor. Choose a course to pursue in which you have interest and you are dedicated to turn into a career. It is advisable to find your passion by doing thorough research on what the programme entails for you before deciding to pursue it. The course you choose should also have the necessary career options so that you land a job immediately or soon after completing the course and can start paying off the amount of education loan.
 

· Choose the institution well: Research on your part about the educational institutions, its ranking and other facilities it offers. Look for universities that offer professional course study in India, if that is what you want to do. Some educational institutions may have gained name and fame but may lack a good placement strategy. When you are applying abroad for higher studies, the right institution would definitely make a big difference.
 

· Choose your bank: A lot of banks offer student loan schemes for different courses in India and overseas. The banking institutions not only offer you education loans of higher amount but all sorts of unsecured loans for small amounts as well. While applying for an education loan of higher amount, the bank tends to seek some form of security. Select a bank that offers a good moratorium period, lower interest on educational loans and a flexible repayment option. Always go for the bank that offers you best terms and conditions rather than maximum finance. Also, it’s better to know beforehand if you are allowed to pay EMI in advance and if the bank offers specific loan for courses that you specifically want to pursue.
 

· Take loan in instalments: Banks charges interest on the amount of money dispensed. Usually if you are pursuing courses from educational institutions in India, then you need to pay for the course semester wise or year wise. Therefore, it would be better to take student loan scheme as and when required. This will reduce your burden of repaying the loan amount and the interest accumulated will be much lesser. Do not go for lump-sum amount but break it according to your needs.
 

· Tax benefits: You can also avail tax benefits on the student loan scheme under section 80E of the Income Tax Act on the interest paid for the KVB education loan. To be able to get this deduction, your education loan must be sanctioned by an Indian scheduled bank or a gazette financial institution. This benefit is available in the initial assessment years or seven years after, until you pay off all the interest. The maximum tax deduction period is of 8 years. Opting for loans with longer duration means that you will be eligible for this tax deduction only when the tenure of loan is 8 years.

 

KVB Student Loan Scheme – FAQs:

How to apply for a student loan scheme from KVB?

Applying for education loan is a very simple and easy process. You have to visit the bank website and fill up a loan application form online with all the mandatory details. You can also use the Paisabazaar portal to check you eligibility by filling a few details and subsequently applying for a education loan from Karur Vysya Bank.
 

What are the documents required for KVB education loan?

The following loan documents have to be submitted:

· Educational documents produced by college/university such as mark sheet and assemblage certificate of last qualifying exam

·   Proof of admission to the course and other details related to the course

·   Bank statements of all the co-borrowers and guarantors

·   Passport size photograph, PAN details, ID and residence proof

·   Statements of liabilities and assets of the borrower

·  If you are undertaking a course in a foreign university, then scholarship details and foreign exchange permit is required
 

Is there any processing fee involved while taking up a KVB education loan?

KVB education loan does not charge anything as loan processing fee. Rate of interest is the only cost involved with the loan amount.
 

What is the standard turnaround time taken by bank to process the application for education loan?

Karur Vyasa Bank takes up to 15 working days to process the application for loans be it a standard education loan, a vocational education loan or a vocational training loan. If there is delay due to paperwork or documentation, the bank representatives will inform you.