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Education Loan

There is a tremendous demand for a high-level expertise and professional tag in today’s competitive environment. However, attaining a professional degree from recognized educational institution has now becoming nearly impossible because of enormous hike in tuition fess over the years. However, with the introduction of scheme for education loans pursuing higher studies or some professional degree course in India is no longer a dream. Banking institutions in India are making the process smoother for those on the path of achieving higher education from top educational institutions in India or abroad by offering student loan scheme.

South India Bank is a dominant private sector bank headquartered at Thrissur city in Kerala, India. The bank has established its nation presence with 839 of its branches and 1293 ATMs widespread across more than 26 states and union territories in India. The bank offers array of financial products and services to its customers, with student loan scheme being one of its best products.

South Indian Bank offers three variants of Educational Loans to students desirous of pursuing higher education. The SIB education loans aims to help students to pursue higher education in India or in abroad without worrying about the needed finance for such studies as the bank takes care of all the course expenses.
 

Types of Education Loans offered by the South Indian Bank

  • Vitjnan Pradhan Scheme – an SIB education loan offered to students who want to pursue professional educational courses either in abroad or India. The key features of the SIB student education Loan granted to students under this scheme are as follows:
  • The SIB education loan covers various expenses related to the course which includes fees payable to the school, college, examination library, hostel, purchase of books, instruments ,equipment, , uniform or computers which are needed to complete the course, which should be supported by the Institution bills or receipts subject to the maximum amount not exceeding 10% of the total tuition fees, travel expenses , insurance premium for the student borrower if applicable and cost of other activities such as project work, study tours etc. which are required to cover the course
  • There is no margin requirement of loans up to Rs. 4 lakh. For SIB education loans above this amount, 5% margin is required for studying  in India and 15% for studying abroad
  • For SIB education loans up to Rs. 4 lakh only the parents can be co-borrowers for security requirements. Above Rs. 4 lakh and up to Rs. 7.5 lakh of SIB education loan, parents or guardian should be the co-borrower and a third party guarantee is required as a collateral security. For loans above Rs. 7.5 lakh. Furthermore, the student’s future incomes may have to be assigned to the company for paying off the loan amount if the company sees fit.
  • The repayment period for loans up to Rs. 7.5 lakh is up to 10 years and for a higher amount above Rs. 7.5 lakh the tenure is up to 15 years. In case of foreign education, however, the moratorium period or the repayment holiday is restricted to a fixed period of 6 months after the qualifying examination.
  • In case of default in payment of EMIs, a penal interest @ 2% will be charged for loans above Rs. 2 lakh for the default tenure and the overdue amount
  • There is no requirement of paying an upfront Processing fee for availing the SIB education loan as there are no processing charges under the loan scheme.

Eligibility: listed below are education loan eligibility criteria:

  • The student can avail of the SIB student loan scheme himself or herself if he or she is a major, i.e. above the age of 18 years
  • For minor students below the age of 18 years, parents will act as borrowers to avail of the SIB education loan
     
  • SIB Excellence – an SIB student education loan granted to meritorious students who want to pursue professional education in top premier Educational Institutes of India. The features of this student loan scheme are as follows:
  • The maximum amount of education loan that can be availed by a student is limited to Rs. 10 lakh or the actual course expense whichever is lower.
  • There is no margin requirement of loan for courses up to Rs.4 lakh. For loans above this amount, 5% margin is required by the company. The scholarship or assistantship earned by the student can be included in the margin requirement. Margin may be bought on a year-to-year basis, when loan disbursements are made by the company.
  • The SIB education loan covers various expenses related to the course which includes fees payable to the college, examination, library or laboratory fees, purchase of books, equipment, instruments, computers or uniform which are essential to complete the course, caution deposit or building fund or refundable deposit which should be supported by the Institution bills or receipts subject to the maximum amount not exceeding 10% of the total tuition fees for the entire course, hostel boarding and lodging expenses and one time premium of a life insurance policy without having any maturity benefit and which covers the entire duration of the SIB education loan where the Sum Assured is equal to the loan amount.
  • The SIB student loan scheme is generally paid through RTGS directly to the institution or supplier for books, uniforms, equipment, etc. and the charges for the RTGS facility may be waived. The bills and vouchers not older than 3 months if already paid will be reimbursed by crediting the amount to the borrower’s account.
  • Students above the age of 18 years can avail the SIB education loan themselves with at least one of the parents or close relatives as guarantors. In case of minor students, the parent will act as a borrower along with the other parent or a close relative as a guarantor. The net worth of the individual acting as a guarantor should be equal to or more than the total amount of loan granted. If there are 2 or more guarantors, the combined net worth of the guarantors should be more than the loan amount. Close relatives in this context include parents, brother, sister, sister’s husband, paternal or maternal uncle, father’s or mother’s sister.
  • The guarantee of one of the parents or close relatives is considered as a security against the student loan scheme. Moreover, a single premium life insurance policy with the amount of coverage and the term should be corresponding to the loan amount and tenure and the policy should be assigned to the bank.
  • The repayment period will start either after 1 year of course completion or 6 months after getting a job, whichever is earlier. The SIB education loan should be repaid within 60 months or 5 years post the moratorium period mentioned above.
  • The borrower can prepay his student loan scheme without any penalty
  • There is no requirement of paying an upfront Processing fee for availing the SIB student education loan as there are no processing charges under this student loan scheme.
  • A copy of the Progress Report or Mark Sheet of the student of each semester will have to be submitted to the bank and if the student fails in any semester, the funding of the SIB education loan will be reviewed by the bank.

Eligibility

  • The SIB student loan scheme is available only at the Nodal branches of the bank which are in Ahmedabad, Bangalore City, Kolkata G.C. Avenue, Kozhikode Main, Connaught Place in Delhi, Powai in Mumbai, T. Nagar in Chennai or Nungambakkam and Hyderabad. Applications made at other branches will be forwarded to the nearest nodal branch
  • The admission to a premier education institutions should be obtained on the student’s merit
  • The eligible educational institutions include PG / PGDM courses of all IIMs, 4 year UG or 2 year PG programs of all IITs, 4 year UG or 2 year PG program from National Institute of Design in Ahmedabad, 2 years PG program from Indian School of Business in Hyderabad, 4 year UG or 2 year PG programs from National Institute of Fashion Technology, 2 year PG program from Indian Institute of Foreign Trade in Delhi and Kolkata and other business schools which appear in the Top 20 ranking of NAAC.
  •  Only Indian nationals can avail this SIB student scheme

Loan documents required:

  • The application form completely filled and the identity proof of the student including Passport copy is required (if passport is available).
  • Individual income records of all the guarantors and relevant record or proof of financial requirements of the entire course which includes admission ticket, if any, will have to be submitted.
  • Sometimes bank may ask your educational documents such as proof of academic qualification, mark sheet of last examination passed and others
  • Vidyanidhi Scheme – an SIB student loan scheme designed for students who have newly taken admission to some selected professional colleges in Kerala. The scheme helps the students to pay the ‘refundable deposit’ required by the institution. The application has to be made by the students themselves if they are above the age of 18 years. If the students are minor, then parents will act as borrowers of the loan.
  • SIB Vocational Education and Training Loan- vocational education and training has gained lot of momentum in the recent years when the Government of India came up with the plan of transforming “scam India” into “skilled India”. Yet it has not been able to grab its share in the conventional definition of higher education. However, vocational education and training are keeping pace with fast changing scenario as now it has diversified itself in the fields of tourism, retail, polytechnic, beauty care, library, mobile repairing, cosmetics, electrical technician, etc. An SIB loan for vocational education and training offers many attractive benefits and features:
    • Loan for vocational education is availed for vocational education and training courses which are imparted at industrial training institutes, polytechnic institutes, industrial training centres and a number of other technical bodies
    • Individuals who have secured admission in any of skill development courses run by IITs, polytechnic or any institute affiliated with NSDC or skill councils can avail this vocational education loan or vocational training loan.

Expenses covered under vocational education and training loan:

  • Course/ tuition fee. Bank shall pay such tuition fee directly to the training institute
  • Any other judicious expenditure which is required in completion of the course but not limited to assessment fee, library fee, examination feel, laboratory fee, equipment and instruments such as computers and laptops.
  • Most of such vocation education and training courses have localised boarding therefore lodging may not be necessarily based on cost of living in that particular area. However, if it is found that lodging is essential, then the necessary lodging expenses may also be granted through the loan for vocational education.

Quantum of finance:

  • Minimum amount of loan for vocational education granted is Rs. 5,000
  • Maximum loan amount granted is Rs. 1,50,000

Note: The projected per month fee based on sector and NSFQ level will be available with NSDC.

Repayment tenure of loan: The repayment option of loan should be in monthly instalments based on equated monthly instalments as shown in the table below:

 

Loan Amount (Rs)

Repayment Period

Up to Rs. 50,000

36 months

Rs. 50001 to 1,00,000

60 months

Rs. 1,00,001 to Rs. 1,50,000

84 months


Rate of interest: South Indian Bank education loan ranges from 9.50% - 16.15%
 

  • EMI calculator

The bank provides the facility of EMI Calculator to calculate the Equated Monthly Instalments (EMI) payable under the loan. Following are some of the instances of calculated EMIs using the bank’s available calculator.

  • A wants to pursue a professional course in Australia for which he requires the necessary finance. He approaches the bank to avail of an Educational Loan under the Vitjnan Pradhan Scheme for Rs. 10 lakh. At the rate of interest of 16.50% for boys under the scheme and for a term of 12 years, the EMI charged by the bank is Rs. 15,987.
  • B, a girl, approaches the bank for a loan of Rs. 3.5 lakh for studying in India for which she promises to repay the loan in 7 years. At the rate of interest of 15.50%, the EMI charged by the bank is Rs. 6,852
  • C secures admission in IIT for a diploma in IT. To fund his education, he approaches the South Indian Bank and applies for a loan of Rs. 5 lakh. The rate of interest applicable is 11.30% and the tenure of repayment chosen is 5 years. The EMI payable by him for the above mentioned amount of loan is Rs. 10,946

The following table records the EMI of each of the above-mentioned cases for easy understanding:

Applicant

Loan Amount

Interest Rate

  •  
  1.  
  1.  

10 lakh

  1.  

12 years

  1.  
  1.  

3.5 lakh

  1.  

7 years

  1.  
  1.  

5 lakh

  1.  

5 years

  1.  

Applying for Education Loan

The loan can be applied for through the branches of the bank which can be located easily as per the location of the customer’s residence. The customer can walk into his nearest branch, acquire a loan application Form, fill up the form, submit the necessary documents and the loan will be processed by the bank.