Education Loan Scheme for Indian Students

Educational Loan Scheme

Education is central to the Human Resources Development and empowerment in any country. National and State level policies are framed to ensure that this basic need of the population is met through appropriate public and private sector initiatives. While government endeavour to provide primary education to all on a universal basis, higher education is progressively moving into the domain of private sector. With a gradual reduction in government subsidies higher education is getting more and more costly and hence the need for institutional funding in this area.

The scope of education has widened both in India and abroad covering new courses in diversified areas. Development of human capital is a national priority and it should be the endeavour of all that no deserving student is denied opportunity to pursue higher education for want of financial support. Loans for education should be seen as an investment for economic development and prosperity. Knowledge and information would be the driving force for economic growth in the coming years.

Based on recommendations made by a Study Group, IBA had prepared a Model Educational Loan Scheme in the year 2001 which was advised to banks for implementation by Reserve Bank of India vide circular No.RPCD.PLNFS.BC.NO.83/06.12.05/2000-01 dated April 28, 2001 along with certain modifications suggested by the Government of India. In line with the announcement made by the Hon'ble Finance Minister in his Budget Speech for the year 2004-05, IBA had communicated certain changes in the security norms applicable to educational loans with limits above Rs.4 lakhs and up to Rs. 7.5 lakhs.

We have been receiving enquiries from members seeking clarifications on the various provisions of the scheme based on feedback received from the branches. With a view to ensure that the scheme is implemented in letter and spirit, it was decided to review the scheme and make modifications in the scheme to facilitate smooth operation at bank branches. Towards this, a Working Group of General Managers drawn from select banks was constituted at IBA. This revised model scheme has been prepared based on the suggestions made by the Group.

2. OBJECTIVES OF THE SCHEME :

The Educational Loan Scheme outlined below aims at providing financial support from the banking system to deserving/ meritorious students for pursuing higher education in India and abroad. The main emphasis is that every meritorious student though poor is provided with an opportunity to pursue education with the financial support from the banking system with affordable terms and conditions. No deserving student is denied an opportunity to pursue higher education for want of financial support.

3. APPLICABILITY OF THE SCHEME:

The scheme detailed below could be adopted by all Commercial Banks. The scheme provides broad guidelines to the banks for operationalising the educational loan scheme and the implementing bank will have the discretion to make changes suiting to the convenience of the students/ parents to make it more customer friendly.

The scheme details are as under :

4. ELIGIBILITY CRITERIA :

4.1 Student eligibility :

* Should be an Indian National
* Secured admission to professional/ technical courses in India or Abroad through Entrance Test/ Merit Based Selection process.

4.2 Courses eligible

a. Studies in India: (Indicative list)

• Graduation courses : BA, B.Com., B.Sc., etc.
• Post Graduation courses : Masters & Phd.
• Professional courses : Engineering, Medical, Agriculture, Veterinary, Law, Dental, Management, Computer etc.
• Computer certificate courses of reputed institutes accredited to Dept. of Electronics or institutes affiliated to university.
• Courses like ICWA, CA, CFA etc.
• Courses conducted by IIM, IIT, IISc, XLRI. NIFT etc.
• Courses offered in India by reputed foreign universities.
• Evening courses of approved institutes.
• Other courses leading to diploma/ degree etc. conducted by colleges/ universities approved by UGC/ Govt./ AICTE/ AIBMS/ ICMR etc.
• Courses offered by National Institutes and other reputed private institutions. Banks may have the system of appraising other institution courses depending on future prospects/ recognition by user institutions.

b. Studies abroad :-

• Graduation : For job oriented professional/ technical courses
  offered by reputed universities.
• Post graduation: MCA, MBA, MS, etc.
• Courses conducted by CIMA- London, CPA in USA etc.

Your Credit and Home Loans

When you express interest in buying a home one of the first things that you will be questioned, whether by a realtor, a home owner, or a mortgage broker or lender is about your credit. You just cannot get away from your credit when you want to apply for home loans so if you don’t know what your credit is you should be prepared to find out! Your credit is an vital part of buying a home because it determines, in large part, whether or not you are worthy of financing from a lender.

Understanding How Your Credit Affects Buying a Home

When you apply for home loans you are asking for more than just a couple of dollars, and because of this lenders have to choose wisely when they are considering those that are asking them for money. If a lender simply gave out money to everyone who questioned they would be broke in a rush because not everyone is going to pay them back. Every time someone applies for a loan the lender has to choose if the person is worth the risk that is involved with lending a person that they don’t know money.

It wouldn’t be honest for a lender to choose that everyone with a certain hair color or eye color would get the home loans that they needed and it wouldn’t be honest for them to choose based on the rate or gender of the person. The only way for the lender to determine who is worthy of the financial support and who is not is to look at the past credit choices of the individuals who are applying for loans.

Depending on the type of loan that you are applying for, your actual credit score may not matter much. For instance, when you apply for an your credit report is pulled and your credit choices in the past are considered, but you do not have to meet a minimum credit score to be approved for the loan. With more conventional loans you have to have a certain credit score to qualify. For instance, if you need to have a credit score of 650 to qualify for the loan and your credit score is 649 you would not get the financing that you needed.

One thing you should know is that not all credit blemishes are looked at the same way when you are applying for home loans. You should do your best to pay all of your bills but if you have ancient medical bills on your credit report but you have been excellent about paying your credit cards, auto loans, and that sort of thing you will be in excellent shape. If you have had bankruptcies and foreclosures you may find that it is a small bit more hard to get home loans. The fantastic thing is that there are a lot of programs out there, giving just about everyone the chance to own a home. If you want to own a home, give it a shot. The process will start and end with your credit, so if you know it is not excellent, you may want to take some time to build it up a bit so you have a better chance of getting the loan that you want!

Home Loans: Getting Your First One

Home loans can be a scary thing for first time buyers to consider but they don’t have to be. The fantastic thing about being a first time buyer is that there are a lot of loan programs out there that have been made just for you! Whether you have perfect credit or have some credit challenges you will find that there are loan programs, mortgage brokers, and lenders that are just waiting to help you step foot into your first home. Buying a home is scary but is also very exciting and there is nothing that can compare with the pride that comes with owning your own home.

Shopping for First Time Home Loans

Most start shopping for their home and then when they find that special house that they really want to own they start shopping for home loans. If this is the way you are going about it you may get really nervous when it is time to really find a loan. Don’t be nervous; instead make sure that you have a realtor that you can trust and then turn to them for help. Most realtors have excellent with lenders or mortgage brokers that will help you get the funding that you need to get into your new home.

Some of the most attractive home loans for first time buyers are. These loans are fantastic because they were meant for people who don’t have a lot of money on hand but really want to own a home. With these loans you do not need to have perfect credit and you can place down as small as three percent on the cost of the home. In addition, there are programs associated with FHA that will help you pay for your down payment as well as your closing costs. This may allow you to get into your new home for very small money or perhaps get the keys to your new place without one cent out of pocket! Could you imagine this?

When you apply for home loans, no matter what type you apply for, you will find that you are questioned a lot of questions and you may not always know the answers. Don’t beat yourself up if you don’t know what is being questioned of you, instead simply question the mortgage broker or even your realtor for some help. These people deal with people, like you, who are new to home loans all the time and they will be more than willing to help you along and make the process simpler. Don’t be worried to question questions, pay attention to what you are being told is needed of you, and just go with the flow. This process often takes a lot of time, so don’t be in too much of a rush.

You may find that it makes more sense for you to apply for a home loan before you start shopping for homes. This will take the pressure off and will allow for you to get all of your ducks in a row so that when you find that house that you have to have, that you can simply make an offer and you don’t have to wait for funding to come through. Buying your first house is scary, exciting, and something that you will never forget so try to make it as enjoyable as possible!

Home Loans After Foreclosure

Many people are told that terrible credit decisions will only stick with you for seven years. Reckon back to seven years ago, it feels like a lifetime ago, doesn’t it? Seven years is a long time and the fact of the matter is that many of the mistakes that we make stick with us for a lot longer than seven years because they just keep lingering and lingering. There are many instances where people cannot help but have their home foreclosed on and it wasn’t because they didn’t want to keep their home or because they weren’t working to keep it. Things happen and many people assume that once they have been through foreclosure they will never be able to buy a home again. This is not the case at all, so if you have been through foreclosure you should not assume that there are not home loans out there for you.

Home Ownership Again

Home loans are one of the things that there is so much misinformation about. While 20 years ago there were a lot of people who would not be able to get a loan under any circumstances, most people today can get a loan if they know where to look and they are willing to consider specific loan programs. Foreclosure can certainly change your financial plans but it doesn’t have to keep you from enjoying the joy that comes with owning your own home.

If you have a foreclosure in your past you will not likely be able to qualify for the same loans as someone who has perfect credit and not one blemish on their credit report. That being said, you can still qualify for plenty of loans. In fact, you can get a fantastic loan that will allow you to buy a home that you like at an affordable monthly payment. Many people look at a foreclosure as the end of their financial existence, but you should instead approach it as the beginning of better financial and credit decisions.

What you need to know is that you cannot have one home foreclosed on and then immediately start to apply for home loans and expect to qualify for them. Generally speaking you will need to wait four years before you can start applying for home loans again after you have been through a foreclosure. Many people get mad that they have to wait this long, but instead of being mad about it you should use this time to build your credit back up to what it should be. You should get a couple credit cards and pay them off each and every month, should pay all of your bills on time, and you may want to see if you can get an auto loan. This will allow you to keep making strides where your credit is concerned so that future creditors will take you seriously when you question them for financial support.

When your four years are up you can then go out there and check out all of the home loans and see which you would like the most. You may find that FHA loans are a fantastic option if you want to keep your down payment small or if you have been able to save a bit more you may be able to qualify for several different conventional loans. If you use the time you have to wait before you can buy another home to keep building your credit you will find that home ownership really can be possible after a foreclosure.

Home loans,education loans in india

There are many types of home loans available in India offered by various Banks and Housing Finance Companies like:

Home purchase loans : Loan for purchase of a house.
Home improvement loans : Loan for repair works and renovations in a home already purchased.
Home construction loans : Loans for construction of a new home.
Home extension loans : Loans for extending or expanding an existing home.
Home conversion loans : Loans for those who have financed the present home with home loan and wish to purchase and move to another home for which some more fund is required. Existing home loan is transferred to new home without need of pre-paying the previous loan.
Land purchase loans : Loans for purchasing a land (plot) for both home construction and investment purpose.
Bridge loans : Loans are designed for people who wish to sell the existing home and purchase another. The bridge loan helps to finance the new home until a buyer is found for the old home.
Balance transfer loans : Loan to help you to pay off an existing home loan and avail the option of a loan with a lower rate of interest.
Refinance loans : Loans to help you to pay off the debt you have incurred from private sources like relatives and friends for the purchase of your present home.
Stamp duty loans : Loans for paying stamp duty.
Loans to NRIs : Loans for NRIs wishing to build or buy a home in India.

Why one should take a loan ?

The loan not only gives you tax benefits, it gives you the facility to repay the loan in EMIs. Both principal as well as interest paid attract tax benefits.

But the loan does not come free.

Other costs are involved.

Processing charge : It is a fee payable to the bank or hosuing finance company at the time of applying for a loan. It may be a fixed amount or may also be percentage of the loan amount.
Pre-payment penalty : When loan is paid before the expiry of the agreed duration, the person has to pay penalty fixed by the company / bank and it may 1-2 % of the amount being pre-paid.
Commitment fees : Though not all banks / companies, many banks / companies levy a commitment fee in case the loan is not availed of within a stipulated period of time after it is processed and sanctioned.
Miscellaneous charges : Some lenders may levy a documentation or consultant charges.Registration of mortgage deed.

If you want a loan, though you like it or not, you have to pay these charges.

Documents required :

Income proof : A salary slip for employed, or IT returns of at least 3 years for self-employed.
Residence Proof : Ration card, land line bill (preferably MTNL), Electric bill.
Photo ID Proof : Driving License, Pan Card, Voter’s ID card etc.
Age proof