Why getting an edu loan is an uphill task
Students Applying At Accredited Institutions Stand A Better Chance As Bankers Believe They Will Be In A Position To Repay
Ragu.Raman@timesgroup.com
28.06.2019
Are you planning to avail an education loan? Then better check whether the institution has got NAAC accreditation or the department has National Board of Accreditation (NBA) rating.
As per the latest guidelines issued by the ministry of human resources development (MHRD), the model educational loan scheme of the Indian Banks’ Association is restricted to students enrolled in professional/technical courses only from NAAC-accredited institutions or professional/technical programmes by NBA or Institutions of National Importance or Central Funded Technical Institutions (CFTIs). “Out of 480 colleges in Tamil Nadu, only around 100 engineering colleges have NAAC accreditation and 75 colleges may have NBA accreditation. Students may have to choose among these colleges if they want to avail education loan with interest subsidy,” said Jayaprakash A Gandhi, a career consultant.
Those programmes which do not come under the ambit of NAAC or NBA would require approval of the respective regulatory bodies such as Nursing Council of India for nursing courses and MCI for medical courses.
Bankers say students from NAAC and NBA-accredited institutions and departments have better chance to get campus placement and that would ensure repayment. According to the scheme, students whose parental income is up to ₹4.5 lakh can avail interest subsidy and the loan is given without any collateral and third-party guarantee for a maximum of ₹7.5 lakh.
For the past two years, all applications for availing educational loan are being routed through Vidya Lakshmi portal to the banks. Combining the past four years, the banks have approved only 42,733 applications out of 1,44,390 applications received through the portal.
“Banks are not giving importance to education loans. There is not enough awareness among bankers and students about the loan. The disbursement of educational loan was not properly monitored,” said K Srinivasan, convener, Education Loan Task Force (ELTF).
While applying, students can pick three banks in their area for a loan. The banks have to intimate the status of the application to students within 30 days. “But often banks do not respond within 30 days as mandated by the guidelines. There is no proper grievance redressal mechanism for educational loan,” Srinivasan said.
He said students need not give any collateral security for loans up to ₹7.5 lakh. “If they give collateral, they will not get the interest subsidy,” he said.
On the repayment process, Srinivasan said, “Students can repay the loan in 15 years. In case of unemployment or under-employment, they can take moratorium from repaying the loan for two or three times.”
M Rajkumar, founder and chief organiser, Education Loan Awareness Movement, said the number of students seeking education loan is declining due to the decrease in engineering admissions in the state. “Due to unemployment among engineering graduates, students and parents are hesitant to take loans. But the banks are dissuading the few who want to avail it,” he said. “It is not easy to avail education loan now. If 100 students apply for education loan, only 20 get it,” he said.
Asked about the high number of rejections in education loan applications, an official from Canara Bank said, “We look at the employment prospects of a candidate which is one of the main criteria we look into while sanctioning an education loan.”
Students Applying At Accredited Institutions Stand A Better Chance As Bankers Believe They Will Be In A Position To Repay
Ragu.Raman@timesgroup.com
28.06.2019
Are you planning to avail an education loan? Then better check whether the institution has got NAAC accreditation or the department has National Board of Accreditation (NBA) rating.
As per the latest guidelines issued by the ministry of human resources development (MHRD), the model educational loan scheme of the Indian Banks’ Association is restricted to students enrolled in professional/technical courses only from NAAC-accredited institutions or professional/technical programmes by NBA or Institutions of National Importance or Central Funded Technical Institutions (CFTIs). “Out of 480 colleges in Tamil Nadu, only around 100 engineering colleges have NAAC accreditation and 75 colleges may have NBA accreditation. Students may have to choose among these colleges if they want to avail education loan with interest subsidy,” said Jayaprakash A Gandhi, a career consultant.
Those programmes which do not come under the ambit of NAAC or NBA would require approval of the respective regulatory bodies such as Nursing Council of India for nursing courses and MCI for medical courses.
Bankers say students from NAAC and NBA-accredited institutions and departments have better chance to get campus placement and that would ensure repayment. According to the scheme, students whose parental income is up to ₹4.5 lakh can avail interest subsidy and the loan is given without any collateral and third-party guarantee for a maximum of ₹7.5 lakh.
For the past two years, all applications for availing educational loan are being routed through Vidya Lakshmi portal to the banks. Combining the past four years, the banks have approved only 42,733 applications out of 1,44,390 applications received through the portal.
“Banks are not giving importance to education loans. There is not enough awareness among bankers and students about the loan. The disbursement of educational loan was not properly monitored,” said K Srinivasan, convener, Education Loan Task Force (ELTF).
While applying, students can pick three banks in their area for a loan. The banks have to intimate the status of the application to students within 30 days. “But often banks do not respond within 30 days as mandated by the guidelines. There is no proper grievance redressal mechanism for educational loan,” Srinivasan said.
He said students need not give any collateral security for loans up to ₹7.5 lakh. “If they give collateral, they will not get the interest subsidy,” he said.
On the repayment process, Srinivasan said, “Students can repay the loan in 15 years. In case of unemployment or under-employment, they can take moratorium from repaying the loan for two or three times.”
M Rajkumar, founder and chief organiser, Education Loan Awareness Movement, said the number of students seeking education loan is declining due to the decrease in engineering admissions in the state. “Due to unemployment among engineering graduates, students and parents are hesitant to take loans. But the banks are dissuading the few who want to avail it,” he said. “It is not easy to avail education loan now. If 100 students apply for education loan, only 20 get it,” he said.
Asked about the high number of rejections in education loan applications, an official from Canara Bank said, “We look at the employment prospects of a candidate which is one of the main criteria we look into while sanctioning an education loan.”
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