Education loan in Bangalore

In this section, we will provide an overview of how education loans are structured, including the kind of expenses that are eligible for funding, the moratorium period offered, loan margin, and collateral margin. By doing this, students and their families get positioned well in terms of their financial capacity to afford these aspects besides getting placed well in their respective educational levels. Now let's look at the specifics about what the education loans in Bangalore have to offer.

Expenses covered 

• College Tuition Fee: The loan covers the cost of tuition fees charged by educational institutions for the chosen course of study.
• Accommodation Fee: Expenses related to accommodation, such as hostel fees or rent for a rented apartment, are also covered by education loans. This ensures that students have a suitable living arrangement while pursuing their education.
• Examination Costs: The loan encompasses expenses associated with examinations, including registration fees, examination fees, and any other charges required to appear for exams throughout the course.
• Library Fees: The cost of library fees, which grants students access to academic resources and materials, is included in the education loan. This enables students to utilize the resources available for their studies.
• Laboratory Costs: For courses that involve practical or laboratory work, the loan covers the expenses related to laboratory equipment, chemicals, and other necessary materials.
• Price of Books: The loan includes the cost of textbooks, reference books, and other study materials required for the course.
• Miscellaneous Costs: Various additional expenses, such as stationary supplies, project materials, and other academic necessities, are covered by the education loan.

Moratorium Period 

Most banks located in Bangalore typically offer a moratorium period for education loans, which is generally equal to the duration of the course plus an additional six months to one year. However, it's important to note that the repayment terms during the moratorium period may differ based on the type of bank, whether it's a public bank, private bank, or a non-banking financial company (NBFC). 

On the other hand, private banks follow a different approach. Borrowers who have taken education loans from private banks are expected to make interest payments, including compound interest, throughout the moratorium period.

This implies that both the principal amount and the accumulated interest will be subject to compounding during this time.Unlike public and private banks, NBFCs typically mandate that borrowers start paying equated monthly installments (EMIs) from the beginning of the moratorium period. This means that students who have taken education loans from NBFCs will need to make regular EMI payments, including both the principal amount and the interest, even during the moratorium period.

Loan Margin 

The loan margin, which is a specific percentage of the total loan amount, is a requirement that needs to be fulfilled by the student or applicant. To ensure loan approval, the student must arrange a certain amount as the loan margin. For example, if the loan margin is approximately 5% and the loan amount is around 40 lakhs, the student will need to arrange 2 lakhs.
When it comes to public banks, the loan margin usually constitutes 10% of the entire loan amount. This means that if a student is seeking a loan from a public bank, they would need to arrange 10% of the loan amount as the loan margin.
In the case of private banks, the loan margin requirements may vary. It typically ranges from 5% to 10% of the total loan amount. This implies that the student would need to arrange a margin within this range, depending on the specific policies of the private bank from which they are seeking the loan.

Collateral Margin 

The collateral margin refers to the portion of the total loan amount that is safeguarded or secured by collateral. It represents the specific percentage of the loan amount that is covered by the collateral provided by the student or applicant. In the case of secured loans, the collateral margin is typically determined as part of the loan agreement.
If the borrower fails to fulfill their loan repayment obligations, the bank can utilize the collateral provided to reclaim the outstanding loan amount. This allows the bank to recoup their losses by liquidating or selling the collateral, thereby recovering the funds that were disbursed as the loan.

Section 1: Application Form & Photograph
Complete the application form for the education loan, either in physical form or online via the WeMakeScholars website. If completing the form online, a printed copy is also acceptable. Additionally, include two passport-size photographs of the applicant.
Section 2: Basic Documents of Applicant, Co-Applicant, and/or Guarantor

Identification Proof:

• • Aadhar card
  • PAN Card
  • Passport (if the applicant plans to study abroad)

Proof of Residence (if permanent and present addresses are the same, two different documents are required):

• • Electricity Bill
  • Aadhaar card
  • Telephone Bill
  • Bank passbook statement
  • Voter ID Card
  • Ration card

Co-Applicant Documents:

• • If Salaried: Bank statements for the last six months
  • If Self-employed: Business transaction records for the past year
  • Asset and Liability Statement approved by the bank employee

Section 3: Academic Documents of Applicant

• Proof of admission to the eligible course
• Fee structure provided by the university, including payment deadlines
• GMAT/IELTS/GRE scorecard
• Marksheets and certificates from school and college starting from class 10th

Section 4: Financial Co-Applicants Income Proof Documents 

If Salaried:

• Details of Form 16 for the last two years
• Salary slips for the past three months
• Applicant's office ID card
• Income Tax Returns (ITRs) for the last two years

If Self-employed:

• Income Tax Returns (ITRs) for the past three years
• Profit and loss statement in the balance sheet for the past three years
• Proof of the business's address

Section 5: Other Documents

• Declaration from the co-applicant affirming responsibility for all other expenses
• Joint affidavit in the bank's standard format from the student and co-applicant

Section 6: Additional Documents (if applicable)

• Payment receipts issued in the university's name
• Statement of any pending loans within the past year
• Gap certificate on a Rs 100 stamp paper, explaining the reason for any academic break

Collateral documents which are required for a secured education loan in Bangalore 

• The deed that establishes ownership of the property.
• A legally registered Will, sale contract, or Gift deed.
• The receipt of initial registration for the aforementioned agreement.
• An allocation letter from the municipal corporation or, if applicable, a government agency such as MHADA, JDA, DDA, HUDA, CIDCO, GIDC, etc.
• A document showing a 30-year connection or a chain of previous sale documents that establish the property's title. This document should provide a timeline of property ownership within the past 30 years. If you have owned the property for more than 30 years, the previous sale paperwork will suffice.
• Recent invoices for property taxes and electricity from the same address.
• A copy of the approved plot layout or construction plan provided by the municipality.

Acceptable collaterals in Bangalore for education loans

• Residential properties such as houses, flats, and non-agricultural land with defined boundaries.
• Properties intended for commercial use (Some banks may accept these).
• Land specifically used for agricultural purposes.
• Fixed deposits, insurance policies, and government bonds.  

Note 
In Bangalore, the properties were categorized into three groups by the municipal corporation in 2007: "A Khata" properties, which are fully legal and have fulfilled all tax obligations; "B Khata" buildings, which are unauthorized or illegal; and "E Khata" properties, which are electronic in nature.

For properties in Bangalore, it is necessary to obtain a Khata extract and certificate. These documents serve as proof of ownership and legal status.

If you take out a secured loan of 25 Lakhs at an interest rate of 10.40% from a public bank in Bangalore with a grace period of 6 months and a repayment period of 12 years your repayment schedule would look something like this. 

Monthly EMI: 36,207
Total payment: 52,13,758
Total Interest Payable: 27,13,758

Padho Pardesh Scheme:

The Padho Pardesh Scheme was an initiative introduced by the Ministry of Minority Affairs to provide subsidies for students pursuing education abroad. The scheme aimed to support students from religious minority communities, including Muslims, Christians, Sikhs, Buddhists, Jains, and Zoroastrians, whose family income was less than 6 lakhs.

It is important to note that the Padho Pardesh Scheme is no longer active as of April 1, 2022. However, students who were beneficiaries of the scheme before March 31, 2022, will continue to receive interest subsidies throughout the duration of their loan and its moratorium period.

Central Scheme for Interest Subsidy for Economically Weaker Sections:

The Central Scheme for Interest Subsidy for Economically Weaker Sections aims to provide financial assistance to students from economically disadvantaged backgrounds. To be eligible for this scheme, the applicant's household income should be less than 4.5 lakhs.

Dr. Ambedkar Central Sector Scheme:

The Dr. Ambedkar Central Sector Scheme is designed to support students from financially underprivileged backgrounds. Eligibility for this scheme includes coming from a financially disadvantaged class and having an annual family income of less than 8 lakhs. Additionally, students from the Other Backward Classes (OBC) category are eligible if their family income is below 8 lakhs per year.

These schemes were implemented to provide financial support and opportunities for higher education to students who may otherwise face financial constraints.