Education Loan in Kerala

If you are a student in Kerala and are thinking about getting a loan to pay for your education in Kerala or elsewhere in India or abroad, this information will be helpful to you. On average, students in Thiruvananthapuram, Kochi, and Alappuzha need around INR 15 lakhs to finance their education within India, and around INR 45 lakhs to study abroad. Education loan interest rates in Kerala can range from 8.5% to 13%, depending on the type of loan and the lender. More information is available below.

For Studies In India

For Foreign Studies

For Studies In India

For Foreign Studies

Expenses Covered

In India, loans for education are commonly used to finance expenses like tuition, Examination fees, and other costs related to college/ university such as room and board, materials, and other necessities. The financial aid might also include living costs like housing and meals. It is essential to review the agreement of the loan and be aware of what expenses it covers.

Moratorium Period

The term "moratorium period" refers to a time frame during which the person who borrowed does not have to pay back the loan. This time frame usually starts once the borrower has finished their studies and continues until they have a stable income. The exact time frame can vary based on the loan provider and the terms of the loan agreement, it's common to be between 6 to 12 months.

Loan Margin 

The loan margin is the percentage of the total loan amount that the borrower has to pay from their own funds. For instance, if the margin is 5%, then the borrower will have to pay 5% of the total loan and the lender will take care of the remaining 95%. Lenders often use this to minimize their risk in the event that the borrower can't repay the loan. It is important to thoroughly read the loan's terms and conditions to understand the loan margin and any other rules that may apply.

Collateral Margin

The collateral margin is the percentage of the total loan amount that is backed by an asset pledged as collateral. Collateral is an asset that the borrower puts as a guarantee for the loan, if the borrower fails to make the loan repayments, the lender can take possession of the collateral to recoup their losses. Collateral Margin is often used by lenders to minimize their risk, in case the borrower is unable to pay back the loan. It is crucial to carefully review the loan's terms and conditions to understand the collateral margin and any other rules that may apply.  

Documents required for Unsecured Loan in Kerala

Application form:

In order to be considered for a loan, The borrower must submit a completed loan application form, which includes the requirement of providing two photographs and a signature, as well as financial information from their designated financial representative.

Student Documents:

• Identification documents such as Aadhar card, PAN card, and passport
• An admission letter from a university
• Utility bills like electricity bills, and house tax as proof of address
• Academic records like 10th and 12th mark sheets and degree or diploma certificates
• Scores from competitive exams like IELTS, TOFEL, GRE, and GMAT if applicable
• A Gap certificate if there is any gap between the degree
• Work experience letter, if the applicant has any relevant work experience.

Co-applicant Documents:

In addition to the identification documents, financial documents are also required. These include:

• For salaried individuals: last 3 months salary slips, 6 months of bank statements, company ID, last 2 years of Form 16, and last 2 years of Income Tax Returns (ITRs)
• For self-employed individuals: last 3 years of ITRs, 6 months of bank statements, balance sheet, profit, and loss account for last 3 years, and proof of business address.

Other Documents:

• A letter stating that the co-applicant is responsible for any remaining costs not covered by the loan. The format for this letter should be provided by the assigned financial officer.
• A manifested standard bank statement with both the student and co-applicant's name on it.
• An invoice for expenses such as travel or a laptop, if a loan is being requested to cover these items.
• Receipts for any transactions made in advance.
• Loan statements from the previous year, if applicable.
• A letter on Rs. 100 stamp paper explaining any gaps in employment or income.
• A letter explaining the lack of a co-applicant's Income Tax Return (ITR), if relevant.

Documents required for Secured Loan in Kerala

For an unsecured loan, in addition to the standard required documents, a co-applicant may need to submit a basic income certificate if they do not have any income tax returns. For a secured loan, proof of collateral being pledged is also needed, which would require additional documentation.

Additional Documents for Secured Loans for Kerala

• The title deed of the property being pledged as collateral
• The registered sale agreement, gift deed, or will
• Original receipt for the agreement listed above
• Munnadaram, a prior deed document, is essential and is needed even if a certified copy is available. If deviation is allowed, a conversion certificate must be obtained if the land has been converted from a wetland or Neelam land to non-agricultural land.
• If the property has private road access, acceptance from the neighboring property owners is required.
• 30 years of documents showing the transfer of ownership of the property or an earlier chain of sale deeds establishing ownership, including an extract of the controlled document (EC)
• Latest property tax bill and latest electricity bill have the same address as the property
• Copy of a municipality-approved building plan or plot layout for the property.

Acceptable collaterals in Kerala for education loans

1. In Kerala, student loans can be secured by using houses, apartments, or land as collateral. To use a property as collateral for a student loan, one must present all the necessary documents such as proof of ownership, an appraisal report, and any other documents required to confirm the value and condition of the property.
2. Private banks may consider commercial properties as collateral, however, the collateral margin is typically lower compared to residential properties. This implies that the value of the commercial property must be relatively higher in comparison to the loan amount, in order to be considered as acceptable collateral.
3. In Kerala, the use of agricultural lands as collateral for educational loans is allowed only for certain public banks, and the applicant must provide an affidavit that confirms that their income is solely from agriculture at the time the loan is taken. Additionally, the maximum loan amount that can be taken is limited to 30 lacs.
4. Fixed deposits, insurance policies, and government bonds may be accepted as collateral, based on their types. The principal value of an FD is usually considered, while the surrender value is considered for insurance policies, and the face value is taken into account for government bonds. It's worth noting that the collateral margin for these types of assets is generally higher compared to other types of properties.

Important Points for Education Loans in Kerala

• Wetland or Nilam land is not accepted as collateral by banks. 
• When it comes to immovable property, there should be adequate road access to the pledged property.
• The road should be a municipal road with a minimum width of 8 feet, wide enough for a car to pass through.
• Rubber plantations, as well as non-agricultural properties with rubber plantations, are not acceptable.

It is important for students from Kerala to understand that many private lenders and non-banking financial companies that offer loans without collateral are not currently accepting applications from students in the state. One potential solution to this issue is to arrange for collateral, such as through friends or relatives. However, if this is not possible, it may be worth reaching out to other organizations for potential assistance in obtaining an unsecured loan.

Additionally, it is important to note that applications with collateral properties that do not have access to a municipal road or have a very small road will likely not be accepted. To qualify, the property must have at least 8 feet of road access through a municipal road, or a NOC from neighbors if the road is private.

Lastly, it is important to note that Neelam land cannot be accepted as collateral for a loan.

A significant area of Kerala is covered by wetlands which cannot be pledged as collateral. Also, most of the area of Kerala is non-serviceable. In such situations getting an education loan is tough. However, you can take assistance from WeMakeScholars. We are supported by govt of India under the Digital India Campaign and are partnered with 14+ banks (Public/Pvt).  Go through the below points to understand more about the benefits you will have when you go through us. 

Guidance from an Expert: If you are seeking a secure education loan, WeMakeScholars will assign a dedicated relationship manager to guide you through the process and ensure a smooth and efficient experience.

Rate of Interest Negotiation: Interest rates for unsecured loans are typically higher than secured loans, however, WeMakeScholars can assist you in negotiating a lower rate of interest, potentially as much as 2% below what the lender initially quotes

Government Funding: WeMakeScholars is a government-funded organization under the Ministry of IT and is supported by the Digital India Campaign.

Experience in Complex Cases: WeMakeScholars handles many complex cases involving multiple parties and prioritizes them to ensure a timely loan approval. We have a track record of successfully navigating these complex cases and getting them approved in a timely manner.

No Service Charge: WeMakeScholars offers all of its services free of charge and will continue to provide support to students until the loan is fully repaid.

Transparency: WeMakeScholars will keep you informed about the progress of your application and ensure that you have a complete understanding of the process

Cashback Provided: WeMakeScholars provides a cashback incentive for students who use our platform to apply for a study abroad loan. The cashback will be credited to the first disbursement of the loan and the maximum reward is INR 3000.

After the moratorium period ends, you will have to begin making monthly payments on the education loan that does not require collateral. The repayment period for this loan is 10 years.

For example, if a student takes out a loan of INR 35 lakh at an interest rate of 11.25% for a 10-year period, they will have to adhere to a repayment schedule where they make monthly payments to pay off the loan.

Dr. Ambedkar Interest Subsidy Scheme for OBC and EBC Students:

The Ministry of Social Justice and Empowerment has introduced this program to lower the interest rate during the moratorium period for education loans for students from the OBC and EBC sections of society. The goal of this program is to provide financial assistance to these students during this period.

Eligibility Criteria for the Dr. Ambedkar Interest Subsidy Scheme for OBC and EBC Students:

• The applicant must have gained admission into a graduate program (such as a Master's, M.Phil, or Ph.D.) at a university outside of India.
• The applicant's household income must be below 8 lakh rupees annually for both the EBC and OBC groups.
• OBC applicants must possess a valid caste certificate.
• The loan must be obtained from a bank that is included in the Indian Banking Association's list and adheres to their guidelines.

Benefit: During the moratorium period of the loan, the interest payments that are normally due will be waived, which means that you will not have to pay any interest during this time

Padho Pardesh Scheme

The Ministry of Minority Affairs has introduced this program to assist individuals from Economically Weaker Section (EWS) communities who want to study abroad, by providing financial aid and resources to help them achieve their educational goals

Eligibility Criteria for the Padho Pardesh Scheme

• Loans must come from a bank that is listed by the Indian Banking Association and follows its rules.
• Applicants must have gained admission into a graduate program (such as a Master's, Ph.D., or M.Phil) at a foreign institution.
• Proof of income, as recognized by the government, is required.
• The applicant's household income must be below 6 lakh rupees annually.

Note: The Padho Pardesh scheme, a government of India program, was terminated on March 31, 2022. However, students who were eligible for and registered in the program before April 1, 2022, will still be able to receive benefits from it.

Central Scheme for Interest Subsidy (CSIS)

The Ministry of Human Resource Development (now known as the Ministry of Education) established this program to waive the interest payments for student loans taken by individuals from the Economically Weaker Section (EWS) of society, in order to provide financial assistance and support to these students during their educational pursuits.

CSIS Eligibility Requirements

To be eligible for this program, students must provide proof of their membership in the Economically Weaker Section (EWS) of society, be accepted into an authorized study program in India, and have a family annual income not exceeding 4.5 lakh rupees. If these criteria are met, students who have taken out loans to study in India during the moratorium period will be exempt from paying interest on their loans under this program.

Benefit: The Central Scheme for Interest Subsidy (CSIS) is a program that provides financial assistance to students who meet the eligibility criteria and take out loans to pay for their education in India during the moratorium period. Under this program, these students are eligible to have the interest on their loans waived, which means they will not have to pay any interest during the moratorium period of their loan.

Thiruvananthapuram, Kochi, and Alappuzha are home to several reputable educational institutions that offer a diverse range of courses including engineering, medical, and degree programs. These institutes are well-respected and considered among the leading universities in Kerala.

• Kannur University, Kannur. 
• Kerala Kalamandalam, Thrissur.
• Kerala University, Thiruvananthapuram. 
• KUHS, Thrissur. 
• SSUS, Ernakulam.
• Malayalam University, Malappuram.
• Chinmaya Vishwavidyapeeth, Kochi. 
• Chinmaya Vishwa Vidyapeeth, Ernakulam.