Education Loan in Kerala

Education is the key to success, but it comes with a cost. Many students in Kerala aspire to pursue higher education in India and abroad but are unable to do so due to financial constraints. This is where education loans come into play. In this article, we will discuss everything you need to know about education loans in Kerala, including eligibility criteria, documentation, interest rates, and repayment terms.
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.

Numerous banks in Kerala provide education loans to students seeking funds to complete their higher studies in India or abroad. Here we have listed down the best bank and their loan details, you can check them out before your education loan process.

For Studies In India and Abroad

Request a callback or fill out the common application form to approach your financial officer at WeMakeScholars, they will analyze your loan profile and connect you to the best lender that will fulfil all your education loan requirements.

For Studies In India and Abroad

(NOTE- To check the latest and detailed interest rate click here).

Kerala Gramin Bank offers an Education Loan Scheme to offer financial aid to students who wish to further pursue their education after finishing their bachelor's. The student should be an Indian National.

The loan limit ranges from 10 to 20 Lakhs and the interest rate ranges from 10.50% to 13.60% with a loan margin that ranges from 5% to 10% depending on the country that the student wishes to go to.

The Eligibility Criteria include that, a parent or guardian should act as the representative for minor students, The loan will be in both the student's and the parent/guardian's names and the student must have gained admission to reputable institutions in India or overseas for higher education through a selection process based on merit.

Expenses Covered

In India, loans for education are commonly used to finance expenses like Tuition fees, Examination fees, Study tours, Project works, and other costs related to college/ university such as room and board, materials, and other necessities. The Education Loan also includes living costs like housing and meals.

Moratorium Period

The term "moratorium period" refers to a time frame during which the student does not have to start paying back the loan. The banks give students 6 months to 1 year after they finish their course, to start repaying the loan. i.e., you get 6 months to 1 year to secure a job before you start repayment.

Loan Margin

The loan margin is the percentage of the total loan amount that the borrower has to pay from their 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 if the borrower can't repay the loan.  

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.   

Documents required for Unsecured Education Loan in Kerala

To begin your education loan application, you'll have to give your bank some documents. We wrote an article about this recently. It tells you exactly what documents you'll need to avail an education loan. Here's a quick summary of the basic documents you'll need for a Bank of Maharashtra education loan:

1. Online Application form
2. Verification of identity (such as Aadhaar Card, Voter ID, Passport, Driving License, etc.)
3. Confirmation of address (like Aadhaar Card, Voter ID, Passport, Driving License, etc.)
4. Confirmation of enrollment (official admission letter from the educational institution)
5. Educational records (academic reports for 10th grade, 12th grade, and graduation)
6. Evidence of income for the last three months (pay slips or a company letter verifying salary)
7. Form 16 for the past two years issued by your employer
8. Income Tax Return (ITR) filed for the previous 2 years
9. Financial documents like balance sheet and profit/loss account for the preceding three years (if the co-applicant is self-employed)
10. Statement addressing any gaps in academic or employment history on stamp paper costing Rs. 100

Documents Required for Secured Education Loan in Kerala

For a secured education 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 along with 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 is 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 neighbouring 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)
• The latest property tax bill and the latest electricity bill have the same address as the property.
• Copy of a municipality-approved building plan or plot layout for the property.

Students from Kerala need 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.

After you complete the course and 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 10 years, they will have to adhere to a repayment schedule where they make monthly payments to pay off the loan.

The Government of India has introduced several interest subsidy schemes for students who wish to pursue higher education in India or abroad. These schemes provide financial assistance or interest subsidies to qualifying students. Some of the popular schemes include:

• Central Govt. Interest Subsidy Scheme (CSIS)
• Padho Pardesh Scheme.
• Dr. Ambedkar Scheme for OBC and EBC.

(To know more about these subsidy schemes click here)

Central Government Interest Subsidy Scheme (CSIS)

• Objective: This scheme aims to offer an interest subsidy while the education loan is under a moratorium period.
• Eligibility: It is available for students from economically weaker sections (EWS) with a yearly gross parental or family income up to Rs. 4.50 lakhs.
• Interest Rate: The scheme provides a 100% interest subsidy during the specified period.

Padho Pardesh Scheme

• Objective: The goal of this scheme is to provide interest subsidy during the moratorium period of an education loan.
• Eligibility: It is accessible for students belonging to minority communities such as Muslims, Christians, Sikhs, Buddhists, Jains, and Zoroastrians, with an annual gross parental or family income up to Rs. 6.00 lakhs.
• Interest Rate: Under this scheme, a 100% interest subsidy is offered.

NOTE: The Padho Pardesh Scheme has been inactive since April 1, 2022. However, beneficiaries who were already enrolled continue to receive the scheme's benefits.

Dr. Ambedkar Scheme for OBC and EBC

• Objective: This scheme's purpose is to provide interest subsidy during the moratorium period of an education loan.
• Eligibility: The scheme is meant for students belonging to Other Backward Classes (OBCs) and Economically Backward Classes (EBCs) with an annual gross parental or family income up to Rs. 8 lakhs.
• Interest Rate: It offers a 100% interest subsidy during the specified moratorium period.

Along with these schemes, there are various other Schemes launched by the Kerala gov. through which you can take the benefits of an education 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.

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 get 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 Experienced Professionals: If you are seeking a secured education loan, WeMakeScholars will assign a Financial Officer to guide you through the entire process and ensure a smooth and efficient experience, we even provide loan repayment support.

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.

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 as soon as possible.

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 loan disbursement of the loan and the maximum reward is INR 3000.