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Bank’s conditions: While sanctioning a loan, the bank will check if a student has actually secured admission to a course, the quality of the college and the course (whether it is recognised by the University Grants Commission or the All-India Council for Technical Education), if the student has the ability to secure an appropriate job after the course, and, where applicable, the credit history of the co-applicant or guarantor. Documents: The most commonly required documents are: a) proof of admission (educational loan cannot be applied without proof that admission has been secured in the selected institution); b) schedule of fees from the institution; c) mark sheet of the last qualifying examination; d) details/statements of bank accounts held by the student applicant for the last six months; and e) photographs. Charges: Banks charge you processing fees for approving the loan and basically doing all the paperwork. These fees range between 2.25 per cent and 2.50 per cent. Another charge is the margin amount. Normally banks do not approve the loan that would cover the entire cost of your education. For example, for a loan of Rs 10 lakhs, the bank will approve only 80 per cent or Rs 8 lakhs. The additional Rs 2 lakhs that you will have to raise from your own sources is called the margin amount. Repayment: Most banks ask you to start paying off the loan either six months or one year after you complete the course, or six months after you have secured a job, whichever happens first. It is important to remember that the higher the amount, the longer you get to repay. However, this does not mean that you are not charged any interest for that period. Although some banks may defer interest payment, interest is actually calculated from the day of disbursement of the loan. banks (for a nominal fee to be paid by the member banks every year to keep the guarantee afloat). Corpus contribution to the fund shall be made upfront by the settler – that is, the government of India – on an annual basis. In case of default and invocation of claim, the Fund shall settle the claims of the lending institution after due diligence and 75 per cent of the guaranteed amount shall be payable as first instalment; the balance, if any, shall be paid after conclusion of recovery proceedings and ascertaining the net/ final loss incurred by the lending institution.

Credit guarantee fund for higher education