MONEY ON MERIT Students with admission to prestigious institutes will get loans more easily than others, while those with a strong academic record will enjoy lower rates of interest

MONEY ON MERIT

Students with admission to prestigious institutes will get loans more easily than others, while those with a strong academic record will enjoy lower rates of interest

Your grades and the rating of the college you get in to will determine whether or not your education loan will be sanctioned, according to the Indian Banks’ Association’s (IBA) Educational Loan Scheme 2012. Meritorious students will be given loans at lower rates — and merit will be established by a cumulative grading of colleges and courses. This grading will be determined by banks in association with academic experts, and some banks already follow this process.
Perhaps this is why the IBA’s latest survey revealed that although the number of Indian students who took education loans went up by 50,000, the total funds disbursed by banks fell by 28% in 2011-12. The loan amount thus decreased by 32% per student in the past year.

THE ASSOCIATION’S LATEST GUIDELINES:
The various banks under the IBA will soon prepare and publish a list of eligible courses that they will sanction student loans for.
Students with good academic records will get loans easily, and at lower rates.
The grade of an institution will depend on its track record in terms of the percentage of students it places and the average salaries of graduating classes.

To facilitate easier repayment of loans, banks will charge lower rates for loans up to R4 lakh and continue giving concessions given to female students. Banks can offer different interest rates to different students based on rating of courses or institutions, or individual student records.
The loan repayment period has been increased from five years to 10 years for loans up to R7.5 lakh and seven years to 15 years for above.
For institutions in India, banks can sanction up to R10 lakh and for colleges abroad, the limit is R20 lakh.

A QUESTION OF SECURITY
For loans up to R4 lakh: No security is required and parents are to be joint borrowers
For loans between R4 to R7.5 lakh: Parents will need to provide collateral security
For loans above R7.5 lakh: Parents will be joint borrowers and will also have to provide banks with tangible collateral security of a suitable value.