A loan which aims to fund education meant for students who wish to go for higher education in both India or abroad.
The loan has the following features:
- The loan is extended for seeking graduation or post-graduation education, or to pursue a technical, professional or management related courses
- The maximum loan granted to an applicant who is seeking education in India is Rs.10 lakh. If the institute from where the candidate is seeking such education falls in the Special Education Loan Scheme, the quantum of loan is higher.
- For studying abroad, the maximum quantum of loan granted is Rs.20 lakh
- Loans going up to Rs.4 lakh require no maintenance of margin and 100% of the finance is offered as a loan. Loans over Rs.4 lakh would require margin money. The margin requirement would be 5% for education taken in India and 15% for education taken abroad. Any form of scholarship or assistantship would be included in the margin.
- There is a concept of repayment holiday technically called the moratorium period during which the loan does not need be repaid. The moratorium period would be lower of the course duration plus 1 year post completion of the course or course duration or six months of job placement.
- For loans of values up to Rs.7.5 lakh, the repayment period would be 10 years excluding the moratorium period and for a loan of a higher value going over Rs.7.5 lakh, the repayment period would be 15 years excluding the relevant moratorium period.
- The loan does not have any processing charges
- If the interest amount is paid during the moratorium period when the repayment is not needed, the student would be eligible to earn a concession in the rate of interest
- The valuation charges, legal charges, stamp duty, CERSAI charges and memorandum registration charges would be payable wherever they are incurred
- No security would be required if the loan amount is up to Rs.4 lakh. For loans above Rs.4 lakh and going up to the value of Rs.7.5 lakh, the guarantee of a suitable third party which should be acceptable to the bank would be required as security. For loans higher than Rs.7.5 lakh, a collateral security of the amount equivalent to the loan and the required interest should be pledged as security which should be acceptable by the bank. Whatever is the quantum of loan, the student’s parent or spouse should be a co-applicant in the loan.
- The student should avail of a life insurance cover equivalent to the amount of loan to pay back the loan in case of premature demise of the applicant
- The loan would be disbursed from the nearest branch of the applicant’s residence and would be directly disbursed to the institute
- If the loan is later taken over by another bank or financial institution, the bank would charge a penalty of 2% of the average balance of loan over the last 12 months
Students applying for education loan should fulfil the following criteria to become eligible for the loan:
- He or she should be an Indian citizen
- The student must have get the admission in the institute from where the education would be sought and such admission should have been through a merit-based selection process or an entrance examination
- The courses eligible to be covered for Indian studies include graduation, post-graduation or diploma courses undertaken from reputed educational institutions covering technical, professional and management studies
- Courses undertaken abroad should be graduation, post-graduation or degree courses conducted by institutes of repute, certified degree courses conducted by specified institutes like CIMA (UK), CPA (USA), etc.
- Any sort of diploma course taken abroad would not be covered under a Union Bank student education loan
Rate of Interest
The rate of interest on educational loans depends on the sex of the student, base rate of the bank and the quantum of loan opted for. The following rates of interest are charged by the bank currently:
Quantum of Loan
Up to Rs.4 lakh
(MCLR + 3.15) % = 12.55%
(MCLR + 2.65) % = 12.05%
Rs.4 lakh to Rs.7.5 lakh
(MCLR + 2.90) % = 12.30%
(MCLR + 2.40) % = 11.80%
Rs.7.5 lakh and above
(MCLR + 2.15) % = 11.55%
(MCLR + 1.65) % = 11.05%