Easier loans for higher studies cheer students

The Budget has brought smiles on the faces of fund-starved students in technical and professional institutes in the country.

In the recent Budget, finance minister P Chidambaram announced that students opting for educational loans for studying in technical and professional institutes need not provide a collateral security if they take the loan from commercial banks.

The banks are also happy as it would make their job of disbursing education loans easier with no collateral security. The not-so-well-off or retired parents can now afford to dream of admitting their children to reputed high education schools.

An education loan scheme which was started by various banks in April, 2001 now comes in a new package with features for students interested in further studies. According to new proposal, no collateral security will be needed for loans up to Rs 7.5 lakh.

"New provisions will increase the availability of funds for further studies for middle class students. Awareness for education loans has grown like never before in the last three or four year. So there are bright chances of expansion of education loan market," said A L Daultani, regional manager of Allahabad Bank.

Loan melas organised for medical and technical education in last few years have seen huge turnout of students.

"I have retired from my government job three years back and required to take a loan of Rs 6 lakh for my son who got an admission in London School of Economics but because of requirements for a collateral security for which as a retired employee I was discouraged by the bank but with Chidambaram's announcement, my son himself can get the loan and up to a higher amount. My son approached the same bank on Saturday and he was asked to come back after few days, as the bank officials are yet to receive a formal approval note from Reserve Bank of India (RBI)," said Suresh Shah, a resident of Anand.

Over 100 per cent security through mortgage of liquid assets and parents' guarantee are some of the essential conditions to meet for loan over Rs 4 lakh at present along with all time endowment for student. Income of parents should be over Rs 2.50 lakh and two guarantees are needed.

Moreover student must pay five per cent fees on his own as a margin in case of study in India and 15 per cent in case of foreign studies.