Education Loan in Amritsar

A student should make sure that when they are getting an education loan in Amritsar, he or she has all the right documents that are needed when processing the loan. The documentation that is required may vary depending on whether the loan is an unsecured one or a secured one. This section gives an outline of the documents required for each category of the loan as a general guide to enable you to prepare adequately. Also, it provides information on the types of security that can be used to secure the loan; this can in one way or the other affect your loan application and the terms that are placed on it. Knowledge of these requirements will assist you to plan better while applying for a loan.

Documents required for Unsecured Loan in Amritsar

Application form:

To be considered for a loan, a borrower must submit a fully completed loan application, which includes providing two photographs, a signature, financial information from their assigned financial representative, and any other requirement as per the lender's guidelines.

Student Documents:

• Proof of identity can include documents like an Aadhar card, PAN card or passport.
• An acceptance letter from a university can be used as proof of enrollment.
• Utility bills such as electricity or house tax can be used to verify one's address.
• Educational records, including marksheets from 10th and 12th grades, and certificates from a degree or diploma program, can be used to demonstrate one's qualifications.
• Scores from standardized tests like IELTS, TOFEL, GRE, or GMAT may be required, depending on the application.
• If there is a gap in one's education, a gap certificate may be necessary.
• A letter from an employer can be used to verify relevant work experience.

Co-applicant Documents:

In addition to the identification documents, the borrower must also provide financial documents as a part of their loan application. These documents may include but not limited to:

• For salaried individuals, documentation may include the last three months of salary slips, six months of bank statements, a company ID, as well as the last two years of Form 16 and Income Tax Returns (ITRs)
• For self-employed individuals, documentation may include the last three years of ITRs, six months of bank statements, balance sheets, profit and loss accounts for the last three years, and proof of business address.

Other Documents:

• A document indicating that the co-applicant is responsible for any outstanding costs not covered by the loan, which should be in the format specified by the designated financial officer.
• A bank statement from a standard bank that includes the names of both the student and co-applicant.
• Proof of expenses such as travel or a laptop, if the loan is being requested to cover these expenses.
• Documentation of any payments made ahead of time.
• Previous loan statements, if available.
• A letter was written on an Rs. 100 stamp paper that explains any gaps in employment or income.
• A letter that explains the absence of an Income Tax Return for the co-applicant, if necessary.

Documents required for Secured Loan in Amritsar

When applying for an unsecured loan, in addition to the standard documents required, the co-applicant may have to provide a basic income certificate if they do not have any income tax returns. For a secured loan, additional documentation would be necessary for collateral being pledged.

Additional Documents for Secured Loans for Amritsar

• The official document that proves ownership of the property being used as collateral.
• A legally registered document that confirms the sale, gift, or transfer of ownership of the property, along with the original receipt for the document.
• A letter of allotment issued by a government authority.
• A collection of documents that demonstrate the transfer of ownership of the property over the past 30 years, including an official copy of the controlled document (EC)
• The most recent property tax bill and recent electricity bill that match the property's address.
• A copy of a building plan or plot layout for the property that has been approved by the municipality.

Acceptable collaterals in Amritsar for education loans

1. In Amritsar, student loans can be secured by using properties such as houses, apartments, or land as collateral. To use a property as collateral, the borrower must present all the necessary documents like the proof of ownership, an appraisal report, and any other documents required to confirm the value and condition of the property.
2. When it comes to private banks, they may be willing to accept commercial properties as collateral for loans, however, the collateral margin, or the amount of value required for the property to be considered acceptable collateral, is typically lower than that of residential properties. This means that the commercial property must have a relatively higher value in comparison to the loan amount.
3. In the city of Amritsar, the use of agricultural lands as collateral for educational loans is only allowed by specific public banks. Additionally, the person applying for the loan must provide a sworn statement that confirms that their income is solely from agricultural activities at the time the loan is being taken.
4. Fixed deposits, insurance policies, and government bonds can be accepted as collateral, depending on their specific types. Banks typically consider the principal value of fixed deposits, the surrender value of insurance policies, and the face value of government bonds when assessing their worth as collateral. However, it's worth noting that the collateral margin, or the amount of value required for the asset to be considered acceptable collateral, is usually higher for these types of assets compared to other types of properties.

Once the moratorium period ends, you will be required to start making monthly payments for the education loan which does not need any collateral. The loan repayment period for this loan is 10 years.

As an illustration, if a student takes out a loan of INR 35 lakh with an interest rate of 11.25% over a 10-year period, they will have to stick to a repayment schedule in which they make monthly payments to clear the debt

In this section, different schemes of the government related to the concessional education loans to the students are discussed. These schemes give interest concessions for the people who want to pursue higher education both in India and Abroad. To implement these we will discuss the Dr Ambedkar Central Sector Scheme, Padho Pardesh Scheme, and the Central Government Interest Subsidy Scheme (CSIS). They are as follows: Each program has its requirements for student eligibility and the aid offered, which is designed for students from low-income families. 

Dr. Ambedkar Interest Subsidy Scheme for OBC and EBC Students:

The Ministry of Social Justice and Empowerment has launched a program that lowers the interest rate during the moratorium period for education loans for students from the Other Backward Classes and Economically Backward Classes sections of society. This program aims to provide financial aid to these students during this time.

Eligibility Criteria for the Dr. Ambedkar Interest Subsidy Scheme for OBC and EBC Students:

• The individual applying for the loan must be accepted into a graduate program (such as a Master's, M.Phil, or Ph.D.) at a foreign university.
• The applicant's household income must be less than 8 lakh rupees annually for both the EBC and OBC groups.
• OBC applicants must have a legitimate caste certificate.
• The loan must be obtained from a bank that is included in the Indian Banking Association's list and follows their guidelines

Benefit: During the moratorium period of the loan, the regular interest payments that are due will be waived, meaning that you will not have to pay any interest during this period.

Padho Pardesh Scheme

The Ministry of Minority Affairs has launched a program to assist individuals from the Economically Weaker Section (EWS) communities who wish to study abroad, by providing financial support and resources to assist them in achieving their educational aspirations.

Eligibility Criteria for the Padho Pardesh Scheme

• The loan must be obtained from a bank that is listed by the Indian Banking Association and adheres to their regulations.
• The applicant must be accepted into a graduate program (such as a Master's, Ph.D., or M.Phil) at a foreign educational institution.
• Applicants must provide a valid proof of income, as accepted by the government.
• The applicant's household income must be less than 6 lakh rupees annually.

Note: The Padho Pardesh scheme, an initiative by the Indian government, has been discontinued as of March 31, 2022. However, students who had already met the criteria for and registered for the program prior to April 1, 2022 are still able to receive its benefits.

Central Scheme for Interest Subsidy (CSIS)

The Ministry of Human Resource Development (now called the Ministry of Education) created the Padho Pardesh scheme to eliminate interest on student loans for those from the economically disadvantaged section of society. It was designed to provide financial aid to these students during their education.

CSIS Eligibility Requirements

To qualify for the Padho Pardesh scheme, students must demonstrate that they belong to the Economically Weaker Section of society, have been admitted to a recognized course of study in India, and have a family income of no more than 4.5 lakh rupees per year. If these conditions are met, students who have obtained loans for their studies during the moratorium period will not be required to pay interest on their loans under this program.

Benefit: The Central Scheme for Interest Subsidy (CSIS) is a scheme that offers financial aid to students who meet the requirements and obtain loans to cover their education in India during the moratorium period. Under this scheme, these students are eligible for a waiver of interest on their loans, which means they will not have to pay any interest during the moratorium period of the loan.