Education Loans in Mumbai

Interest rates on education loans in Mumbai vary from bank to bank; they have different rates and promotions for studies in India and abroad. The next section aims to present a comparison of these rates and the bonuses when choosing the requisite bank, such as discounts for female students and others. This information is useful since students applying for loans will find the possible savings through some concessions articulated here easier to understand, especially when processing their loans with WeMakeScholars.

For studies in India

For Foreign studies

Education loans that students get from banks in Mumbai or other NBFCs can be used to finance tuition fees, accommodation, books, travel, food, and other related expenses. Further, banks also have agreed to meet any other incidental expenses that may be incurred in connection with the said course. The period of moratorium is for the duration of the course plus one year after the course is completed depending on the policy of the bank. Loan margin and collateral margin requirements are also not the same, and they have their particular percentages depending on the type of loan and the type of collateral to be placed. Keep reading to learn more about the features:

Covered Expenses

Students availing an education loan from banks or NBFCs in Mumbai are covered for the following expenses

• Course or Tuition Fees
• Hostel or accommodation fees
• Cost of stationeries and books
• Traveling cost (air tickets, if the student is going abroad)
• Mess and food expenses
• Cost of uniform, projects, and thesis work
• Laptop or computer cost

The banks also commit to paying for any other expenses incurred during the course or related to the course of study.

Moratorium Period

The moratorium period is the duration of time that starts immediately after the disbursement of loan. It usually lasts for the course duration plus upto 6 months or 1 year after completion of the course, depending on the bank policy.

Loan Margin

Applicants do not get the entire asked loan amount as an education loan, there is a loan margin in every bank. It is a percentage-wise amount of the asked education loan which the applicant will have to arrange on their own, in order to get the remaining amount as an education loan. The loan margin is to check the loan repaying capacity of the applicant.

Generally,

• The loan margin to study in India is 5% of the loan amount
• To study abroad loan margin is 15% of the loan amount

However, the actual loan margin depends on the type of loan that you are applying for and the loan scheme under which you are applying.

Collateral Margin

Depending on the type of collateral, banks have different percentages set for each type of collateral on which it provides education loans. 

Some banks allow up to 100% of the value of immovable properties when determining the loan amount, while others accept up to 100% of the value of liquid assets. The proportion, however, is dependent on the kind of collateral. Contact your financial officer at WeMakeScholars to find out the precise loan amount you qualify for based on your collateral security.

Lenders have very specific documents requirements to offer student education loan in Mumbai, which include the following documents:

Section 1: Application form & Photograph

Submit the filled education loan application form, hard copy of the loan application form filled out online on the WeMakeScholars website is also acceptable. Also, carry 2 passport-size photographs of the applicant.

Section 2: Basic documents of applicant, co-applicant, and/or guarantor

1. Identification proof

• Aadhar card 
• PAN Card
• Passport if the applicant is going to study abroad

2. Proof of residence (in case permanent address and present address is same then, student will have to provide 2 different documents)

• Electricity Bill
• Aadhaar card
• Telephone Bill
• Bank passbook statement
• Voter ID Card
• Ration card

3. Co-applicant documents

• If Salaried- bank statement of last 6 months
• If Self-employed- business transactions of last 1 year

4. Asset and Liability statements approved by the bank employees

Section 3: Academic documents of the applicant

• Admission proof of student in the eligible course
• Fees structure as provided by the university with the payment deadline
• Scorecard of GMAT/ IELTS/ GRE 
• School and college mark sheets from class 10th along with certificates

Section 4: Financial co-applicants income proof documents

If Salaried

• Last 2 years' details of Form 16
• Salary slips of last 3 months 
• Applicant’s office ID card
• Last 2 years ITRs

If Self-employed

• Last 3 years ITRs
• Profit and loss statement in the balance sheet of the last 3 years  
• Business address proof

Section 5: Other Documents

• Co-applicant declaring that all other expenses will be taken care of by them
• Joint affidavit in the bank’s standard format from the student and co-applicant’s side

Section 6: Additional docs (if applicable)

• Payment receipts made in the name of the university
• Statement of any pending loans in the last 1 year
• Gap certificate on Rs 100 stamp paper explaining the reason for a break in academics

Acceptable collaterals in Mumbai for education loans 

1. House, Flat, in residential areas with all required documents
2. Commercial properties 
3. FD, Insurance policy, Government bonds 

To apply for a collateralized education loan in Mumbai, you will need to produce all the necessary collateral documents along with the below mentioned collateral documents if you are pledging immovable property as collateral:

• A no-objection certificate from the builder or society management in the bank’s given format
• Receipts of all payments made to the builder or seller
• Share certificate if in case the property is a resale property
• Conveyance deed of the property
• Confirmation of POA by the builder
• If the property is very old, then a structural analysis report will be required by public banks
• Commencement certificate in case of new property
• Certificate copy of board resolution or power of attorney from builder is required

The above-mentioned collateral documents are required for collateralized education loans in Mumbai. Also, they vary from state to state. Talk to your financial officer who will provide you with an accurate list of required documents.

The repayment plan for an education loan in Mumbai depends on the loan amount, the interest rate, and the desired repayment period. For instance, if a student gets a loan of Rs 40 lakhs at 10% interest and the tenure of the loan is 12 years with a moratorium period, then the loan will be repaid through monthly installments. The table below shows the amortized EMI, which breaks down the monthly payment between interest and principal until the loan is fully repaid at the end of the tenure.

Education loan subsidy schemes are as follows: Several interest concession schemes are available to the students from Mumbai to get the education loans. The Central Government Interest Subsidy Scheme (CSIS) is available for loans up to Rs 7.5 Lakhs/- for eligible students belonging to the low-income group. Padho Pardesh Scheme is similar for the minority students for overseas studies while the scheme has been closed since April 2022. Furthermore, under the Dr. Ambedkar Central Sector Scheme of Interest Subsidy, loans up to Rs 7.5 lakhs are provided without any interest for each eligible student pursuing further education in foreign countries. Keep reading to know more about the specific subsidy schemes.

Central Government Interest Subsidy Scheme (CSIS)

The program, which provides eligible students with a reduction in interest on school loans totaling up to 7.5 lacs, was created and is administered by the Indian federal government. However, the total loan amount may be greater than 7.5 lacs.

Eligibility criteria for CSIS

• Only students from India are eligible.
• just for Indian study-abroad programmes
• Students must come from a socioeconomically disadvantaged group with a family income of under 4.5 lacs.

Padho Pardesh Scheme

An education loan interest subsidy of up to 7.5 lacs is available through this scheme to eligible students from India's recognized minority communities who are also EWS members for their overseas studies. However, the loan amount might be higher.

Eligibility for Padho Pardesh Scheme

• Only students from India are eligible.
• Only for international study programs
• The family's combined total income of the student cannot exceed Rs 6 LPA.

Note: Students will continue to get subsidy benefits if they applied for interest subsidy benefits under this plan before 1 April 2022. Due to the government's decision to end this program on March 31, 2022.

Dr. Ambedkar Central Sector Scheme of Interest Subsidy 

For students who qualify for Dr. Ambedkar's interest subsidy program, there is no interest to be paid on education loans up to 7.5 lacs.

Eligibility criteria for Dr. Ambedkar's interest subsidy scheme

• A Cast certificate is mandatory
• The family income of the applicant should be less than Rs 8 lacs per annum
• An income certificate will be required
• Student must have taken admission abroad in Master, MPhil or PhD