Education loan subsidy
Though loan facilities are in place to meet the expenses of higher education, yet the cost of such loans has kept the economically weaker sections away from such facilities. 

Have you taken a loan for your son or daughter’s higher education in 2009-10 from any bank? Now you can claim interest subsidy from the branch of the bank where you have taken the loan. But before that you check your eligibility. You are eligible to claim the subsidy if your total household income is less than Rs.4.5 lakhs per annum. Education loans granted for studies in recognized technical and professional courses in India after Class XII are covered under this subsidy scheme. 
This subsidy scheme has been formulated by the Government of India, Ministry of HRD (MoHRD) for the economically weaker sections for pursuing technical/professional courses in India. Under the scheme, full interest subsidy will be provided during the moratorium period on educational loans. 
How to prove that your household income is less than Rs.4.5 lakhs per annum? Simple, you have to obtain an income certificate from Tehsildar or appropriate authority designated by the state chief secretary. You have to approach your loan branch with relevant documents supporting your eligibility. 
Notably, the interest subsidy under the scheme shall be available to the eligible students only once, either for the first under graduation degree course or the post graduate degrees/ diplomas. The subsidy shall, however, be admissible for combined under graduate and post graduate courses as well. 
It’s pertinent to mention that the interest subsidy shall be withdrawn for those students who either discontinue the course midstream or for those who are expelled from the Institution on disciplinary or academic grounds. If discontinuation was on medical grounds, the interest subsidy shall be granted for the usual period of study. 
Even as the state of affairs in education sector in J&K state cannot be described healthy, literacy rate has shown a decadal growth rate of more than 13 per cent. According to the provisional census figures released a few days ago, overall literacy rate of our state has grown from 55.5 percent in 2001 to 68.74 percent. There is a visible improvement in indicators like enrolment ratio, reduction in drop out rate retention etc.  
However, for most of the parents imparting higher education to their children has become burdensome due to increasing cost of education. Though loan facilities are in place to meet the expenses of higher education, yet the cost of such loans has kept the economically weaker sections away from such facilities. In this backdrop, the above mentioned interest subsidy on education loans is a key for the economically weaker sections to realize their dream of imparting higher education to their wards. 
We have also observed that the quantum of loan amount granted under educational loan scheme has been marring the ambition of students.  However, J&K Bank while improving upon the traditional education scheme has taken certain initiatives so that students here don’t suffer for want of finances to pursue higher education. Ticket size of the loan has been enhanced and additional courses have been brought under the ambit of the scheme over the years. Even more relaxations have been extended to the students seeking loan under the scheme. 
The basic eligibility criterion envisaged under the J&K Bank education loan scheme is that the student should have secured admission to professional/technical courses or any other course covered under the scheme through entrance test or a selection process. He/she should have passed the qualifying examination for admission to the courses. If the student intends to pursue his education abroad, he should have secured admission to foreign universities/institutions. Employed person intending to improve their educational qualification and/or receive training in modern technology in India or abroad can also apply for the loan under the scheme provided training offers prospects of better placement. 
As far as scale of finance is concerned, the loan is categorized into two categories. For Studies in India, students can borrow up to Rs 10 lacs. For studies abroad, a student can get financial assistance up to Rs.20 lacs. For studies in India, loans up to Rs.4 lacs are granted without margin. For a loan amount of above Rs 4 lacs to Rs10 lacs, the student has to pay five percent margin. For overseas loans, 15 per cent margin is to be paid. 
Repayment starts after a repayment holiday of course period and one year or 6 months after getting job, whichever is earlier. If the student is not able to complete the course within the scheduled time, extension of time for completion of course may be permitted for a maximum of two years. After this, the student has to repay the loan in 5 to 7 years through monthly installments. 
The borrower has a repayment option. The accrued interest during the repayment holiday period can be added to the principal loan amount and loaded in the Equated Monthly Installments (EMI) fixed by the bank. This means, the borrower doesn’t have to make repayment during the study period. However, the borrower can earn a concession of one per cent in rate of interest, if he decides to repay the accrued interest monthly during the study period. 
Further concessions have been put in place in the scheme where talented students pursuing courses in IIT, IIM, and Indian school of Business, Hyderabad have not to give tangible collateral security for loans up to Rs.10.00 Lacs. Besides, a concession of 0.50% in the rate of interest shall be allowed for students pursuing their degrees from these institutes. While as, for others loans above Rs.7.50 Lacs shall be granted against the tangible collateral security of suitable value. 
Expenses considered for loan also include travel expenses/ passage money for studies abroad, insurance premium for student borrower and any other expense required to complete the course - like study tours, project work, thesis, etc. In the normal course, the bank while appraising the loan shall look into the future income prospects of the student. However, where required, the means of parent or guardian could also be taken into account to evaluate re-payment capability. 
Some of the foreign universities require the students to submit a certificate from their bankers about the sponsors' solvency/ financial capability, with a view to ensure that the sponsors of the students going abroad for higher studies are capable of meeting the expenses till completion of studies. Such capability certificates shall be issued by the bank after the applicant submits financial and other supporting documents to ascertain the capability / solvency. The banks shall be disposing of the loan applications within a period of one month. 
Loans above Rs.4 lacs and up to Rs.7.50 lakhs are granted against a third-party guarantee of one person. The third-party guarantee can come from an uncle, neighbour or friend standing guarantee for the full amount. Loans beyond Rs.7.50 lakhs are granted against the mortgage of property worth the loan amount. As far as loans up to Rs.4 lakhs, no third party guarantee is required. Notably, all education loans are granted with parents or guardians as co-borrowers. And remember, for such loans the income of parents/ guardians is taken into account. 

Quote:
Even as the state of affairs in education sector in J&K state cannot be described healthy, literacy rate has shown a decadal growth rate of more than 13 per cent. According to the provisional census figures released a few days ago, overall literacy rate of our state has grown from 55.5 percent in 2001 to 68.74 percent. There is a visible improvement in indicators like enrolment ratio, reduction in drop out rate retention etc.

Lastupdate on : Sun, 10 Apr 2011 21:30:00 Makkah time
Lastupdate on : Sun, 10 Apr 2011 18:30:00 GMT
Lastupdate on : Mon, 11 Apr 2011 00:00:00 IST