Education Loan in Tamil Nadu

Tamil Nadu is one of the most educated states in India with a literacy rate of over 80% and a Gross Enrollment Ratio of 50% (All-India Survey on Higher Education 2019-20). The state accounts for one-fifth of the total education loans disbursed by public sector banks between 2014-15 and 2017-18. This is a testimony to the state’s constant emphasis on higher education and the demand for education loans to realise the dream of the middle class. In this article, let us learn about how to avail of an education loan in Tamil Nadu and its technicalities.

Availing an Education Loan: Public Sector Banks vs Private 

Banks vs NBFCs

Education loans can be availed either from a Public Sector Bank or Private Bank depending on the convenience of the loanee. Public Sector Banks offer loans at a relatively lesser interest rate. However, the process may be tedious and often involves complex documentation formalities. 

Private Banks offer loans at a higher interest rate but the process is faster and simple. Both government banks and private banks look for a strong customer profile and need collateral securities in the form of real estate properties, liquid securities and immovable assets etc.

However, Non-Banking Financial Companies (NBFCs) offer unsecured loans without collateral with a higher rate of interest. Some of the popular NBFCs for education loans include

• Credila (HDFC group)
• Global Student Loan Corporation (GSLC)
• Avanse
• International Student Loan Program (ISLP)
• Credenc

Interest Rates in Tamilnadu

• Public Sector Banks charge a rate of interest between 9% and 14%

• Private banks charge a rate of interest between 11% and 13%
• NBFCs charge a rate of interest between 12% and 14%

Moreover, the rates of interest also depend on various factors such as your score in the entrance exam (NEET, JEE, GRE, GMAT etc.) your university and your academic profile.

Education Loan In Tamil Nadu: Eligibility Conditions

Geographical Effect

Tamil Nadu is a highly urbanised state and most of the regions inside the state are serviceable for education loans. However, some far-flung rural areas and hamlets may not be serviceable. In that case, lenders make sure that your application is processed by other major banks and NBFCs get your loan sanctioned.

Coverage - List of Expenses Covered under Education Loan

• Fees payable to school/college/hostel (including tuition, hostel and miscellaneous fees)
• Examination/library/laboratory fees.
• Purchase of books/instruments/uniforms.
• Purchase of a personal computer/laptop, if required to complete the course. 
• Travel Expenses/ passage money for studies abroad.

Margin

Public Sector Banks have a strict margin policy. They provide financing up to 80-90% of the total amount required to pay your fees. 

Whereas, private banks and NBFCs offer 100% financing that covers all your expenses including tuition fees, hostel and miscellaneous fees.