'How do banks decide eligibility of education loan?'

In an online chat with readers, Neeraj Saxena, CEO of Avanse Education Loans tackled queries on education loans, the documentation process and more.

Are you planning to take an education loan for your higher studies?

With several initiatives in the form of interest rates and prepayment options being made available to Indian students, students are increasingly considering it as a viable option.

But how does one know whether s/he is eligible for a loan?

What are the documents required to apply for an education loan?

What is the loan cap?

What are the current interest rates and the repayment procedures/ options?

To discuss all this and above, Rediff.com had organised a chat with Neeraj Saxena, CEO, Avanse Education Loans on March 26, between 3 pm and 4 pm IST.

For those who missed the live chat, here's the edited transcript:

nambiar mavila: My son is doing his third be in electronics and telecommunications. pls advise the formalities for the loan

Neeraj Saxena: Hello Mr. Nambiar you may contact us at 1800 222 301 and we shall provide you the complete details, alternatively you could also visit us http://rediff.ly/2xd74

chandekar muley: If I take a loan do I need to submit the original papers of the property or a evaluated copy of the property?

Neeraj Saxena: It depends on the collateral requirement of your loan. If the collateral is required, then the original property documents need to be submitted to the loan provider at the time of loan disbursement.

Jaykar Kajale: If I want Education Loan from bank I want to have any account in that bank or Not?

Neeraj Saxena: It is generally not mandated that you need to open an account to avail of an education loan. However, pl check with your banker specifically on their requirements.

Firoz Khan: I student of PGDBM 2nd semester. I have paid the fees of frist year by cash. Now I want education loan. My city is Azamgarh (U.P). Can I get loan from in Ghaziabad (U.P.). Tell the brach also.

Neeraj Saxena: We can very well evaluate your case at the nearest Avanse office. Even better, why don't you call us on 1800 222 301 for us to guide you on way forward. Good news is that, you may also consider getting the fee you have paid in the first year reimbursed, to be included as part of the loan.

Vinay Shukla: Sir, i want to know that how much interest we have to pay of education loan during the study . Example if I take loan of 3 lakhs then how much i pay.

Neeraj Saxena: There are several repayment options. Typically, the student pays the simple interest on the education loan during the study period.

ani: Is collateral required for education loan?

Neeraj Saxena: Collateral requirement depends on course and institute chosen, cost of completing the course, scholarship received etc. I would advice that you speak to us on 1800 222 301 for us to evaluate your specific need.

Rafiq Qureshi: Your information about bank loan is good,which banks are eligible for getting loan.and where these loan application is available.

Neeraj Saxena: Generally, all banks offer education loans. However, private education loan providers offer attractive interest rates, flexible repayment options, interesting benefit packs for overseas education etc. Thus, I would recommend that you explore all available options before deciding.

Satish Pulli: Dear Sir,My brother has completed his Engineering with the help of Educational Loan.Now,he wishes to go for further studies, So, My question is that can he further get the facility of educational loan?

Neeraj Saxena: For one course, you can avail of an education loan. For every new course, you may avail of fresh education loans. However, the total repayment capacity will be checked while evaluating your eligibility. Also, your education loan repayment record will be an important criteria for the lending institution while assessing your new loans.

Rajan sha: I would like to know the following details:1) Can I take a personal loan in case of educational loans i.e can i take a loan without submitting any guarantee?

Neeraj Saxena: Of course! You can take a personal loan, though it's not advisable considering their high interest rates.

Panse Kaisare: I want to know how much graduation marks need for educational loan???

Neeraj Saxena: Indeed your academic qualification is a criteria to evaluate your education loan eligibility. It also plays a role in deciding the rate of interest.

kavita bavekar: If I apply for a loan do I need to submit any of the income proofs or IT File or Bank statement???

Neeraj Saxena: Your co-borrower / guarantor (parent / sibling etc.) needs to sumbit all financial documents including the IT returns and bank statements.

Nitish Chandak: Do banks also give loan for study visa?

Neeraj Saxena: Pl elaborate on what you mean by Study Visa

BinodSharma: 1) Edu loans for premier institutes like the IITs, IIMs NIT's draw low interest Rate is it true ??2). Simple Interest or Compound Interest is calculated for the moratorium period?

Neeraj Saxena: It is indeed natural that premier institutions provide for better employment opportunities and hence lesser risk for the lending institution, resulting in a low interest rate offering. 2) Generally, simple interest is calculated for the moratorium period.

Dawar Sheth: How do banks decide eligibility of loan?

Neeraj Saxena: Lending institutions decide on loan eligibility on the basis of the academic strength of the student and future employment prospects (choice of institutes and courses). Also, co-borrower's financial standing is also considered in the evaluation process.

Dinkar Dosanjh: Do I need to produce a guarantor for edu loan?

Neeraj Saxena: Generally students do not have a source of income, so they take the support of a co-borrower or guarantor for their loan application. This, you will understand, mitigates the risk for the financial institution giving you the loan. Your parents / sibling / close relative can be your co borrower.

Eknath Gangulee: I want to apply for a loan of Rs 12 lakhs. What documents will I need?

Neeraj Saxena: Typically, you will KYC documentation, you academic documents, admission confirmation letter, financial documents of your co-applicant (generally parents). However, following a detailed evaluation of your case, we may require a few more documents.

Manasi Nath: Are there special benefits for girls?

Neeraj Saxena: As per IBA norms, there are special benefits for women applicants from banks. I would advice you to contact your banker for first level information. As far as Avanse is concerned, we encourage advanced education amongst women, and thus provide them a whole host of loan and value-added benefits.

Jignesh Kaisth: What is the current interest rate for education loan in India?

Neeraj Saxena: Education loan interest varies from case-to-case. It ranges from 11.5 per cent to 13.5 per cent generally.

Lalji Margasahayam: Dear sir I applied for education loan of 2 lakhs at BOB in 2009. According to Chidambaram sir's announcement I'm eligible for the moratorium payment. But my bank people haven't got any notice about following it. What should I do?

Neeraj Saxena: Hi Lalji, Please contact your bank representative about this specific communication from the Finance Ministry.

Neeraj Saxena: Thank you all, it's been a great interactive session. Good luck with your studies! Neeraj