Education Loan in Andhra Pradesh

Overseas Education loans from banks or NBFCs in Andhra Pradesh include tuition fees, living expenses, examination fees, purchase of books, transportation, and insurance for abroad studies. The moratorium period usually ranges from the course duration to up to 6 months to one year. It is to be noted that during this period, public banks levy only simple interest, private banks demand compound interest and NBFCs demand Equated Monthly Installments (EMIs). Loan margins that the applicant secures are 10% for public banks and 5-10% for private ones. Keep reading to know more

Expenses covered

Education loans in India are typically taken to cover the cost of tuition fees, examination fees, and other education-related expenses such as hostel fees, books, and equipment. Some loans may also cover living expenses such as accommodation and food. It is important to carefully read the terms and conditions of the loan to understand what expenses are covered. The lender may have specific requirements or restrictions on how the loan can be used.

Moratorium Period

The moratorium period refers to the time during which the borrower is not required to make any loan repayments. This period typically begins after the borrower has completed their studies and ends when they start earning a regular income.The exact duration of the moratorium period may vary depending on the lender and the terms of the loan, which is typically 6 months to 12 months. 

Loan Margin

The loan margin is the percentage of the total loan amount that the borrower is required to pay out of their own pocket. For example, if the loan margin is 5%, the borrower would be required to pay 5% of the total loan amount as their own contribution, and the lender would cover the remaining 95%. The loan margin is often used by lenders to reduce their risk in case the borrower is unable to make the loan repayments. It is important to carefully read the terms and conditions of the loan to understand the loan margin and any other conditions that may apply.

Collateral Margin

The collateral margin is the percentage of the total loan amount that is secured by collateral. Collateral is an asset that is pledged as security for a loan. In the event that the borrower is unable to make the loan repayments, the lender can seize the collateral to recover their losses. The collateral margin is often used by lenders to reduce their risk in case the borrower is unable to make the loan repayments. It is important to carefully read the terms and conditions of the loan to understand the collateral margin and any other conditions that may apply.

Andhra Pradesh-based students should apply for an education loan by completing a loan application form, producing identity and residential proof, personal assets and liabilities schedule, and recent bank statements. Some of the necessary documents include admission confirmation, the structure of course fees, tests, and mark sheets. Documents for proof of income for co-signers, for employees: salary slips for the latest months, Form 16, and Income tax returns for the latest year; for self-employed persons: Income tax returns and balance sheet. Other supporting documents include cheques for processing fees, collateral affidavits, and statements of loan requests that are still pending. Secured loans require property documents and municipal approvals as part of the documentation. Keep reading to know the exact checklist of documents:

Documents required for Unsecured Loan in Andhra Pradesh

Application form:

• A loan application form that has two photos, a signature, and your basic information officer.

Student Documents:

• Identification documents: Aadhar card, PAN card, and passport of the applicant
• Admission letter from a university
• Utility bills: electricity bill, house tax
• Academic documents: 10th, 12th, degree/diploma
• Scores from competitive exams: IELTS, TOFEL, GRE, GMAT
• Gap certificate for any gaps between degrees
• Work experience letter, if applicable

Co-applicant Documents:

• In addition to identification documents, financial documents are also required.
• For salaried individuals: last 3 months of salary slips, 6 months of bank statements, company ID, last 2 years of Form 16, last 2 years of ITRs
• For self-employed individuals: last 3 years of ITRs, 6 months of bank statements, balance sheet, profit and loss account for last 3 years, proof of business address

Other Documents:

• A letter stating that the co-applicant is responsible for any remaining costs not covered by the loan (format provided by an assigned financial officer)
• A bank statement that is issued by a bank and shows the financial transactions of both the student and co-applicant.
• An invoice for expenses such as travel or a laptop, if a loan is being requested for these items
• Receipts for any transactions made in advance
• Loan statements from the previous year, if applicable
• A letter explaining any gaps, on Rs. 100 stamp paper
• A letter explaining the lack of a co-applicant's income tax return, if relevant

Documents required for Secured Loan in Andhra Pradesh

In addition to the documents required for an unsecured loan,A basic income certificate of the co-applicant, if they do not have ITRs. A secured loan also requires the following papers to serve as proof of the collateral being pledged.

Additional Documents for Secured Loans for Andhra Pradesh

• Title deed for the property being used as collateral
• Registered sale agreement, gift deed, or will
• Original receipt for the agreement listed above
• Allotment letter from a government authority such as VGTM - UDA(Vijayawada Guntur Tenali Mangalagiri - Urban Development Authority)
• 30 years of documents showing the transfer of ownership of the property or an earlier chain of sale deeds establishing ownership, including an extract of the controlled document (EC)
• The latest property tax bill and latest electricity bill with the same address as the property
• Copy of a municipality-approved building plan or plot layout for the property.

Acceptable collaterals in Andhra Pradesh for education loans

• House, Flat, and Land are accepted but the sale of D-form patta lands is restricted based on the recipient of the allotment. If the land is allotted to ex-servicemen, it may be sold after a period of ten years. If the land is allotted to any other individual, it may be sold after a period of thirty years. After this time period, banks may consider offering loans on a case-by-case basis. However, within this time period, the sale of the land is not permitted. Similarly, DKT lands, which are also allotted by the government, have similar restrictions on the sale and therefore cannot be accepted as collateral.   
• Commercial properties are accepted by private banks but the collateral margin varies considerably less than residential properties
• In Andhra Pradesh, it is permitted to mortgage agricultural lands for the purpose of obtaining an educational loan. The applicant must submit a patta passbook and title deeds at the time of mortgage creation. 
• FD(Fixed Deposit), Insurance policies, and government bonds are accepted according to their type. For example, the principal value of the FD is considered and surrender value is considered for insurance policies, face value for government bonds, and the collateral margin is quite higher than other properties.

After the moratorium period, you will need to start making monthly payments on an unsecured educational loan with a 10-year repayment period.

For instance, if a student borrows 35 lakh rupees at an interest rate of 11.25% over a 10-year period, the student will be required to pay back the loan according to the following payment plan:

Here are a few interest subsidy schemes launched by the Indian government to provide equal opportunities for higher education to the economically and socially backward classes of society. These schemes are to the interest charged on education loans so that the students will not have to bother about the expenses of education. The large-scale schemes include educational scholarships for the students of the economically weaker section of society, namely, the CSIS for students of economically backward classes under the Dr. Ambedkar Interest Subsidy Scheme and the minorities under the Padho Pardesh scheme. Both of them target specific groups and offer crucial support with their education. 

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

The Ministry of Social Justice and Empowerment launched this program to provide rebates on the interest payments due during the temporary suspension of payments period for education loans taken out by students from the OBC and EBC sections of society.

Eligibility Criteria

• To be eligible for the program, the student must have secured admission into a master's, M.Phil or Ph.D. program abroad
• The student's family income must not exceed 8 lakh rupees per year for both the EBC and OBC categories
• A caste certificate is required for students belonging to the OBC category
• Loans taken from scheduled banks as per Indian Banking Association guidelines are the only ones accepted

Benefit: The interest payments due during the temporary suspension of the payments period of the loan will be waived.

Padho Pardesh Scheme

The Ministry of Minority Affairs introduced this program to assist study-abroad aspirants from the EWS communities.

Eligibility Criteria for the Padho Pardesh Scheme

• Loans must be taken from scheduled banks as per Indian Banking Association guidelines.
• Students must be accepted into courses such as masters, Ph.D., or M.Phil.
• A certificate of income approved by the government is required.
• The student's family income must be less than 6 lakh rupees per year.

Note: The Padho Pardesh scheme has been discontinued by the government of India as of March 31, 2022. However, eligible students who registered before April 1, 2022, will continue to receive benefits from the program.

Central Scheme for Interest Subsidy (CSIS)

The Ministry of Human Resource Development (now the Ministry of Education) introduced this program to provide waivers on the interest payments for student loans taken out by those from the EWS portion of society. 

CSIS Eligibility Requirements

• Students must provide documentation proving their membership in the EWS sector of society.
• Students must be accepted into authorized study programs within India only.
• The annual income of the student’s family must not exceed 4.5 lakh rupees.

Benefit: Qualifying students who borrowed money to study in India during the temporary suspension of payments period are exempt from paying interest on their loans as part of the program.