Education Loan in Tamil Nadu

Certain documents are required while applying for an education loan in Tamil Nadu and these include a filled-up application form, two passport-size photographs, identity proof, proof of residence, and personal asset and liability declaration. Affidavits are official documents such as admission letters, details of tuition fees, test results, and mark statements. Income documents for co-applicants are pay slips, Form 16 or ITR for salaried employees, and ITR and Balance sheet for self-employed professionals. Other necessary documents are processing fee cheques, collateral affidavits, and statements of the pending loan. Municipal approvals and property documents are required for secured loans. Keep reading to get the exact checklist of documents:

Documents required for Unsecured Loan in TamilNadu

Application form:

A loan application form requires a borrower to submit two photos and a signed form, as well as information from their financial officer, to be considered for a loan.

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 assigned financial officer)
• A manifested standard bank statement with both the student and co-applicant
• An invoice for expenses such as travel or a laptop, if a loan is being requested to cover these items
• Receipts for any transactions made in advance
• Loan statements from the previous year, if applicable
• A letter explaining any gaps in employment or income, 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 TamilNadu

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

Additional Documents for Secured Loans for TamilNadu

• The title deed and patta (a document that grants ownership rights over land) for the property being used as collateral must be provided.
• A registered sale agreement, gift deed, or will that establishes ownership of the property must be presented.
• The original receipt for the ownership-establishing document listed above must be provided.
• An allotment letter from a government authority such as Manai Patta, with DTCP for Coimbatore, Madurai, Tiruchirappalli, Salem, and CMDA approvals for Chennai, must be presented.
• 30 years' worth of documents showing the transfer of ownership of the property or earlier chain of sale deeds that establish ownership, including an extract of the controlled document (EC), must be provided.
• The latest property tax bill and latest electricity bill with the same address as the property must be presented.
• A copy of a municipality-approved building plan or plot layout for the property must be provided.

Acceptable collaterals in TamilNadu for education loans

1. Generally, banks in Gram Natham do not accept properties without a patta and building plan approval for an independent house, but SBI now does if the property has a patta. If it is flat, only a patta is required. Bank of Baroda will accept a property with Manai Patta and DTCP or CMDA approval. Patta is a mandatory document for properties in Tamil Nadu.
2. Commercial properties are accepted by private banks but the collateral margin varies considerably less than residential properties. If a property does not have building plan approval and the land value is low, it may be better to consider other collateral or third-party collateral options.
3. It is allowed to use agricultural land as collateral for education loans in Tamil Nadu. However, it is important to note that different banks and financial institutions may have their own specific requirements and restrictions regarding the use of agricultural land as collateral and for non-agricultural lands, demarcations (boundary markings) are not mandatory.  
4. 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 the 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 begin making monthly payments on an unsecured education loan with a repayment term of 10 years.

For example, if a student takes out a loan of INR 35 lakh 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:

The following segment explains different education loan subsidy schemes that are offered to students belonging to Tamil Nadu. These schemes seek to provide loans to students belonging to the economically disadvantaged and marginalized sections of society by providing subsidized interest rates for education loans. Explained programs include Dr. Ambedkar Interest Subsidy Scheme for Other Backward Class (OBC) / Economically Backward Class (EBC) students, Indian students studying abroad under Padho Pardesh Scheme, and the Central Scheme for Interest Subsidy (CSIS). Every scheme has certain conditions which apply for the student’s eligibility to apply as well as the amount which is to be paid by the student of India or any foreign university.

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

The Ministry of Social Justice and Empowerment launched this program to provide a reduction in 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:

• The student must have been accepted into a masters, M.Phil, or PhD program abroad
• The student's family income must be less than INR 8 lakh per year for both the EBC and OBC categories
• A caste certificate is required for students in the OBC category
• Only loans taken from scheduled banks as per Indian Banking Association guidelines are accepted.

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

Padho Pardesh Scheme

The program was introduced by the Ministry of Minority Affairs to help individuals from EWS (Economically Weaker Section) communities who wish to study abroad.

Eligibility Criteria for the Padho Pardesh Scheme

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

Note: The Padho Pardesh scheme, which was run by the government of India, has been discontinued as of March 31, 2022. However, students who were eligible and registered for the program before April 1, 2022 will still receive benefits from it.

Central Scheme for Interest Subsidy (CSIS)

The Ministry of Human Resource Development (now known as the Ministry of Education) created the program to offer waivers on the interest payments for student loans taken by individuals from the EWS (Economically Weaker Section) of society.

CSIS Eligibility Requirements

To be eligible for the program, students must provide proof of their membership in the EWS (Economically Weaker Section) of society. They must also be accepted into an approved study program within India, and their family's annual income must not exceed 4.5 lakh rupees. Under the program, qualifying students who took out loans to study in India during the temporary suspension of payments period are exempt from paying interest on their loans.

Benefit: Under the Central Scheme for Interest Subsidy (CSIS), students who meet the eligibility requirements and took out loans to finance their education in India during the temporary suspension of payments period are eligible to have the interest on their loans waived.