A STUDY ON STUDENT SATISFACTION TOWARDS EDUCATIONAL

LOAN FROM COMMERCIAL BANKS WITH SPECIAL REFERENCE

TO KALYAN CITY

CHAPTER 1. INTRODUCTION

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 Introduction

Education is vital to human resource and their empowerment in any country. National and state
level policies are framed to ensure that the basic need of the population is met through
appropriate public and private sector institution. While government endeavours to provide
primary education to all on a universal basis, higher education is getting more and more costly
and hence the need for intuitional funding in this area.

Education is derived from the Latin word Educate which means to nourish or to raise.
Education is a basic human right and a significant factor in the development of children,
communities and countries. The
educational systems are used to promote
doctrines or ideals as well as knowledge.

Education affects the life of individuals,

their participation in economic
activities, and overall economic
development in various ways. Since a
person without basic literacy and
numerary skills as in a difficult situation
to master everyday life, the lack of basic
education

has always been accepted as one of the major components of multidimensional concept of
poverty. Moreover education is strongly linked to the notion of empowerment. A general or
literal education can be defined as “a curriculum aiming at imparting knowledge and
developing general intellectual capacities in contrast to a professional or technical curriculum”.
It is characterized by its focus in the whole development of an individual, apart from his
occupational training.

Importance of Education

In the modern era, the importance of highly specialized scientific and technical education is
well recognized. A higher education system should meet many different goals. Those include

• Satisfying demand from students for an increasingly sophisticated and rewarding

education.
• Training the people needed to run a modern society and contribute to its further
• advance care.
• Providing a forum in which a society can examine its problem and identify appropriate
solution.
• Offering a setting in which a society’s culture and the values can be studied and
developed.
A general education is an excellent forum of preparation for the flexible, knowledge
based careers that increasingly dominate the upper tiers of the modern labour force. The
ability to learn will provide valuable insurance against the vagaries of a rapidly
changing environment.

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Education is often the best tool for creating wealth and happiness. It plays an important role in
shaping an individual’s career. The level of education helps people to earn Recolonisation and
respect in the society. Undoubtedly education is both socially and personally an indispensable
part of human life. Though education plays a major role in shaping our society still on an
average it is seen that the education is not the same in different areas. Every year the
government is taking huge efforts and plan strategies to maintain the quality of education
everywhere because the development of nation is dependent directly upon the standard of its
education. Hence it is the prime duty of mankind to try education available in every part of the
world.

The problem of financing education is a matter of importance. It is now achieved through

nationalized and commercial banks by the means of educational loan system. Training the
people needed to run a modern society and contribute to its further advance care. Providing a
forum in which a society can examine its problem and identify appropriate solution.

Offering a setting in which a society’s culture and the values can be studied and developed.
A general education is an excellent forum of preparation for the flexible, knowledge based
careers that increasingly dominate the upper tiers of the modern labour force. The ability to
learn will provide valuable insurance against the vagaries of a rapidly changing environment.

Education is often the best tool for creating wealth and happiness. It plays an important role in
shaping an individual’s career. The level of education helps people to earn Recolonisation and
respect in the society. Undoubtedly education is both socially and personally an indispensable
part of human life. Though education plays a major role in shaping our society still on an
average it is seen that the education is not the same in different areas. Every year the
government is taking huge efforts and plan strategies to maintain the quality of education
everywhere because the development of nation is dependent directly upon the standard of its
education. Hence it is the prime duty of mankind to try education available in every part of the
world. The problem of financing education is a matter of importance. It is now achieved
through nationalized and commercial banks by the means of educational loan system.

Definition of Bank
Banking means “accepting deposits for the purpose of lending investment of deposits of money
from the public, repayable on demand or otherwise & withdraw by cheque, draft or otherwise”

- Banking Companies (Regulation) Act, 1949

ORIGIN OF THE WORD “BANK ”

The origin of the word bank is shrouded in mystery. According to one view point the
Italian business house carrying on crude from of banking were called “banchi
bancheri”.According to viewpoint banking is derived from German word “branck ”which
mean heap of mound. In England, the issue of paper money by the government was referred to
as raising a bank.

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HISTORY OF EDUCATION LOAN IN INDIA

ORIGIN OF BANKING:
Its origin is simplest from can be traced to the origin of authentic history. After recognizing the
benefit of money as a medium of exchange , the importance of banking was developed as it
provides the safer place to store the money .This safe place ultimately evolved in to financial
institutions that accepts deposits & make loans i.e. modern commercial banks.

BANKING SYSTEM IN INDIA

Without a sound & effective banking system in India it cannot have a healthy economy.
The banking system in India should not only be hassle free but it should be able to meet
new challenges posed by the technology & any other external & internal factors.
For the past three decades India’s banking system has several outstanding achievements to its
credit .The most striking is its extensive reach. It is no longer confined to only metropolitans
or cosmopolitans in India. In fact Indian banking system has reached even to the remote
corners of the country. This is one of the main reasons of India’s growth process.

HISTORY OF BANKING
The first bank in India, though conservative, was established in 1786. From 1786 till today,
the journey of Indian Banking System can be segregated into three distinct phases:
1. Early phase of Indian banks, from 1786 to 1969
2. Nationalization of banks and the banking sector reforms, from 1969 to 1991
3. New phase of Indian banking system, with the reforms after 1991

Phase1:-
The first bank in India, the General Bank of India, was set up in 1786. Bank of Hindustan
and Bengal Bank followed. The East India Company established Bank of Bengal (1809), Bank
of Bombay (1840), and Bank of Madras (1843) as independent units and called them
Presidency banks. These three banks were amalgamated in 1920 and the Imperial Bank of
India, a bank of private shareholders, mostly Europeans, was established. Allahabad Bank was
established, exclusively by Indians, in 1865. Punjab National Bank was set up in 1894 with
headquarters in Lahore. Between 1906 and 1913, Bank of India, Central Bank of India, Bank
of Baroda, Canara Bank, Indian Bank, and Bank of Mysore were set up. The Reserve Bank of
India came in 1935.

During the first phase, the growth was very slow and banks also experienced periodic
failures between 1913 and 1948. There were approximately 1,100 banks, mostly small. To
streamline the functioning and activities of commercial banks, the Government of India came
up with the Banking Companies Act, 1949, which was later changed to the Banking Regulation
Act, 1949 as per amending Act of 1965 (Act No. 23 of 1965). The Reserve Bank of India
(RBI) was vested with extensive powers for the supervision of banking in India as the
Central banking authority. During those days, the general public had lesser confidence in
banks. As an aftermath, deposit mobilization was slow. Moreover, the savings bank facility
provided by the Postal department was comparatively safer, and funds were largely given to
trader.

Phase2:-
The government took major initiatives in banking sector reforms after Independence. In
1955, it nationalized the Imperial Bank of India and started offering extensive banking
facilities, especially in rural and semi-urban areas. The government constituted the State Bank

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of India to act as the principal agent of the RBI and to handle banking transactions of the Union
government and state governments all over the country. Seven banks owned by the
Princely states were nationalized in 1959 and they became subsidiaries of the State Bank of
India. In 1969, 14 commercial banks in the country were nationalized. In the second phase of
banking sector reforms, seven more banks were nationalized in 1980. With this, 80 per-cent of
the banking sector in India came under the government ownership.

Phase3:-
This phase has introduced many more products and facilities in the banking sector as part of
the reforms process. In 1991, under the chairmanship of M Narasimham, a committee was set
up, which worked for the liberalization of banking practices. Now, the country is flooded
with foreign banks and their ATM stations. Efforts are being put to give a satisfactory service
to customers. Phone banking and net banking are introduced. The entire system became
more convenient and swift. Time is given importance in all money transactions.

The financial system of India has shown a great deal of resilience. It is sheltered from
crises triggered by external macroeconomic shocks, which other East Asian countries
often suffered. This is all due to a flexible exchange rate regime, the high foreign exchange
reserve, the not-yet fully convertible capital account, and the limited foreign exchange
exposure of banks and their customers.

Nationalization Process :-
• 1955: Nationalization of State Bank of India
• 1959: Nationalization of SBI subsidiaries
• 1969: Nationalization of 14 major banks
• 1980: Nationalization of seven banks with deposits over Rs 200 crore

The commercial banking structure in India consists of scheduled commercial banks

and unscheduled banks. Scheduled banks constitute those banks that are included in the
Second Schedule of Reserve Bank of India (RBI) Act, 1934. As on June 30, 1999, there were
300 scheduled banks in India having a total network of 64,918 branches. The scheduled
commercial banks in India comprise State Bank of India and its associates (8), nationalised
banks (19), foreign banks (45), private sector banks (32), co - operative banks, and regional
rural banks. Before the nationalization of Indian banks, the State Bank of India (SBI) was the
only nationalized bank, which was nationalized on July 1, 1955, under the SBI Act of 1955.
The nationalization of seven State Banks subsidiary took place. After the nationalization of
banks in India, the branches of the public sector banks rose to approximately 800 per-
cents in deposits and advances took a huge jump by 11,000 percentage.

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Reforms:-
As a result of the reforms, the number of banks increased rapidly. In 1991, there were 27 public-
sector banks and 26 domestic private banks with 60,000 branches, 24 foreign banks with 140
branches, and 20 foreign banks with a representative office. Between January 1993 and
March 1998, 24 new private banks (nine domestic and 15 foreign) entered
themarket;thetotalnumber of scheduled commercial banks, excluding specialized banks sucha
s the Regional Rural Banks rose from 75 in 1991/92 to 99 in 1997/98.
Entry deregulation was accompanied by progressive deregulation of interest rates on deposits
and advances. From October 1994, interest rates were deregulated in a phased manner and by
October 1997, banks were allowed to set interest rates on all term deposits of maturity of more
than 30 days and on all advances exceeding Rs 200,000.
While the CRR and SLR, interest rate policy, and prudential norms have always been
applied uniformly to all commercial banks, the Reserve Bank of India treated foreign
banks differently with respect to the regulation that requires a portion of credit to be allocated
to priority sectors. In 1993, foreign banks - which used to be exempt from this requirement
while all other commercial banks were required to earmark 40 per cent of credit - were
required to allocate 32 per cent of credit to priority.

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Position of banking sector before and after independent:

Before:-
In India the business of banking and credit was practices even in very early times. The
remittance of money through Hundies, an indigenous credit instrument, was very popular.
The handier were issued by bankers known as Shroffs, Sahukars, Shahus or Mahajans in
different parts of the country. The modern type of banking, however, was developed by the
Agency Houses of Calcutta and Bombay after the establishment of Rule by the East India
Company in 18th and 19th centuries. During the early part of the 19th Century, ht volume of
foreign trade was relatively small.
Later on as the trade expanded, the need for banks of the European type was felt and the
government of the East India Company took interest in having its own bank. The government
of Bengal took the initiative and the first presidency bank, the Bank of Calcutta (Bank
of Bengal) was established in 180. In 1840, the Bank of Bombay and IN 1843, the Bank of
Madras was also set up. These three banks also known as “Presidency Bank ”.
The Presidency Banks had their branches in important trading centres but mostly lacked in
uniformity in their operational policies. In 1899, the Government proposed to amalgamate
these three banks in to one so that it could also function as a Central Bank, but the Presidency
Banks did not favour the idea. However, the conditions obtaining during world war
period (1914-1918) emphasized the need for a unified banking institution, as a result of which
the Imperial Bank was set up in1921. The Imperial Bank of India acted like a Central bank and
as a banker for other banks. The RBI (Reserve Bank of India) was established in 1935 as the
Central Bank of the Country. In 1949, the Banking Regulation act was passed and the RBI was
nationalized and acquired extensive regulatory powers over the commercial banks.

After:-
After Independence, in 1951, the All India Rural Credit survey, committee of Direction
with Shri. A. D. Gorwala as Chairman recommended amalgamation of the Imperial Bank of
India and ten others banks into a newly established bank called the State Bank of India (SBI).
The Government of India accepted the recommendations of the committee and
introduced the State Bank of India bill in the Lok Sabha on 16th April 1955 and it was passed
by Parliament and got the president’s assent on 8th May 1955. The Act came into force on
1st July 1955, and the Imperial Bank of India was nationalized in 1955 as the State Bank of
India. The main objective of establishing SBI by nationalizing the Imperial Bank of India
was “to extend banking facilities on a large scale more particularly in the rural and semi-urban
areas and to diverse other public purposes”.

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What Are All Educational Loan Facilities Available To The Individuals?

Below is a list of some of the most popular education loan schemes provided by the Indian
banks.

State Bank of India's Student Loan

• SBI's student loan is offered in the form of a term loan, which means that such loans
are to be repaid within a fixed period.
• Generally, the parents are entertained as co-borrowers under such schemes.
• Please note that the co-applicants' CIBIL score should be good, as it is one of the key
factors for getting loan approval
• Thequantumofloanrangesbetween10-30lakhs,dependinguponwhereandwhichcourse
you want to pursue.
• So, for example, if you have enrolled yourself in a medical degree course in India, you
are qualified to receive up to 30 lakhs as a loan amount.
• For other courses, the loan amount is ten lakhs.
• Further, If you want to pursue your education outside India, you are eligible to receive
a 20 lakhs loan.
• The expenses covered under this scheme include fees, hostel fees, computer, books,
tour expenses, and cost of a two-wheeler up to INR 50, 000.
• Another important feature of an education loan is the margin money
• So what does margin money mean?
• Suppose you want a loan of up to INR 10 lakhs, now the bank won't provide you with
the entire 10 lakh amount right away.
• The bank wants you to invest some money from your pocket, and therefore, if the
margin is set at 20% for the ten lakhs loan, you will be required to pay INR 2 lakhs in
advance
In the case of an education loan, the margin is set as follows -
1. Up to 4 lakhs – NIL
2. Above 4 lakhs (India) – 5%
3. Above 4 lakhs (Abroad) – 15%
• The processing fees for a loan of up to 20 lakhs is NIL, and if the loan amount is above
20 lakhs, the processing fee is INR 10, 000.
• The rate of Interest is fixed; it ranges between 8.45% to 10.70%.
• Loan security is NIL if you are applying for a loan of up to INR 7.50 lakhs.
• However, if the loan amount is above INR 7.50 lakhs, the security to be paid is 110%
of the loan amount.

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 Axis Bank Education Loan

1. The loan provided by Axis bank is available for undergraduate, graduate, diploma
courses, postgraduate and masters courses.
2. A student who has completed his schooling/graduation with at least 50% marks or has
secured admission in a college (India or abroad) through an entrance test, becomes
viable to apply for this loan.
3. Axis bank has classified the educational institutions into three parts, i.e. Prime A, Prime
B, and Non-Prime.
4. The strategy is quite straightforward if you are going to a prime institute the bank is
ready to take maximum exposure.
5. This conveys that the loan amount could be given up to INR 40 lakhs without any
collateral security.
6. On the other hand, if you are going to a Prime B institute, an unsecured loan is offered
up to 25 lakhs.
7. In the case of the Non-prime institute, collateral comes into the picture.
8. Therefore, any loan amount, which is more than INR 7.5 lakhs, can be availed only
after the payment of security.
9. Collateral can be many forms; it can be a residential property, fixed deposit, shares,
mutual funds, LIC policies, etc.
10. One can also club two or three collaterals if the loan amount is higher.
11. There are two components of an education loan, one is the moratorium period, and the
other is the repayment period.
12. The moratorium period is a period during which a student pursues his higher studies.
13. During this period, a student has to pay simple interest, and after the completion ofthe
course, the EMI's are to be paid.
14. The total tenure under this scheme is 15 years, including the moratorium period.
15. The rate of interest depends upon various factors, such as, university, course category,
the country in which the course is being pursued, and accordingly it is decided what
rate should be offered.
16. Following is the usual interest rates offered by the Axis bank – Up to 4 lakhs – 15.20%

• More than 4 lakhs, but less than 7.5 lakhs – 14.70%

• More than 7.5 lakhs – 13.70%

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 HDFC Bank Education Loan

• To avail of the loan facility under this scheme, one should be between the age group of
16-35 years.
• This loan is available for any course that you wish to pursue.
• If you want to study in India, the maximum loan offered by the bank is INR 10 lakhs,
however, keep in mind that if you want to avail of a loan of 7.50 lakhs, there is no
requirement for the collateral.
• And if the education loan is above 7.50 lakhs, the collateral against this loan amount
would be needed.
• The interest rate offered by HDFC on education loans is between 12%-22% depending
upon the type of loan that you applied for.
• Furthermore, there are some additional benefits available under this scheme;
• Free savings account
• HDFC's Life insurance at a certain discount rate
• Processing fees, if you are applying in India, is 1%.
• So if your loan amount is INR 10 lakhs, the processing fee would be INR 10,000.
• And abroad, the processing fee is 1.5% of the loan amount.

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TYPES OF EDUCATION LOAN

The education loan schemes offered by banks in India are in the nature of CMLs, which can be
further classified into the different categories on the basis of student borrower characteristics
and institutions they seek admissions to/study in. Most banks offer a scheme for education loan
as per the Indian Banks’ Association (IBA) model education loan scheme to students pursuing
higher studies in India and abroad. As per this model loan scheme, education loans up to ₹4
lakh do not require any collateral to be provided by the borrower, education loans up to ₹7.5
lakh can be obtained with collateral in the form of suitable third-party guarantee, while
education loans above ₹7.5 lakh require tangible collateral. In all the above cases, co-obligation
of parents is necessary. The second category of education loans are sanctioned to those students
who obtain admissions to colleges/universities through management quota, provided they
satisfy the minimum marks criteria in the preceding examination. The third category of
education loans includes schemes for needy students for pursuing vocation education courses
run by industrial training institutes (ITIs), polytechnics, training partners affiliated to National
Skill Development Corporation (NSDC)/sector skill councils, state skill mission/corporation,
preferably leading to a certificate/diploma/degree issued by such organisation as per National
Skill Qualification Framework (NSQF) and any other institutions recognized by either the
central or state education boards or university. The fourth category of scheme specifically
caters to the requirement of students studying in premier institutions like IITs/IIMs/NITs/IISc
or courses abroad, with demand for a higher quantum of loan amount. All education loans of
up to ₹10 lakh (enhanced to ₹20 lakh in September 2020) have been included within the priority
sector definition by the Reserve Bank of India.

Under most of these schemes, moratorium period consists of the course period plus six months
to one year, and there are nil/negligible processing fees for schemes with high value education
loans. The interest rate under the various schemes consists of a markup of 2-3 per cent above
the marginal cost of funds based lending rate (MCLR)/external benchmark4, based on the
reputation of the course/institutions. The repayment period is in the range of 1015 years.

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Education loan or student loans can found many type of education programs broadly
they are categorized as.

¨ Location-based loans
¨ Course-based loans
¨ Loans based on collateral types

Location-based loans

¨ Domestic education loans: These are loans that are meant for students who like to
pursue an education in Indian educational institutions. There are many eligibility
criteria that the lenders will have and the loan is approved only if the applicant has got
admission to an institute that meets the lenders’ requirements.
¨ Study abroad education loans: These loans are intended to help students pursue their
education abroad. Like the domestic education loans, the applicant should have secured
a seat in an institute that is in the lender’s list of eligible institutions for the loan
approval.

Course-based loans

Financial institutions offer loans based on the course type the borrower chooses. It can be for
completing their basic degree or to study in prestigious institutions like IITs and IIMs.

¨ Undergraduate education loans: These loans are offered to provide financial support
to pursue and complete an undergraduate degree program. The undergraduate program
can be a three or four-year course which will help the individual with ample job
opportunities. The applicant should have completed or are pursuing secondary
education to apply for this loan.
¨ Graduate student loans: These loans can be availed by applicants who like to continue
their education and obtain advanced degrees in colleges within the country. It is for a
student who plans to get a postgraduate degree or complete any other professional
course. The applicant should have completed the undergraduate course to apply for this
loan.
¨ Career education loans: Many banks and other financial institutions offers career
education loans that pay for training and courses that help with career development or
to become eligible for jobs. An applicant planning to attend career-oriented programs
at colleges in India and technical and trade schools can apply for this loan.

Loans based on collateral types

While availing a secured loan there needs to be collateral as a guarantee that the loan will
repaid. Some of the loan types are
¨ Loan against the property: An immovable asset like land agricultural land/residential
land/ flat/house, etc has to be pledged to the bank
¨ Loan against deposits: Loan can be availed against fixed deposits/recurring deposits
or gold deposits
¨ Loans against securities: Bonds/debentures/equity shares can be used as collateral
¨ Third-party guarantee: A certificate of guarantee from an employee or a home bank
can help get loans.

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WHAT IS THE EDUCATION LOAN REPAYMENT PROCESS

Education loan in India is availed in order to pursue further studies from India or abroad. The
primary criteria for availing education loan includes a scholarly history of the student,
repayment capacity, and future prospects in terms of job and earnings. Education loan
repayment can be a concern if you don’t plan it in a smart and informed way. Many Indian
students see the abroad education loan as a major liability. Very often, they overlook the fact
that if there’s a little amount of contemplation and planning is done prior to selecting the loan,
all these worries can be put to rest easily.

For the purpose of planning the loan repayment, it is imperative for you to understand the
policies and various other aspects of loan repayment in India. Read on to get profound
knowhow of policies and tactics to plan your education loan repayment manner. process in an
effective Moratorium Period

• Moratorium period is a unique feature of education loans. Under this, you can choose
not to pay the EMI for up to 12 months from completion of studies or 6 months from
starting a job, whichever is earlier. However, the moratorium period depends on the
bank policies.
• Student loan EMI (Easy Monthly Instalment): A fixed sum of repayment set by the
applicant to be paid monthly in return of the study loan.
• Student loan EMI = (annual interest on total disbursed loan amount/12) + principal
amount adjustment
• Applicants can choose to set any amount for EMI, so as to manage the amount of
principal amount adjusted with every EMI
• Education loan part-payment: Students with available funds can submit the
consolidated sum of repayment to decrease the burden of interest rates.
• This is not at all related to the fixed EMI amount, students can repay higher than EMI
up to any limit (As per bank conditions)
• Most banks do not provide this service but applicants should check with their respective
bank
• Part payment can be used to adjust the loan tenure/duration and lower the EMI rates for
subsequent payments
• Education loan pre-payment: Students who happen to arrange for the complete due
amount of study loan can choose to repay the complete loan prior to its tenure,
irrespective of the fixed monthly EMIs
• Involves some processing charges (not compulsory for all banks)
• Is not allowed during the moratorium period
• Applicants might need to check the limits of pre-payment at their respective bank
• Education loan extension: Applicants can also choose to extend the loan tenure or lower
the EMI based on their affordability. This helps students to manage the loan in a better
way.
• Extension of study loan can be done in two ways, (i) decrease in EMI value (ii) increase
in loan tenure
• A decrease in EMI value is adjusted to increase the number of total EMIs to be paid
• An increase in the loan tenure is adjusted by the change in EMI value or by an increase
in study loan principal amount
• Education loan refinancing: Addition of study loan amount can be done as per the

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 requirement of an applicant based on their existing loan and credit record. Students
wishing to continue their education or seek more funds can present their existing study
loan as proof for refinancing. Above repayment options are all applicable for student
loan refinancing

When to Start Repaying Education Loan?

Although you are allowed a moratorium period in education loans, it is advisable to start
repaying the loan as soon as you can. This moratorium period is not interest free. And education
loan interest rate in India is quite high. Interest keeps accruing if you do not start repaying the
principal amount. And even in moratorium period, interest needs to be paid. This means
without decreasing the outstanding loan amount, you end up increasing the burden of interest
and hence the cost of the overall loan. Apart from that, you can also earn a good credit score if
you start the repayment early.

Miscellaneous Considerations Repayment period varies from bank to bank and on the basis
of the loan amount that you have availed. For students studying in abroad, the repayment period
is at times as long as 15 years giving them enough time and scope to repay it slowly in smaller
instalments. Banks do not levy charges on prepayment of education loans. However, prepaying
or foreclosure of the education loan is generally not advisable. This is because in education
loans, you can avail tax deductions on the interest as per the Section 80E.

What Will Happen If You Default on Your Education Loan?

¨ As we see, the chances of an education loan becoming an NPA is very real. Let us
discuss when your education loan will be classified as NPA and what will happen after
that.
If a student fails to pay the EMI for 3 consecutive months, the bank will classify the
loan as a non-performing asset.
¨ The borrower’s collateral will be at risk. The bank may seize your collateral and use it
to recover the loan amount.
Once the loan is classified as an NPA, the credit score of both the borrower as well as
his co- applicant’s credit score will be affected. This will reduce your and your co-
applicant’s ability to borrow money in the future.
¨ However, there is no need to get scared of the NPA numbers. Education loans are a
boon for all those who aspire for higher education from premier educational institutions
in India and abroad and are easy to repay too if you are meticulous about your
repayment. In this blog, we
¨ will tell our readers how they can plan their education loan repayment and avoid it from
becoming a burden or an NPA.
¨ A wise loan repayment plan begins soon after disbursal and is no rocket science. All it
requires is a combination of planning and diligence. Simple measures like using the
funds wisely, making sensible lifestyle choices, and understanding and implementing
the importance of budgeting go in an efficient and wise loan repayment strategy. At
this stage, Gyan Dhan’s EMI calculator - that allows students to know their EMI - is a
big help to students as it allows them to know how long it would take to repay their
education loan and thus plan wisely.

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Do You Need To Repay While Studying?

Once students know the number of EMIs they have to pay to repay their education loan, the
next question that crosses a student's mind is this. In order to plan their loan repayment
intelligently, it is prudent for them to know the different repayment options.
Students who take an education loan are entitled to a moratorium period. Ideally, during this
period the borrower does not have to make any loan repayment. This is the time between the
end of the course and the start of a job and RBI has asked banks to give a moratorium period
of one year after the completion of the course. A moratorium period acts as a financial cushion
for borrowers and gives them time to find a job after completing their course.

Lenders in India have different policies for repayment during the moratorium period. They are
as follows:

• Students Have To Pay Zero Interest During The Moratorium

• Students Have To Pay Partial Interest During The Moratorium
• Students Have To Pay Full Interest During The Moratorium
• Students Have To Pay EMI During The Moratorium

How does education loan work?

Education loans help students pay not only academic fees but also non-academic expenses
during their studies. The provision of student loan, like any other loan, comes on the payment
terms of an interest amount over the originally borrowed money. Commonly known as Study
Loan EMIs, the monthly instalments paid against the student loan allow applicants to repay the
loan amount borrowed step-by-step.

Who can avail education loans?

Education loans in India are only limited to higher education, albeit scholastic education in
India being equally expensive. Study loans are provided to students who’re at least pursuing a
professional course approved by government bodies after completing their SSC (10th class or
equivalent) and HSC (12th class or equivalent).

Who can provide education loans?

Banking institutions in India which are allowed to provide education loan have to be approved
by Indian Banking Association (IBA). These banking institutions are obligated to follow the
CSIS (Central Sector Interest Subsidy Scheme) and other regulatory norms to provide the
services which are in the best interest of student loan applicants. The two common types of
institutions which are allowed to provide study loans in India are:-

1. Registered banking institutions

2. Non-Banking Financial Institutions (NBFCs)

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EDUCATION LOAN FROM REGISTERED BANKS
(FEATURES/BENEFITS/CONDITIONS)

• Accountability of transactions
• Study Loan insurance facility available
• Lower rate of interest for loan
• Higher education loan tenure
• Extra features like part-payment, health cover, etc.
• Interest Rate subsidies and tax rebates

Education loan from non-registered banks/NBFCs (features/benefits/conditions)

• Higher education loan amount availability

• Low processing time
• Low or no need of collateral (even for high student loan amount)
• Higher interest rates
• Tough repayment timeline
• Extra features like loan against movable property/bullion (gold/diamond deposit loans)
• Wider course and institution eligibility options for applicants
• Higher processing fees
• Lower moratorium period (holiday period when applicants can choose to not pay the
EMIs)

It is strongly suggested that students should apply for study loan at a banking institution
regulated by IBA and RBI. Only these institutions provide loans which are considered safe in
terms of financial security and anti-theft norms.

Best banks providing study loans generally fall in the category of registered banks but there
are other NBFCs too, which are becoming more popular with their quick service and easier
norms. There is another method by which students can find the best possible blend of services
provided by both NBFCs and registered banks. They can opt for Student Loan Experts or
Student Financing Institutions. Education loan experts like Buddy4Study EduLoans provide
the best of what NBFCs and ‘Registered Banks’ have to offer.

16
ELIGIBILITY AND DOCUMENTATION

Eligibility :

• Availing an Education Loan from Axis Bank requires you to fulfil certain eligibility
criteria. Find out the eligibility criteria for Education Loan, below.
• Axis Bank provides Education Loans for students looking to study in India and abroad.
You can get a loan starting from Rs. 50,000 at attractive interest rates with benefits such
as no pre- payment charges and no pre-closure charges. Find out the education loan
eligibility criteria for availing an Axis Bank student loan.
• The Education Loan will be provided to those students who have
• Indian Citizenship
• Secured at least 50% marks during HSC & Graduation
• Who have obtained admission to career-oriented courses e.g. Medicine, Engineering,
Management etc., either at the graduate or post-graduate level
• Secured admission in India or Abroad through entrance test / merit based selection
process post completion of HSC (10+2)
• Documents displaying regular income is mandatory for the co-applicant(
parents/sibling/guarantor)
• The education loan eligibility will be determined by Axis Bank as per the Bank's policy
prevailing at the time of loan application and disbursement.

17
Documents required for Education Loan

Axis Bank Education Loans helps you finance your tuition fees, hostel charges, study
materials, etc. The Bank provides quick and hassle-free loans once you provide the application
and required documents. Find out the documents required for Education Loan.

Documents for Education Loan for salaried individuals:

• KYC documents
• Bank Statement / Pass Book of last 6 months
• Optional – Guarantor Form
• Copy of admission letter of the Institute along with fees schedule
• Mark sheets / passing certificates of S.S.C., H.S.C, Degree courses
• Documents for Education Loan for all other Individuals
• KYC documents
• Bank Statement / Pass Book of last 6 months
• Optional – Guarantor Form
• Copy of admission letter of the Institute along with fees schedule
• Mark sheets / passing certificates of S.S.C., H.S.C, Degree courses
• Documents required for first disbursement
• Demand letter from college or university
• Loan agreement signed by applicant, co-applicants
• Sanction letter signed by applicant, co-applicants
• Disbursement request form signed by applicant, co-applicants
• Receipts of margin money paid to the college / university along with bank
statement reflecting the transaction
• Documents for collateral security (if applicable)
• Form A2 signed by applicant or co-applicants in case of overseas institute
• Documents required for subsequent disbursement
• Demand letter from college or university
• Disbursement request form signed by applicant, co-applicants
• Receipts of margin money paid to the college / university along with bank
statement reflecting the transaction
• Exam progress report, marksheet, Bonafede certificate (Any one)
• Form A2 signed by applicant or co-applicants in case of overseas institute

18
FEATURES AND BENEFITS OF EDUCATION LOAN

Features of education loan

• Higher education loans can be availed to pursue higher studies both in India and abroad.
• Banks offer different amounts for studying abroad and India. For example, the State
Bank of India offers Rs. 30 lakhs to pursue higher studies abroad and Rs.10 lakhs to
study in India.
• Enjoy long term repayment tenures for higher education loans.
• Banks may ask for collaterals if you borrow a higher amount of money. For example,
HDFC Bank asks for collaterals if you are borrowing more than Rs.7.5 lakhs.
• A co-applicant is mandatory for a full time course.
• Easy and hassle free documentation process.
• You can enjoy a wide range of collateral options including residential property, fixed
deposits, national savings certificate, LIC policy etc. However, collaterals may differ
from bank to bank.
• You can enjoy tax benefits by taking a higher education loan under section 80E of the
Indian Income Tax Act 1981.
• Banks like HDFC also offer doorstep services.
• The loan gets directly disbursed to your educational institutions. It may be disbursed in
full or parts as per the requirement of your course.
• Some banks offer savings account free with higher education loans.
• Get insurance protection.
• You can use the amount received as higher education loan for paying off your college
fee, hostel expenses and travel expenses, and purchasing books and computers etc.
• No margin is applicable up to a particular amount.

Benefits of Education Loans

• Applicable for all: Any student who wants to study can apply for an education loan.
Even the economically backward sections of the society can take education loans under
the government-sponsored subsidy schemes such as ‘Central Scheme to provide
Interest subsidy’ (CSIS).
• Applicable for all courses: Education loan can be used to pursue all types of courses
— graduation, post-graduation, diploma courses, vocational courses — whether in
India or in foreign universities.
• Easily available: Education loans are widely and easily available. In fact, they are a
priority product in all banks as per the RBI’s guidelines.
• Varied loan amounts: Banks can offer loans anywhere between Rs.2 lakh and Rs.22
lakh for studying in India. Of course, the size of the loan depends on the course applied
for. To study abroad, the loan amount goes up to Rs.20 lakh.
• Helps in completion of education: The expense curve of education is increasing with
inflation and shifting prices. To avoid hindrances in studies, education loans become
essential.

Benefits: Education loans include many additional benefits like caution deposits, library fees,
building deposits, laboratory fees, tuition, examination fees, hostel fees, money for buying
books, instruments and uniform, travel expenses for studies abroad, etc.

Low interest rate for females: Female students are offered loans at lower interest rates.

19
Easy repayment: Also, another great advantage of education loan is that the loan amount need
not be repaid immediately. The repayment tenure can extend up to 5 to 7 years after the
completion of the course. This makes it easy for repayment.

20
Advantage and Disadvantages of Education Loan

ADVANTAGES OF EDUCATION LOAN

1. Lower Interest rates

When taking personal loans for financing education abroad, interest rates are predominantly
higher compared to education loans. The interest rates on study loans are lesser. Also,
Government banks provide an additional concession of 0.5% to all female students.

2. Moratorium holiday-Pay after your course completion

This is one of the significant advantages of education loans. Unlike personal loans where a
borrower is expected to start paying the incurred EMIs from the next months, education loan
schemes come with a moratorium period.

The moratorium period is the time until which the EMIs don’t start or the student is not required
to make any payments to the lender. Generally, the moratorium period includes course duration
plus 6 months( can be extended to 12 months) so that the students can concentrate on their
studies.

3. A wide range of expenses covered

Education loan for abroad studies covers almost every necessary expense that a student might
need to complete their education. It includes tuition fees, travel (tickets), house rent, university
fees, food expenses, living expenses, a laptop, or any other apparatus required for your
education.

4. Education loan interest subsidy

The Government of India has introduced several education loan interest subsidy schemes for
the benefit of the loan applicants who belong to the financially backward sections of society.
The subsidy schemes are given below.

• Central Sector Interest Subsidy Scheme

• The Padho Pardesh Education Loan Interest Subsidy Scheme

21
 • Dr. Ambedkar Central Sector Scheme of Interest Subsidy

The advantages of these subsidy schemes include the waiver of the education loan
interest charged during the moratorium period. However, post the moratorium period,
these students are to start the repayment of EMIs by themselves.

5. Tax benefit- Section 80E

In Section 80E of the Income Tax of 1961, the loan applicant or the co-applicant can avail of
the education loan income tax exemption. In simple terms, the loan applicant or the co applicant
can proclaim a certain percentage of the interest paid towards their education loan as deductible
from the total income.

6 . Tax collection at source (TCS) on foreign remittance

As per TCS on foreign remittance, a person sending money more than 7 lakhs abroad in a
financial year, has to pay an extra tax on amounts exceeding 7 lakhs. To provide relief to
students who have taken education loans through a financial institution in India i.e banks or
NBFCs, the rate of TCS shall only be 0.5% on amounts exceeding Rs 7 lakh. And the best part
is the whole amount of TCS can be claimed back.

7. Build your CIBIL score

CIBIL is the credit information report i.e. summary of your credit history till date. CIBIL score
generally ranges between 300-900. A score above 750 is considered a good score. Education
loan benefits your CIBIL as the timely repayment of EMIs will build the required score and
will help you get a loan easily in the future like a home loan, car loan, etc.

8. No need to liquidate valuable assets

Mostly, parents liquidate valuable assets to bear education expenses which eventually disturbs
long-term financial goals like buying land or a flat, children’s marriage, etc. By taking an
education loan, banks retain your liquid assets like FDs, insurance, Government bonds as
security and grant you a loan against that security. Therefore, the loan taken for your education
would not muddle in between your long-term financial goals.

9. Liberating your parents from loan burden

Taking an education loan can liberate parents from all financial burdens as the student is
responsible to repay his education loan after the completion of his studies and the moratorium
period.

22
DISADVANTAGES OF EDUCATION LOAN

• The banks ask for the mark sheet before disbursing the loan, so it is important to
maintain a good academic record. (Now that you know, don’t let this be a disadvantage
factor in your case).
• The Education Loan has a floating Rate of Interest with a variable index which changes
with time. Depending on banks and type of loans that one is taking, the interest rate
may change.
• Loans below 4 lakhs require no guarantor but for the ones above this amount a guarantor
is mandatory.
• Obtaining an Education Loan for courses which doesn’t guarantee much employment
rate is a complicated task. So banks can refuse a student this loan if he/she is taking
admission to “mere degree granting colleges”.
• A few banks does not allow for change of course or college after the reimbursement of
loans. Do check with the bank before applying for the loan.
• Students get trapped in the web of unsuitable education loans due to lack of proper
knowledge and understanding about the loan procedures and banks’ terms and
conditions. In many cases, bank disclosures for securities (viz. mortgages, guarantee)
are not adequate or presented in a very complex manner for applicants to understand,
given their limited understanding of credit market. Due to such complexity, applicants
are not fully acquainted with the schemes and risks involved in availing the credit.
Hence, when re-payment process starts, borrowers have to deal with unexpected
problems which leave them helpless.
• It’s very important for borrowers to analyse the long run suitability of the loan
beforehand so that debt does not lead to an unmanageable situation. In case a candidate
is not able to repay the loan as per schedule due to some unavoidable situations, he has
to suffer great hassles owing to the bank’s mounting pressure for repayments.
• Majority of the banks are unable to provide proper assistance to the borrowers who are
facing a tough time during repayments. Loaners are not ensured any rights and remedies
by the banks if caught in unaffordable loans. Loans may go into default very soon after
missed payment.
• Generally in the beginning banks, do not inform adequately about workout and
cancellation procedures and later start putting late fee, and other charges for delayed
payments, further increasing the overall cost of loan. Although most of the banks try to
cooperate and show considerable flexibility in terms of payment schedule, they usually
turn out to be inflexible in granting long- term repayment relief for borrowers.
• Undoubtedly, today, when higher education is costlier than ever, education loans are
the most welcomed antidote by aspiring candidates. Certainly, these loans are the best
answer to financial shortage for a successful career if chosen wisely; else, they become
a burden and lead the borrower to a disastrous situation.

INTEREST RATE IN SOME BANKS

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Public sector banks
BANKS INTEREST RATE
Bank of baroda 6.75%
Union bank 6.80%
Central bank 6.85%
BOI 6.85%
SBI 6.85%
PNB 6.90%
Canara bank 6.90%
Bank of maharashtra 7.05%
Indian bank 7.15%
IOB 7.25%

Private sector banks

BANKS INTEREST RATE
IDBI bank 6.90%
South Indian bank 7.95%
HDFC bank 9.45%
Karnataka bank 9.98%
Federal bank 10.05%
Dhanlaxmi bank 10.50%
ICICI bank 10.50%
Karur vysya bank 10.75%
YES bank 10.99%
Axis bank 13.70%

Private sector banks such as IDBI Bank, South Indian Bank and HDFC Bank are offering
the lowest rates on education loan at 6.90%, 7.95% and 9.45%, respectively.

24
Women Education Loan Schemes

Many Indian girl students are excluded from receiving a quality education. The majority of
girls are compelled to drop out of school for a variety of reasons, despite the fact that boys and
girls enrol in primary school in equal numbers. There are also a lot of women who put in a lot
of effort in school and are competing with men in a variety of fields at all levels.

To empower women and to encourage women to study, private and public banks in India have
introduced various education loan schemes that are designed especially for women.

List of Women Education Loan Schemes

Some of the Education Loan Schemes that are offered by banks in India for women are
as follows:

Central Bank of India Cent Vidyarthi

This education loan is a term loan with maximum amounts of Rs. 10 lakhs for in-country
education and Rs. 20 lakhs for out-of-country education. If the borrower offers security in
exchange for the loan, there is no upper restriction on the loan amount. The rate of interest for
Female, Scheduled Castes (SC), Scheduled Tribes (ST), Indian Institute of Technology (IIT)
students is Marginal Cost of Funds Based Lending Rate (MCLR) + 1.5%.

This loan covers many expenses such as:

• College, School or Hostel fee.

• Laboratory, library or exam fee.
• Travel expenses for education abroad.
• Purchase of equipment, books, instruments and uniforms.
• Insurance premium of the student borrower.
• Any expenses related to the course.

Corp Vidya Scheme

The Corporation Bank of India offers this education term loan. Female borrowers benefit from
lower interest rates on this loan. For new loans, the concession is 50 basis points (25 basis
points for women borrowers) lower than the card rate. This loan is available to female
borrowers who want to study in India or abroad.

This loan covers many expenses such as:

• College, School, Hostel, Laboratory, library or exam fee.

• Travel expenses for education abroad.

25
 • Purchase of equipment, books, instruments and uniforms.
• Purchase of computer at a reasonable price.
• Any expenses related to the course.

Indian Overseas Bank Education Loan

Vidya Jyoti - A 0.5 percent interest rate decrease on this education loan is available to all female
students. It offers a maximum of Rs. 30 lakhs for in-country courses and Rs. 40 lakhs for out-
of-country courses. Students may repay the loan's interest over the course of their studies or in
addition to the principal. With a flexible payback period of between 5 and 7 years, this loan is
available to students.

State Bank of India Education Loan

The State Bank of India offers loans to women who want to attend college abroad. The bank
gives a rate that is 25% above the MCLR for loans up to Rs.7.5 lakhs. On the other hand, the
bank will apply an MCLR of greater than 1.85 percent if the loan amount surpasses Rs.7.5
lakhs. Contrarily, women are eligible for a 0.50 percent rebate on their student loan debt.

IDBI Education Loan

IDBI Bank offers a concession of 50 bps for female applicants. The rate of interest ranges
between 9.10% and 11.10% p.a. The process to apply for an education loan from the IDBI
Bank is easy and can be done online.

Baroda Scholar

Bank of Baroda offers the Baroda Scholar Loan where there is not processing fee or security
fee for a loan amount of up to Rs.7.5 lakh. The interest rate offered is between 10.40% and
11.15% p.a.

Axis Bank Education Loan

Women who wish to pursue higher education can avail an education loan from Axis Bank to
meet the cost. The interest rate offered ranges between 13.70% and 15.20% p.a.

26
Pradhan Mantri Vidya Lakshmi Karyakram

A fully IT based Student Financial Aid Authority has been proposed through the 'Pradhan
Mantri Vidya Lakshmi Karyakram', to administer and monitor Scholarship as well
Educational Loan Schemes, with a view to enable all poor and middle class students to pursue
higher education of their choice without any constraint of funds.
Vidya Lakshmi Portal is a first of its kind portal for students seeking Education Loan. It
provides single window electronic platform for students to access information and prepares
applications for Educational Loans and Government Scholarships. It provides information on
the following:
• Educational Loan Schemes of various Banks
• Common Educational Loan Application Form for Students
• Application for Education Loan to multiple Banks
• Facility for Banks to download Students Loan Applications
• Facility for Banks to upload loan processing status
• Facility for Students to email grievances/queries relating to Educational Loans
to Banks
• Linkage to National Scholarship Portal for information and application for
Government Scholarships
This initiative aims to bring on board all Banks providing Educational Loans. It is expected
that students throughout the country will be benefited by this initiative of the Government, by
making available a single window for access to various Educational Loan Schemes of all
Banks. The portal has been developed and being maintained by NSDL e-
Governance Infrastructure Limited.
39 Banks have registered 70 Educational Loan Schemes on the Vidya Lakshmi Portal and
integrated their system with the Portal for providing loan processing status to students.

27
 CHAPTER 2
REVIEW OF LITERATURE

28
 REVIEW OF LITERATURE

Graham Fowler(1998) plans to increase the number of students entering higher education are
welcomed; although it is argued that student loans do not fit in with this policy and that in
reality education requires extra funding. The way to expand higher education requires extra
funding. The way to expand higher education is seen as through a high-status vocational route.
This is contrasted with the current forms of vocational schooling. A good general education for
students up to the age of 16 is proposed, with subsequent quality vocational training which
encourages access to higher education. The increased status of the vocational route will follow
and, in return, high-quality vocational education will offer motivation for schools, a higher
proportion of graduates and more highly qualified staff.

Baum and Saunders (2000) cost-benefit analysis of student debt this method compared total
indebtedness at graduation to total gross annual income. In the first six years of practice,
NCNM graduates will experience a great deal of burden in repaying loans. However, the
figures after year six demonstrate that students will be at a marginal level of cost to benefit
ratio with an average 95% of total income to total debt. This figure goes well over this margin
if students reach the projected loan amounts of $123,334 to 139%. According to Baum's
research, this would not be uncommon for professionals but may cause student dissatisfaction
with their education. It will definitely cause those who are indebted to these levels to delay
some decisions and purchases in their life circumstances. According to the analysis of this data,
the return on the investment of this population should occur after year six in practice, at which
time the monetary benefit level would better meet the indebtedness of the student.

M. R. Narayana (2005) has found model educational loan scheme. The Educational Loan
Scheme outlined below aims at providing financial support from the banking system to
deserving/ meritorious students for pursuing higher education in India and abroad. The main
emphasis is that every meritorious student though poor is provided with an opportunity to
pursue education with the financial support from the banking system with affordable terms and
conditions. No deserving student is denied an opportunity to pursue higher education for want
of financial support.

Choy and Li (2006) showed that default rates increased by as much as 6 percent among some
groups of students and by as much as 60 percent among some types of institutions (Lederman,
2008). It is not surprising that federal policymakers looking at these numbers were asking again
how much default is acceptable and what factors contribute to it. Their efforts to define default
and to decide if default rates should be used as indicators of institutional quality or loan
program efficacy raise complicating questions. Is default a function of the characteristics of
students or of the institutions they attend? Do the types of loans influence the probabilities of
default? Do life circumstances—like the types of jobs and income levels of students after they
graduate—have an impact on default rates? To help policymakers and practitioners answer
these and other questions surrounding the reauthorization process, we offer this review of the
research literature on the predictors of student loan default.

Andrew Austin, D (2008), analyzes the effects of borrower’s interest rates and student’s lender
subsidies on federally guaranteed student loan volumes from 1988 to 1994 and from 1996 to
2006. In the present and past policy debates, some have contended that lender subsidy cuts
would cause some lenders to reduce loan supply or to leave the student loan market. A simple
model of the student’s loan market suggests that if lenders receive economic rents due to
generous subsidies, small changes in subsidy levels should not affect loan supply. The

29
empirical results based on a variety of GMM panel estimators find evidence to a link between
higher SAP margins and higher loan volumes, is weak or inconclusive for both the 1988-1994
and 1996-2006 periods. This suggests that subsidy reductions had no discernable effect on
student loan volumes. Results also suggest that higher real borrower interest rates reduce
student loan volumes for public colleges and universities.

Amarjit Singh Lall (1999) an official said in his article, lending public sector banks here
started effective floating interest rates on loans to the infrastructure sector to pledge against the
long tenure of these loans. Bank officials said banks continue of follow this practice in most
sectors. But within fracture loans extended for long tenures lenders are more comfortable with
the floating interest rate commercial lending at floats help a bank maintain spreads in times of
interest rate volatility.

Nagaraj Mylandla (2001) in his article “Corporate Reports” stated we have slogged for a
decade in developing the market. Now that most private banks have computer networks and an
increasing number of nationalized banks are getting computerized, our business will grow
faster in the coming years.

S.S.Kohli (2004) concluded in his study bank can revised their fixed rate loans higher; this is
a risk management exercise to safeguard their asset, liability management. But a firming up to
lending rates can only be witnessed of the RBI increases the bank rate.

National Development – our Hon’ble president A.P.J.Abdul Kalam rightly said at the U.G.C.
Golden Jubilee Celebration function in Delhi on 28th December 2003, any country’s
development depends on the development of education in the country. The greatest impact of
WTO control over higher education would occur in developing countries need for academic in
situations that contribute to national development, produce research relevant to local needs and
participate in the strengthening of civil society.

(Sangeetha, 2018). The paper compared the student loan schemes introduced and implemented
in Australia and India. Government of Australia introduced Higher Education Contribution
Schemes such as Higher Education Loan Program (HELP) to support the students to participate
in Higher Education by helping them to get loans so as to incur the cost of higher studies

(Edmiston, 2012) The paper discussed about the awareness of student loan debt and
deliquency and also addressed about the various issues such as, issues faced by borrowers,
creditors and Americal Federal Government and the society

(Puttaswamaiah, 2010) The research study found that Students are applying increasingly for
Students loans. The paper talked about the increasing pattern for Student’s loan application
year by year from 2004 to 2009 in India The research paper proposed the theoretical framework
based on the four theories: Theory of reasoned action, Theory of Planned Behaviour, Theory
of Human Capital and Theory of ability to pay. The paper also identified some of the
determinants which may influence intention of students to repay Educational Loan (Srivastava,
2020).

The paper discussed about the impacts of state Educational Loan on the Study life of Students.
Also found there exists positive correlation between Student’s family background i.e., Family
income, Type of University Whether Government or Private University (Bing, 2012).

30
Khanwalker, 2019 Problems and issues faced by students about the banks and various
financial institutions that as the unemployment rate is goes on increasing, Students are failing
to repay the loan amount in a prescribed time. Similarly, Students after getting loans and
completion of the course not getting in contact with banks so banks are considering Education
Loan as ‘Non-Performing Assets.

(Sivakumar, 2018)The research paper discussed about the factors those influencing students
to avail loan. Findings of the study revealed that Students (Borrower’s Family Income/
Background) those who are interested to pursue higher education studies, Amount of Loan,
Interest Rate, Loan application procedure, post Higher Education employment opportunities.

CHRISTOPHER AVERY

This essay reviews three recent books on the causes and consequences of student debt. In
addition to increases in college tuition and fees, supply and resource constraints both contribute
to the growing phenomenon of default degree completion rates are relatively low especially at
two-year colleges. Default rates actually decrease with the amount of debt incurred, as students
who incur more debt are more likely to complete degrees that bolster their earning power.
These books suggest some promising policy options but there are a quick fixes given that the
net cost of attending both private and public colleges continues to rise (JEL D14. 122, 123,
128)

ALAN MICHAEL COLLINGE

The Student Loan Scam is an exposé of the predatory nature of the $85-billion student loan
industry. In this in-depth exploration, Colling argues that student loans have become the most
profitable, uncompetitive, and oppressive type of debt in American history.

This has occurred in large part due to federal legislation passed since the mid-1990s that
removed standard consumer protections from student loans-and allowed for massive penalties
and draconian wealth-extraction mechanisms to collect this inflated debt. High school
graduates can no longer put themselves through college for a few thousand dollars in loan debt.
Today, the average undergraduate borrower leaves school with more than $20,000 in student
loans, and for graduate students the average is a whopping $42,000. For the past twenty years,
college tuition has increased at more than double the rate of inflation, with the cost largely
shifting to student debt.

JOEL BEST & ERIC BEST This illuminating investigation uncovers the full dimensions of
the student loan disaster. A father and son team—one a best-selling sociologist, the other a
former banker and current quantitative researcher—probes how we’ve reached the point at
which student loan debt—now exceeding $1 trillion and predicted to reach $2 trillion by
2020— threatens to become the sequel to the mortgage meltdown. In spite of their good
intentions, Americans have allowed concerns about deadbeat students, crushing debt,
exploitative for-profit colleges, and changing attitudes about the purpose of college education
to blind them to a growing crisis.

Working Paper Higher Education in India:

HE NEED FOR CHANGE, By Pawan agarwal June 2006 working paper, no. 180 provided
in cooperation with: Indian council for research on international economic relations
(ICRIER)As of 30 June 2005, Public Sector Banks had a total outstanding exposure of Rs.71

31
billion against 488,000 education loan accounts. Financing of higher education through
student loans is still incognisant. Only 2-3 % students avail of student loans. In comparison, 85
% students in UK and Sweden, 50% in USA and Canada and 77 % in Australia had availed
of student’s loans in recent years. (Usher, 2005)

BANDY UPADHYAY (RBI DATA) Extending the research in the Indian context, the present
study explores the crucial factors associated with education loan default in Tamil Nadu. This
study uses a detailed account-level lending data of over two lakh borrowers in the state from
three commercial banks headquartered in the southern region as compared to a smaller sample
of 5000 borrowers by Bandy Upadhyay (2016). Since the southern region, particularly Tamil
Nadu, has a dominant presence in education loan market in India, focusing only on the NPAs
in education loans in the state throws up some interesting insights which may not have been
discovered with the use of diverse all-India data. Further, unlike the study by Bandy Upadhyay
(2016) which was confined only to PSBs, this study covers two PSBs and one PVB, thereby
facilitating a comparison between the two categories of banks by ownership. More specifically,
use of micro level data allows us to investigate the spatial, borrower, scheme and course
specific attributes associated with higher default probability in education loan segment.
Findings of the paper have important policy implications in terms of risk identification in
education loan segment. With a view to capture the lenders’ perspective in extending education
loan, the paper also includes the results of a questionnaire-based survey of banks in Tamil
Nadu.

RACHEL CHITRA (TOI) In the past four years, the number of education loans disbursed in
India has reduced by 25 per cent. As of March 31, 2019, the number of students able to secure
loans fell to 2.5 lakh from 3.34 lakh students as of March 31, 2015.The main reason for the
decline is that high non-performing assets levels. These have nearly doubled to 12.5 per cent
in the past four years, according to a ToI report.

Apart from this, during this period, the number of active loans accounts also declined.
However, it may be noted that the total loan amount disbursed has increased 34 per cent to Rs
22,550 crore in the fiscal year 2019 from Rs 16,800 crore in the financial year 2016, which
indicates that banks are keen only on funding higher-sized loans.

For the same period, the total number of active loan accounts or students declined to 27.8 lakh
from 34 lakh in the past four years. Meanwhile, the average ticket-size of loans hiked to Rs 9
lakh from Rs 5.3 lakh during the same period. Credit bureau CRIF Highmark, SVP, Parijat
Garg said, "Banks are looking at a value game. They are no longer interested in volumes."

32
 CHAPTER 3.
RESEARCH METHODOLOGY

33
Objectives of the Study

The objective of this research projects summarizes what is to be achieved by the study. The
purpose of this study is Study on student satisfaction towards educational loan from
commercial banks. The present research was undertaken with the following objectives as
follow:

• To examine the satisfaction level of the students in availing educational loans from
commercial banks.
• To study out the various schemes of education loan for women student
• To analyse the awareness of education loan among the youth
• To find out the factors influencing the students for preferring education loan

34
SCOPE OF THE STUDY

• The study provides the information relating To find out students satisfaction
with the reference to education loan scheme.

• The study provides the information relating various Loan schemes offer by the
banks

• The study provides the information relating various schemes for women
provided by commercial banks and from government.

• The study provides the information relating to examining the interest charged
by banks on student loan and which bank is more convenient for education loan
interest wise.

• The study provides the information relating to understand the prosses of banks.

• The study provides the information relating the understanding the reason for
taking education loan.

• The study provides the information relating Pro and Cons of Education Loan

• The study provides the information relating which cast people take more
Education Loan.

35
LIMITATION OF STUDY :

Every study is to be undertaken within a certain set of circumstance, including limitations.

So is with this research also. Although, a number of obstacles were done away with while
undertaking the work. Man has done everything to make it come true but everything has its
own limitation. However, nothing can be limitation free in this world. So, there still had been
certain limitations related with this study.

Some of the limitations of this study are mentioned below, so that the finding of this study is
understood in proper perspective:

1. This study is based on both primary and secondary data, so the quality of finding depends
upon the accuracy of information collected through questionnaire, and on the information
collected from relevant published source.

2. The research is limited to the information collected by administering a questionnaire to the

students of Kalyan east who have taken an Education Loan. The research sample size is 70.

3. Simple Mathematical calculation is used, for analysis and interpretation of data.

4. This study is subjected to geographical barrier, as data could only be collected from a
particular region (Kalyan).

36
RESEARCH METHODOLOGY

Research can be defined as "A Scientific and Systemic Search for pertinent information
on a specific topic. Therefore, research could be understood as an organized activity
with specific objectives on a problem or issues supported by compilation of related data
and facts, involving application of relevant tools of analysis and deriving logically on
originality.

Methodology here refers to the method as to how the researcher has done his efforts
towards the activity of reviewing the literature. The Methodology includes the sources
of data which include either secondary data or primary data and even sometimes the
combination of both. Secondary data are readily available, because they were collected
for some other purpose and which can also be used to solve the present problem. They
are the cheapest and the easiest means of access to information. But for the present
study, more concentration is on primary data. The research design was descriptive in
nature.

It includes the description of the study population, sample size. sampling techniques.
sources of data and methods of data collection.

Definition of research:

"Research is a systematic and objective analysis and recording of collected observation

that may lead to the development of generalization, principle or theories. resulting in
prediction and possibly unlimited control of event."

john w. Best

"Research is an organized inquiry or examination to discover new information or

relationship and to expand and to verify existing knowledge."

Francis Rommel

37
Research Population
The total number of respondents for this research work is 70. The population from which data
is collected are the customer of the Banks who have taken education loan.

Research Area
Sample area for the research is taken from questionnaire form, from the students who have
taken education loan, in Kalyan area.

Sample Size
The proposed research is descriptive in nature. The sample size is of 70 and it be considered
throughout the research. Sample refers to the subset of the universe population. The sample for
this study is drawn from the students who have taken the Education Loan using convenience
sampling.

Research Instrument
The research instruments employed in this study is a closed ended structured questionnaire.
Google form was used as research instrument. The questionnaire is designed in such a way to
enable the respondent to provide answer as the owner of tour and travel agency. Research
questions were tailored to address the research objectives set forth in this study and also
formulated research hypotheses.

Tools And Techniques:

1. Validation Of Tool:
The main statistical tool used for the collection method and analysis of data in this project are:
1. Pie chart
2. Tables
3. Graphical method

2. Data Processing And Analysing Plan:

The data was processed and analysis with the help of percentage using excel sheet.

Data Collection Method:

Data has been collected from two main sources:

Primary Data
Primary data are those which the researcher collects directly by himself. In this project work.
primary data is collected by giving questionnaires. The Primary data have been collected
through a survey with a pre-tasted structured QUESTIONNAIRE on a sample of randomly
selected 70 people who are the students who have taken the education loan. Questionnaire is
included in appendix.

Secondary Data

38
Secondary data are those, which are got through reviewing primary data. The various secondary
data used in this work includes
1. Internet
2. Journals
3. Books related to tours and travel etc.

Data sources Primary and secondary

Primary data well-structured questionnaires
Secondary data Website. books related to tours and travel,
articles, newspaper etc
Sample size 70
Sampling techniques Random sampling
Data analysis Tabulation and graphical representation

Structure Of Questionnaire

The questionnaire structure consisted of two parts. The first section gathered the respondents'
demographic information, whereas the second part focused on exploring five key aspects:
(1)To examine the satisfaction level of the students in availing educational loans from
commercial banks.
(2)What is the process of banks for Education Loans
(3)Benefits to women who want to take education loan.
(4)consumer review, The questionnaire mainly collected quantitative data by using different
measurement techniques including multiple-choice questions. open-ended questions to gather
the qualitative data.
Regarding the process of data analysis and interpretation, the qualitative data were coded to
identify popular themes and categories that are relevant to the research questions.

39
 CHAPTER 4.

DATA INTERPRETATION

40
Q1. Gender

Option :

1. Male
2. Female
3. Transgender

Table:

No. Options Frequency Percentage %

1. Male 33 47.1%
2. Female 37 52.9%
3. Transgender 0 0
Total 70 100%

Gender

female, 37, 53%

male, 33, 47% Other, 37, 53%

male female

Interpretation :

From the above table and the pie chart we can see that, the Education loan is taken by more
females then men.

From the 70 Respondents,

53% are Females had taken Education Loan.
47% are Males who have taken Education Loan.

41
Q2. Age

Option :

1. 18-20 Age Group

2. 20-30 Age Group
3. 30-40 Age Group
4. Others

Table:

No. Options Frequency Percentage %

1. 18-20 age group 23 32.9%

2. 20-30 age group 45 64.3%

3. 30-40 age group 1 1.4%
4. Others 1 1.4%
Total 70 100%

42
 Age Group
50
45
40
35
30
25
20
15
10
5
0
18-20 20-30 30-40 Other

Age GROUP

Interpretation :

From the above table and the bar graph we can see that, the Education loan is taken more by
the age group of 20-30.

From the 70 Respondents,

64.3% loan is taken by 20-30 age group people.
32.9% loan is taken by 18-20 age group people.
1.4% loam is taken by 30-40 and other age group people.

43
Q3. Do you aware of Education loan

Option:

1. Yes
2. No

Table :

No. Options Frequency Percentage %

1. Yes 58 82.9%

2. No 12 17.1%
Total 70 100%

Awareness Of Education loan

17%

83% 17%

Yes No

Interpretation :

From the above table and the Pie chart we can see that, There is Awareness of Education loan
among the students.

From the 70 Respondents,

83% of Students are aware of Education Loan.
17% of students are not aware of Education Loan.

44
Q4. Qualification

Option :

1. SSC
2. HSC
3. Graduation
4. Post-graduation

Table :

No. Options Frequency Percentage %

1. SSC 3 4.3%

2. HSC 15 21.4%
3. Graduation 40 57.1%
4. Post- Graduation 12 17.1%
Total 70 100%

45
 Qualification
45

40

35

30

25

20

15

10

0
SSC HSC Graduation Post-Graduation

Qualification

Interpretation :

From the above table and the Bar graph we can see that, the most of Education Loan is taken
after the graduation, for higher studies.

From the 70 Respondents,

57.1% of students which is 40 of students have taken loan after the graduation of higher
studies.
17.1 % of students which is 12 of students have taken loan after the post-graduation.
21.4% of students which is 15 of students have taken loan after their HSC and,
4.3% of students which is 3 of students have taken loan after their SSC.

46
Q5. How do you know about the Education Loan

Option :
1. Advertisement of banks
2. Friends
3. Internet
4. Family
5. Teachers
6. Other

Table :

No. Options Frequency Percentage %

1. Advertisement of banks 9 12.9%

2. Friends 19 27.1%
3. Internet 15 21.4%
4. Family 9 12.9%
5. Teachers 13 18.6%
6. Other 5 7.1%
Total 70 100%

47
 How do you know about the Education Loan
20
18
16
14
12
10
8
6
4
2
0
Advertisement of Friends Internet Family Teachers Other
bank

How do you know about the Education Loan

Interpretation :

From the above table and the Bar graph we can see that, the most of people came to know
about Education loan by their Friends.

From the 70 Respondents,

27.1 % of students came to know about education loan through their friends.
12.9 % of students came to know about education loan through Advertisement of banks.
21.4 % of students came to know about education loan through Internet.
12.9 % of students came to know about education loan through family.
18.6 % of students came to know about education loan through Teachers.
7.1 % of students came to know about education loan through other.

48
Q6. For what course you have taken education loan

Option :

1. Engineering diploma
2. Medical field
3. MBA
4. IT diploma
5. Other

Table :

No. Options Frequency Percentage %

1. Engineering diploma 3 4.3%

2. Medical Field 7 10%

3. MBA 18 25.7%
4. IT Diploma 8 11.4%
5. Other 34 48.6%
Total 70 100%

49
 Course for Education Loan
40

35

30

25

20

15

10

0
Engineering diploma Medical Field MBA IT Diploma Other

Course for Education Loan

Interpretation :

From the above table and the Bar graph we can see that, the most of people take education
loan for other studies.

From the 70 Respondents,

46.6% of students taken loan for other studies.
10% of students taken loan for medial field studies.
25.7% of students taken loan for MBA.
11.4% of students taken loan for IT diploma.
4.3% of students taken loan for Engineering.

50
Q7. Have you got education loan immediately from bank ?

Option:

1. Yes
2. No

Table :

No. Options Frequency Percentage %

1. Yes 37 52.9%

2. No 33 47.1%
Total 70 100%

Loan Disbursement

47%

53% 47%

Yes No

Interpretation :

From the above table and the Pie chart we can see that, Most of the Students get the Loan
immediately from bank.

From the 70 Respondents,

53% of Students get Education Loan immediately from banks.
47% of students doesn’t get Education Loan immediately from banks.

51
Q8. Whatever the interest rate are charged by bank it is reasonable ?

Option:

1. Yes
2. No

Table :

No. Options Frequency Percentage %

1. Yes 45 64.3%

2. No 25 35.7%
Total 70 100%

Interest Rate Reasonable

36%

64% 36%

Yes No

Interpretation :

From the above table and the Pie chart we can see that, Most of the Students are agreeing that
the Interest which is charged by bank for the Education Loan is reasonable

From the 70 Respondents,

64% of Students find interest on Education Loan reasonable.
36% of Students find interest on Education Loan is not reasonable.

52
Q9. Which bank have you prefer to take loan ?

Option :

1. Public sector bank

2. Private sector bank
3. Non-banking institution
4. Co-operative banks
5. Others

Table :

No. Options Frequency Percentage %

1. Public sector bank 20 28.6%

2. Private sector bank 34 48.6%

3. Non-banking institution 1 1.4%
4. Co-operative banks 5 7.1%
5. Others 10 14.3%
Total 70 100%

53
 Types of banking sectors
40

35

30

25

20

15

10

0
Public sector bank private sector bank non-banking co-operative banks others
institution

types of banking sectors

Interpretation :

From the above table and the Bar Graph we can see that, Most of the Students are taking
Loan from Private sector banks.

From the 70 Respondents,

48.6% students are taking loan from private sectors banks.
28.6% students are taking loan from public sectors banks.
14.3% students are taking loan from others financial institution.
7.1% students are taking loan from co-operative banks.
1.4% students are taking loan from non-banking institution.

54
Q10. What is the repayment Period of your Education Loan

Option :

1. 1 to 2 years
2. 2 to 3 years
3. 3 to 4 years
4. More then 5 years

Table :

No. Options Frequency Percentage %

1. 1 to 2 years 7 10%

2. 2 to 3 years 27 38.6%
3. 3 to 4 years 12 17.1%
4. More then 5 years 24 34.3%
Total 70 100%

Numbers of years

10%

34%

39%

17%

1 to 2 years 2 to 3 years 3 to 4 years more then 5 years

Interpretation :

From the above table and the pie chart we can see that, Most of the Students Loan repayment
period is between 2 to 3 years.
From the 70 Respondents,
38.6 % of students repayment period is 2 to 3 years.
10% of students repayment period is 1 to 2 years.
34.3% of students repayment period is more then 5 years.
17.1% of students repayment period is 3 to 4 years.

55
Q11. What is the mode of repayment ?

Option :

1. EMI
2. ECS
3. PDC

Table :

No. Options Frequency Percentage %

1. EMI 66 94.3%

2. ECS 3 4.3%
3. PDC 1 1.4%
Total 70 100%

Mode of Repayment
4% 2%

94%

EMI ECS PDC

Interpretation :

From the above table and the pie chart we can see that, Most of the Students choose EMI
option foe repayment.
From the 70 Respondents,
94% of students choose EMI option for repayment.
4% of students choose ECS option and 2% students choose PDC method of repayment.

56
Q12. What are the rate of Interest charged by the the bank ?

Option :

1. 5 to 10%
2. 11 to 15%
3. More than 15%

Table :

No. Options Frequency Percentage %

1. 5 to 10% 45 64.3%

2. 11 to 15% 23 32.9%
3. More than 15% 2 2.9%
Total 70 100%

Rate of Interest

3%

33%

64%

5 to 10% 11 to 15% More than 15%

Interpretation :

From the above table and the pie chart we can see that, Most of the Banks charges Interest 5
to 10% on Education Loan.
From the 70 Respondents,
64% banks charges 5 to 10% Interest on Education Loan.
33% banks charges 11 to 15 % Interest on Education Loan.
3% banks charges more then 15 % Interest on Eduacation Loan.

57
Q13. What type of security pledged for the loan ?

Option :

1. Financial Assets
2. Physical Assets
3. Others

Table :

No. Options Frequency Percentage %

1. Financial Assets 40 57.1%

2. Physical Assets 5 7.1%

3. Others 25 35.7%
Total 70 100%

security

36%

57%

7%

Financial Assets Physical Assets Others

Interpretation :

From the above table and the pie chart we can see that, Most of the Banks Ask for Financial
security to the students for education loan.
From the 70 Respondents,
57% of banks ask for Financial security.
36% of banks ask for other security.
7% of banks ask for Physical assets.

58
Q 14 Do you need any guarantor for education loan.

Option:

1. Yes
2. No

Table :

No. Options Frequency Percentage %

1. Yes 46 65.7%

2. No 24 34.3%
Total 70 100%

Guarantor for Loan

34%

66% 34%

Yes No

Interpretation :

From the above table and the Pie chart we can see that, Most of the Students are agreeing that
there is need of guarantor for education loan.

From the 70 Respondents,

66% of Students are agreeing that there is a need of guarantor for education loan
34% of Students finds that there is no need of guarantor for education loan

59
Q15. Are you satisfied with the service of the bank ?

Option:

1. Yes
2. No

Table :

No. Options Frequency Percentage %

1. Yes 57 81.4%

2. No 13 18.6%
Total 70 100%

service satisfaction

19%

81% 19%

Yes No

Interpretation :

From the above table and the Pie chart we can see that, Most of the Students are satisfied
with the service provided by bank on education Loan.

From the 70 Respondents,

81.4% of Students are satisfied with the service by banks.
19% of Students are not satisfied with the service by banks

60
Q16. Does education loan is beneficial for students ?

Option:

1. Yes
2. No
3. Maybe

Table :

No. Options Frequency Percentage %

1. Yes 52 74.3%

2. No 4 5.7%
3. Maybe 14 20%
Total 70 100%

Benefits to students

6% 20%

20%
74%

Yes No maybe

Interpretation :

From the above table and the Pie chart we can see that, Most of the Students thinks that
education loan is beneficial for students.

From the 70 Respondents,

74% of Students thinks that it is beneficial.
6% of Students thinks that it is not beneficial.

61
Q17. Cast based Analysis

Option :

1. Open
2. S.C
3. O.B.C
4. N.T, D.N.T and Other
5. S.T

Table :

No. Options Frequency Percentage %

1. Open 50 71.4%

2. S.C 10 14.3%
3. O.B.C 3 4.3%
4. N.T, D.N.T and Others 5 7.1%
5. S.T 2 2.9%
Total 70 100%

62
 Cast
60

50

40

30

20

10

0
Open S.C O.B.C N.T, D.N.T and Others S.T

Cast

Interpretation :

From the above table and the bar graph we can see that, Most of the Students of open cast
take the education loan.

From the 70 Respondents,

71.4 % of students are from open cast who take loan.
14.3 % of students are from ST cast who take loan.
4.3% of students are from O.B.C cast who take loan.
7.1% of students are from N.T cast who take loan.
2.9% of students are from S.T cast who take loan.

63
Q18. Number of days taken by a bank for disbursement of loan

Option :

1. 15 to 20 days
2. 1 months
3. 2 months
4. 3 months
5. More than 3 months

Table :

No. Options Frequency Percentage %

1. 15 to 20 days 26 37.1%

2. 1 months 12 17.1%
3. 2 months 9 12.9%
4. 3 months 11 15.7%
5. More then 3 month 12 17.11%
Total 70 100%

64
 Period for disbursement of loan
30

25

20

15

10

0
15 to 20 days 1 months 2 months 3 months More then 3 month

Period for disbursement of loan

Interpretation :

From the above table and the bar graph we can see that, Most of the Students disbursement
the loan with in 15-20 days.

From the 70 Respondents,

37.1% of banks disbursement the loan with in 15 to 20 days.
17.1% of banks disbursement the loan with in 1 months.
12.9% of banks disbursement the loan with in 2 months.
15.7% of banks disbursement the loan with in 3 months.
17.11% of banks disbursement the loan with in more than 3 months.

65
Q19. Due to education loan, economically poor students were completed their higher
education in India and abroad.

Option :

1. Strongly agree
2. Agree
3. Neutral
4. Disagree
5. Strongly disagree

Table :

No. Options Frequency Percentage %

1. Strongly agree 25 25.7%

2. Agree 17 24.3%
3. Neutral 18 35.7%
4. Disagree 2 2.9%
5. Strongly disagree 8 11.4%
Total 70 100%

66
 30

25

20

15

10

0
Strongly agree Agree Neutral Disagree Strongly disagree

Interpretation :

From the above table and the bar graph we can see that, Most of the Students are Neutral with
education loan, economically poor students were completed their higher education in India
and abroad.
From the 70 Respondents,
35.7% of respondents are Neutral
24.3% of respondents are agree
25.7% of respondents are strongly agree
2.9% of respondents are disagree
11.9% of respondents are strongly disagree

67
Q20. Reasons for taking the education loan

Option :

1. Financial problems
2. Quality higher education
3. Suggestions by other
4. Tax benefits

Table :

No. Options Frequency Percentage %

1. Financial Problems 42 60%

2. Quality higher education 24 34.3%

3. For studding abroad 4 5.7%
4. Tax benefits 0 0
Total 70 100%

68
 Resons for taking loan
45

40

35

30

25

20

15

10

0
Financial Problems Quality higher education For studding abroad Tax benefits

Resons for taking loan

Interpretation :

From the above table and the bar graph we can see that, Most of the Students who take
education loan because of financial problems.

From the 70 Respondents,

60% of students is taking loan because of the financial problems.
34.3% students taken loan because of quality higher education.
5.7% students are taking loan because they want to studding abroad.

69
 HYPOTHESES

H0 There is no relation between rate of interest and satisfaction

H1 There is relation between rate of interest and satisfaction

HYPOTHESES CALCULATION BY CHI SQUARE TEST

Table No. 1.

Interest Rate satisfied Total

Yes No
5 to 10 43 02 45
11 to 15 14 08 22
More then 15 0 03 03
Total 57 13 70

Table No. 2 Expected value

5 to 10 45 * 57/ 70 45 * 13 / 70
= 36.64 = 8.36
11 to 15 22 * 57 / 70 22 * 13 / 70
= 17.91 = 4.09
More then 15 03 * 57 / 70 03 * 13 / 70
= 2.44 = 0.56

Table No. 3 Calculated value

O E (O-E) (O-E)2/E
37 36.64 0.36 0.0197
8 8.36 (0.36) 0.0861
18 17.91 0.09 0.0101
4 4.09 (0.09) 0.0440
2 2.44 (0.44) 0.3607
1 0.56 0.44 1.5714
Total calculation value 2.8669

Table No. 4 Conclusion

Table value Calculation value Land of significance Level of freedom

5.991 2.8669 5% 2

Conclusion : calculated value of chi square in 2.8669, and table value is 5.991, our calculated
value is less than table value so we reject null hypothesis.

70
 CHAPTER 5
FINDING OF THE STUDY AND SUGGESTION

71
FINDING OF THE STUDY

According to the above analysis and interpretation we can say that,

¨ The Most of the Students who take education loan because of financial problems.

¨ The Most of the Students are Neutral with education loan, economically poor students
were completed their higher education in India and abroad.

¨ The Most of the Students disbursement the loan with in 15-20 days.

¨ The Most of the Students of open cast take the education loan.

¨ Most of the Students thinks that education loan is beneficial for students.

¨ The Most of the Students are satisfied with the service provided by bank on education
Loan.

¨ The Most of the Students are agreeing that there is need of guarantor for education loan.

¨ The Most of the Banks Ask for Financial security to the students for education loan.

¨ The Most of the Banks charges Interest 5 to 10% on Education Loan.

¨ The Most of the Students choose EMI option for repayment.

¨ The Most of the Students are taking Loan from Private sector banks.

¨ The Most of the Students Loan repayment period is between 2 to 3 years.

¨ The Most of the Students are agreeing that the Interest which is charged by bank for
the Education Loan is reasonable.

¨ The Most of the Students get the Loan immediately from bank.

¨ The most of people take education loan for other studies.

¨ The most of people came to know about Education loan by their Friends.

¨ The most of Education Loan is taken after the graduation, for higher studies.

¨ There is Awareness of Education loan among the students.

¨ The Education loan is taken more by the age group of 20-30.

¨ The Education loan is taken by more females then men.

SUGGESTIONS :

72
• By calculating the total loan : Education loan borrowers must calculate and
understand the total amount that they have to repay to the bank. This amount includes
the principal amount, interest rate, fees and charges, etc. They must also be aware of all
the repayment rules of the loan. When people know the total amount they have to repay
to their lenders, it will become easy for them to plan their repayment.
• Plan EMI : Borrowers should set an EMI that can be paid easily. They can choose to
keep it low and extend the tenure of their loan or they can choose to pay high EMIs and
shorten the tenure. They should be ready to pay more MONEY OF EMI only if they
have a good income and can afford it.
• Use Grace Period or Repayment Holiday feature Smartly :The grace period is not
the same for every type of loan. Education loans also have a grace period/repayment
holiday feature and borrowers should use it smartly to lower down their EMI. One way
borrowers can reduce their repayment amount is by paying off a part of the interest
during their study period itself.
• Avoid defaults : Defaulting on education loans can land borrowers into a lot of trouble.
Their credit score will be affected and the possibility of getting loans in future will also
be reduced. So, when people plan their education loan, they should ensure that they
plan it in a way that their chances of becoming a defaulter is almost 0%. If borrowers
think that they will not be able to repay the full amount back to their lenders on time,
they can apply for an education loan along with a co-borrower.
• Pay other loans : Before taking an education loan, borrowers are advised to clear off
all their previous loans (if they have any). They should pay off the loans that have the
highest rate of interest first. Also, if they have other loans, they should plan their
monthly budget well before adding the liability of an education loan. They should be
sure that they can afford it to avoid a case of default.
• Earn and Pay : When people start earning, they should begin paying off their
education loan. They can choose to pay lesser amount at the start if their salary is low
and increase their EMI payments later.
• Reduction on Interest rate : The rate of interest should be reduce for the students who
are taking education loan. And the government also developed new schemes for the
students.

73
CHAPTER 6.
Conclusion

74
Conclusion

The education is important for everyone nowadays and so it plays a vital role in shaping the
human behaviour. It has become now become too costly since the government, aided and self-
financing colleges follow different level of fees structure among students. The difference in
fees structure is met through educational loan systems. This study helps both the students and
the bankers by providing valuable suggestions to both of them to improve their level of
satisfaction.

Education has become the major stepping stone toward success, and education loans have
become an integral part of the lives of people who cannot afford the overpriced fee structure
of well-known institutions. Education loan should have more support from the government.
And should have a lesser interest rate as it only helps the students build a career for themselves
and make the country proud. since India is the youth-based country, education loan should be
readily available in any part of the company.

Lastly, in conclusion information found in this project; it has proven that the education loan is
a vital part of a student’s life when the individual comes from relatively poor housing.

The bank are provide a good service for the society by providing educational loan for the
student who unable to continue their higher education due to lack of cash. There is a good
advantage for availing the bank loan, besides there is some disadvantage too.

75
CHAPTER 6
BIBLOGRAPHY

76
 BIBLOGRAPHY:

Journals

• Amarjit Singh Lall, The Journal of Banking studies, March 1999, Vol. XVIII No.3,
P.18.
• Nagaraj Mylandla, “Corporate Reports”, Business India, No.603, April 16th t o 29th
2001, P.No.73.
• Kothari. C.R, (2007) Research Methodology, New Age International Publication,
New Delhi
• Sheriekar. S.A, Marketing Management, Himalaya Publishing House, 13th revised
edition

Links

• https://www.indiatoday.in/education-today/jobs-and-career/story/tips-to-opt-forbetter-
educational-loan-182433-2014-02-24
• https://www.bankbazaar.com/education-loan/tips-to-manage-education-
loaneffetively.html
• https://okcredit.in/blog/what-is-education-loan-history-and-more/
• https://www.buddy4study.com/article/education-loan.
• https://www.gyandhan.com/blogs/public-sector-bank-education-loan

Websites

• https://www.onlinesbi.sbi
• https://www.axisbank.com/
• https://www.hdfcbank.com
• https://www.icicibank.com
• https://www.india.gov.in/spotlight/pradhan-mantri-vidya-lakshmi-karyakram-towards-
bright-future

77
CHAPTER 7
APPENDIX

78
Q1. Gender
Option :

1. Male
2. Female
3. Transgender

Q2. Age
Option :

1. 18-20 Age Group

2. 20-30 Age Group
3. 30-40 Age Group
4. Others

Q3. Do you aware of Education loan

Option:

1. Yes
2. No

Q4. Qualification
Option :

1. SSC
2. HSC
3. Graduation
4. Post-graduation

Q5. How do you know about the Education Loan

Option :

1. Advertisement of banks
2. Friends
3. Internet
4. Family
5. Teachers
6. Other

Q6. For what course you have taken education loan

Option :

1. Engineering diploma
2. Medical field
3. MBA

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 4. IT diploma
5. Other

Q7. Have you got education loan immediately from bank ?

Option:

1. Yes
2. No

Q8. Whatever the interest rate are charged by bank it is reasonable ?

Option:

1. Yes
2. No

Q9. Which bank have you prefer to take loan ?

Option :

1. Public sector bank

2. Private sector bank
3. Non-banking institution
4. Co-operative banks
5. Others

Q9. Which bank have you prefer to take loan ?

Option :

1. Public sector bank

2. Private sector bank
3. Non-banking institution
4. Co-operative banks
5. Others

Q10. What is the repayment Period of your Education Loan

Option :

1. 1 to 2 years
2. 2 to 3 years
3. 3 to 4 years
4. More then 5 years

Q11. What is the mode of repayment ?

Option :

1. EMI
2. ECS
3. PDC

Q12. What are the rate of Interest charged by the the bank ?

80
Option :

1. 5 to 10%
2. 11 to 15%
3. More than 15%

Q13. What type of security pledged for the loan ?

Option :

1. Financial Assets
2. Physical Assets
3. Others

Q 14 Do you need any guarantor for education loan.

Option:

1. Yes
2. No

Q15. Are you satisfied with the service of the bank ?

Option:

1. Yes
2. No

Q16. Does education loan is beneficial for students ?

Option:

1. Yes
2. No
3. Maybe

Q17. Cast based Analysis

Option :

1. Open
2. S.C
3. O.B.C
4. N.T, D.N.T and Other
5. S.T
6.
Q18. Number of days taken by a bank for disbursement of loan
Option :

1. 15 to 20 days
2. 1 months
3. 2 months
4. 3 months
5. More than 3 months

81
Q19. Due to education loan, economically poor students were completed their higher
education in India and abroad.
Option :

1. Strongly agree
2. Agree
3. Neutral
4. Disagree
5. Strongly disagree

Q20. Reasons for taking the education loan

Option :

1. Financial problems
2. Quality higher education
3. Suggestions by other
4. Tax benefits

82