Path to Finance Your Dream Engineering Education

Completing an engineering degree not only involves sincerity, diligence, and perseverance in a student, but also a large sum of money. Doubts that usually lurk in minds of prospective pass-outs are the rating of an institution in which he or she is planning to study, popularity and future of the specific engineering field, and the ways to fund education in that dream institution. Shrishti Dubey, now a final year Civil Engineering student at Takshila Institute of Engineering & Technology, Jabalpur was awarded a scholarship by ACC Cements in 2014 through which she was able to get admission in the institute she always aspired for. She happily adds, “Growing up in a less privileged community has not only posed financial and academic challenges in my life but has also helped me in realizing the value of education. I am thankful to Vidyasaarathi and ACC cements for such an unconditional support and appreciation. With this opportunity, I will be able to continue my education and pursue my dream of becoming an aspiring civil engineer.”

Plan all Aspects of Funding Technical Education

Being organized is a prerequisite while planning to apply for a hefty loan. Most of the times, students prefer to gather information about loans while appearing for their final year examination. Everybody does not have a family asset which can be liquidated and hence opt the way of loan. If a student wishes to pursue his or her degree from a foreign university, it becomes necessary for the student to show the financial resources prior to/after approval of the visa. Mr. Gurinder Bhatti, Chairman, and MD, ESS Global says, “Planning is the crucial and most significant task for any success. Students should do a thorough research before they begin their loan application process with any bank. They should also consider the marginal money which is required before any bank approves the loan. Incomplete documentation can act as a hurdle in the entire process. Hence, before proceeding always ensure that documents are handy.”

Financers that Assist in Funding

The entire process of approval, disbursal, and rate of interest are crucial aspects of an education loan for any student. The financing agencies primarily consider factors such as the overall academic record of the student, ranking and quality of education imparted by the institute, entrance exam scores, the course that is to be pursued, and employment opportunity in future. While getting loans from the government and Public Sector Banks (PSBs) might appear like a strenuous task in terms of documentation, private banks have come up with easy loan schemes for bright students. However, the rate of interest in latter could be higher than that of the former.

Apart from conventional private and government banks, students can also get loans from NBFCs (Non-Banking Financial Companies). NBFCs process loans in a short period of time. Hence within a week’s time, a student can avail loan to study in the institute of his or her choice. While explaining the benefits of availing an NBFC loan; Ishan Bose, the Founding Team Member of Krazy Bee, a company that processed nearly 10,000 education loans during 2017-18 says, “KrazyBee asks for less documentation, the processing of loan is convenient as the guardian does not have to be physically present. The entire process can be done virtually. Only the original signature of a student is required on loan documents.” Coming to the rate of interest which forms the most important part of the loan, he said, “There is no burden on the borrower, the overall cumulative is much lesser and the rate of interest does not float as per the market rate, and varies from 12-15%.”

Requirements For a Loan Play a Major Role

Education loans typically are of amounts larger than 10 lakhs and the collateral that any bank can approve should be of higher value than the approved amount. Depending on the amount, banks can approve up to 100% of the loan amount. Presently, margin money is not required for an amount up to Rs 4 lakh. To study in India, 5% of the required money has to be borne by the student; whereas to study in a country outside India, the margin money increases to 15%. A third-party guarantor is asked along with the assignment of future for the income group from Rs 4-7.5 lakh and a collateral security equal to 100% of the loan amount is required for the income group above Rs 7.5 lakh. But, a bank can waive this condition occasionally for a student with an excellent academic record.

Give a Thought About How to Repay your Loans

An applicant usually pays a loan after the completion of his or her course. Most of the banks and other financial institutes offer the alternative of repayment of loan after a period of six months when the applicant gets hired or one year after the completion of course. When a student avails an education loan, he or she gets benefits under the I-T Act, Section 80E which permits the deduction of the total interest amount paid from your taxable income. But, this deduction is acceptable only for applicants paying interest on the loan for him or her and for students of whom you are a legal guardian. “The students may find higher EMIs (due to shorter repayment periods) at the beginning of their careers very challenging. Thus, we offer longer tenure of up to 10 years to facilitate smooth transition of a student from campus to corporate. This way they can start their earning and professional lives with positive credit histories that help them to take other loans in future,” asserts Mr. Ajay Bohora, Co-Founder, MD & CEO of HDFC Credila.

Government Sponsored Scholarships for Students

Central Sector Scholarship (CSS) scheme, awarded by Ministry of Human Resource Development (MHRD) to meritorious higher secondary pass students is granted on the basis of marks obtained in Higher Secondary and holds no separate exam. However, the student has to be an Indian, belonging to a non-creamy layer and must have taken admission in an undergraduate or postgraduate regular course in a recognized Indian university. Every year, 82000 new scholarships (41000 for boys and 41000 for girls) are awarded through this programme. The aim of this scheme is to provide financial assistance to deserving students that have a family income of less than Rs 6 lakh per annum and to meet a part of their daily expenses while pursuing higher studies.

Emphasizing the significance of scholarships and fellowships given to students, Mr. Ajay Vohra adds, “According to Credit Information Bureau India Ltd (CIBIL), the outstanding education credit including loans to study within the country and abroad, as on March 31 stood at INR 63,800 crore against INR 53,334 crore in April 2014, clearly indicating the rising demand of education loans and scholarships.” Few government scholarships that help students to realise their dreams are listed below:

Expressing his views on the ease of applying scholarships at Vidyasaarathi, a unique portal that helps a large number of students to apply for scholarships directly to the corporate companies, Mr. Gagan Rai, Managing Director and CEO, NSDL e-Governance Infrastructure Ltd reclaims, “Vidyasaarathi is an educational policy portal, created with the aim to facilitate the disbursement of the scholarships from corporates to students, to match those who need the scholarships, and those who are providing the scholarships.” He further adds, “The corporates lay down the criterion in such a way that they can provide scholarships to bright students from medium background. There are eligibility parameters to apply for a scholarship to a particular corporate, and every student has to look for the criteria where he/she fits in. One can apply for that corporate and once approved, the corporate will directly send the money to the student’s bank account.”

Bright Path Ahead for the Underprivileged

There are many other scholarships available apart from the ones listed above. Hence, it is advisable for students to keep a track of their deadlines and apply within the specified time. Students applying for loans, their parents, and guarantors should also understand the entire procedure associated with availing an education loan. Most of the times, students are in a misconception that they will be recruited by a best company of the industry after the completion of their engineering education. Hence, an elaborate research about the institute and verification about the intricacies of paying back a loan would pave a right path for you while you get in your dream institute.

“If we are talking about past couple of years, challenges are slowly disappearing for anyone applying for education loan. The challenge is students need to make sure that they have confirmed admissions letter before applying for the loan application and need to consider that many colleges do not grant much time between the admissions and the fee payment. Most important is to be ready with the right documentation beforehand,” concludes Mr. Gurinder Bhatti, Chairman, and MD, ESS Global.