education loan
jithesh p
(Querist) 02 January 2011
This query is : Resolved
helo sir,
my brother has taken an education loan from syndicate bank for rs 2,00,000 in the year 2007 for his mba course, now he is working in abroad,he has repaid R.s 45000, but the principle remain the same.now he has some problems and the 2 months instalments has been dropped. sir i want to know about the interest rate and how they charge the rate, at the duration of his course, the banker made him pay the interest and he has compeled him to pay by blocking his final instalment. sir, is there any provision on the concession on the interest rate at the time of the duration of the course.he is ready to pay the loan in full, but he need some time. please advice me about the provisions available.
malipeddi jaggarao
(Expert) 03 January 2011
Mr.Jithesh
Repayment of interest during the course period depends upon the terms of sanction at the time of availing education loan. Now that the course is over, your brother successfully completed course and got the job, it should not be a point for discussion.
Your brother should be in regular touch with the Bank which has helped him for completion of his studies. Repayment of EMI on educational loan of Rs.2.00 lac should not be a problem to a person who got employed abroad in normal course. He is facing genuine problems, he can represent the Bank for giving him some time. The following are the general terms for repayment of Education Loans of Public Sector Banks and mode of charging the intterest:
The terms of repayment generally will be:
Repayment holiday/Moratorium will be Course period + 1 year or 6 months after
getting job, whichever is earlier.
The loan is to be repaid in 5-7 years after commencement of repayment.
INTEREST ON EDUCATION LOANS IN PUBLIC SECTOR BANKS:
Simple interest to be charged during the repayment holiday/moratorium period. Normally nationalized Banks charge sub-PLR interest on Education loans presently many banks charge at 12%. This rate is linked with Bank’s Prime Lending Rate and whenever there is change in Bank’s PLR, the rate on education loan is also changed accordingly. Penal interest @2% will be charged for loans above Rs.4 lakh for the overdue amount and overdue period. The accrued interest during the repayment holiday period will be added to the principal and repayment in Equated Monthly Instalments (EMI) be fixed accordingly. Banks are supposed to intimate the EMI after fixing the same once the course is over. Banks are also supposed to give 1% interest concession for loanees if the interest is serviced during the study/ /moratorium period.
