In this Blog Shourya Arora , a third year Tolani Maritime Institute student has shared his personal journey of getting Education Loan. He also did a lot of research with Banks before completing this article and Merchant Navy DECODED appreciates his efforts. We , feel this article will not just help you in knowing all about Education Loan , challenges in getting a loan , documents needed but also knowing who all cannot avail the Education loan facility in Merchant Navy field.
Please read the Blog till the end as in the last CE Praneet Mehta has shared his personal story regarding EDUCATION LOAN as well. A journey full of struggles but HOPE and SURVIVAL in the end.
“Don’t stop dreaming just because you think you are not privileged”
Let me take you on my journey of figuring out how I did it. I belong to a low middle-class family but I have had huge dreams since childhood and I never stopped dreaming for the same because dreams come true for those who dare to dream.
One thing I knew since school is that though I’m not a privileged child, I’m not going to turn my dreams off. But how, how I managed to study in India’s top marine college that is Tolani Maritime Institute? That too for 20 lakhs where my father earns just 20k a month.
It was a huge hurdle for my family to even think of 20 lakhs as my father didn’t have even 5 percent of it in his savings account. So we have been left with no option but to take an education loan.
Taking an education loan is itself a task or we can say a detailed process which one should understand that how it works and how one can apply for the same. Just keep one thing in mind that, you are the one who will be paying it afterwards so you have to work hard and you have to get through your college with a placement in a good company and academic record to sustain and repay the loan.
Let us discuss few points that will help you to figure out the process and will help you to make a decision:-
- Who is eligible for education loan?
- You are eligible to apply for an education loan if you are a resident of India and you are 18-35 years old during the loan application.
- One should have secured admission in a college or university affiliated with UGC/AICTE/Govt. Bank.
- Those who want to take a loan for DNS (Diploma in Nautical Science) as it’s a diploma will have to explain bank that though it’s a diploma course but it leads to BSc. Nautical Science which is affiliated with IMU(Indian Maritime University). Only, in that case, they will be getting a loan.
- There’s no Education loan For the GP rating course.
- You can get a loan for B.Tech Marine Engineering, BSc Nautical Science, DNS(Diploma in nautical science), and GME(Graduate Marine Engineering) but there is one more important thing for passed out Mechanical Engineers if they had already taken loan for their Mechanical Engineering degree, which still exits then they won’t be able to get the loan for GME course.
2. Documents required for education loan–
i.) Loan application form as per bank
ii.) Passport size photographs
iii.) Proof of address and age
iv.) Copy of PAN of student
v.) Proof of having cleared the last qualifying examination
vi.) Admission letter
vii.) Prospectus of the College wherein charges like Admission Fee, Examination Fee, Hostel Charges, etc. are mentioned.
viii.) Details of Assets & Liabilities of parents/co-obligates/guarantors.
ix.)Collateral–Collateral are the assets that the bank accepts as securities for a loan. In case you want to file an education loan of more than 7.5 lakhs then you have to attach securities with your loan application file. These securities can be movable (FDs, LIC insurance, etc) or immovable assets (Land, house, etc).
3. When repayment of education loan starts-If the bank will approve all your documents your loan will be approved and repayment starts after1 year after the end of studies or 6 months after getting a job, whichever is earlier, so work hard in your college. Also after the loan has been approved, when the bank will be paying semester fees, they will ask you to deposit 5 percent of that semester fees, and then only they will pay the fees. For example, if a fee for a particular semester is 2 lakh then you have to deposit 5% of the amount that is 10 thousand in this case.
4. Education loan Interest rate– In an education loan the interest is initially Simple Interest till your first installement period and post that it becomes Compound Interest . You have to repay your loan with interest and education loan interest rate varies from 6.75 percent to 15.20 percent and varies from bank to bank. It’s advisable to take loans from national banks like PNB (Punjab National Bank), SBI(State Bank of India), Union Bank of India etc. as they have low interest rates and also in certain conditions students can get subsidy in their loan amount as well. For example- Punjab National Bank (PNB) interest rate varies from 6.90% to 9.55% while the axis bank interest rate varies from 13.70% to 15.20%.
5. Results– Bank gives you a loan on your performance so you have to score well in your 10+2. Not only that even if your loan is passed, every semester whenever you will ask the bank to pay the fees to college they will ask for your last semester result because they will be monitoring your academics and they will decide whether you are working hard in your college or you are just wasting bank’s money in college and bank may reject fees demand letter if you got back in semester subjects.
6. Education Loan amount with or without collateral– You can get 7.5 lakhs of loan which the bank can give to you without collateral. But if you want to increase that loan amount, the bank will ask for collateral. For example, you can take loans up to 7.5 lakh loans without any collateral deposits but if one wants to increase the amount of loan even if it’s 8 lakh then you have to attach securities with the loan application file.
7. Which bank is easy to get education loan? Colleges also mention Certain Banks in their prospectus and approaching them for an education loan is much easier than any other bank for that particular college. If your college is not in association with the bank, they will do a detailed study about college and the course, they will also look for placement records of the college and how college is performing, how many companies are coming to college they will study everything and then only they will be sending your file further. For example, in my case, I approached HDFC bank during my admission time because it is in association with Tolani Maritime Institute and it was easier for them to complete the loan formalities but the interest rate was high so I approached PNB (Punjab National Bank) and they had done a detailed study regarding the college because they are not in association with the college but still all the documents were complete so my loan had been approved. As from past experiences and feedbacks from the students we came to know that although SBI (State bank of India) offers low interest rates but taking loan from SBI (State Bank of India) bank is itself a hurdle and a long procedure. So make sure you are doing it with authentic college and you are pursuing something that you are passionate about.
8. Problems faced by students for education loan:-
i) CIBIL score– It is the credit history of a particular person of their past loan performance. Maintaining a good credit score helps in getting loans easier. It ranges from 300 to 900.CIBIL can go down if you have not paid your loan payments on time or you have stopped paying the loan. If your parent’s CIBIL score is below 600 then it’s a thing to be worried about. Your application has a high chance of being getting rejected by the bank. So having a CIBIL in between 600-749 is still a good score to apply for the loan. If your parent’s CIBIL is low, try to approach small banks and tell them the reason behind the bad CIBIL score and if the reason is genuine, they might consider your case and if you have some connections in the bank try to take help from them.
ii) Minimum marks for education loan? Bank considers your academic qualification and your achievements and if you have a bad academic record in the past they might reject your application. If your score is above 60%, you are eligible to apply for an education loan, but a good score helps get things easier.
iii) Collateral– If you want to apply for an education loan let’s say from PNB (Punjab National Bank). And you want more than 7.5 lakhs for your studies, you have to attach securities with your loan application file. These securities can be movable (FDs, LIC insurance, etc) or immovable assets (Land, house, etc). If you couldn’t manage to pay the loan back you would lose your securities and will end up with bad CIBIL so sometimes family members are reluctant to take such a risk and in this case your responsibility towards explaining them , making them believe in you and most importantly making the right choice increases tremendously.
So if we talk about Merchant navy, I had opted for B.tech Marine Engineering from Tolani Maritime Institute where the fees was around 20 lakhs and for that yes, the bank has asked for the collateral and my family had to put our only house at stake for which I’m trying to give justice to my parent’s hard work. I was able to get placed in BW groups of shipping and I’m grateful for that and proud that I took a decision that time.
Now if we talk about DNS the course is around 6-7 lakhs and one can easily get a loan without any collateral.
For GME(Graduate Marine Engineering) aspirants the course is around 5 to 6 lakhs and you can easily get a loan for this course also by providing complete documents.
But again if we go for BSc. Nautical science then the bank will ask for collateral.
After reading this whole blog! Can you just ask yourself a question?
Are you willing to take the burden on your shoulders?
Are you willing to work hard for your dreams?
Are you willing to make your parents proud?
Are you willing to grab this one opportunity that can change your life?
And if it’s a “Yes”, then you have got your answer to your question about education loan for which you were reading the whole blog.
And I know, the person who is willing to, they know what they are capable of.
Wishing best for you.
This was my story or I can say a part of my journey and I would love to hear yours. Hello everyone I’m Shourya arora a third-year cadet at Tolani Maritime Institute and I have been placed in BW groups of shipping in the LNG division .Thank you for reading the whole blog I hope you liked it.
Chief Engineer Praneet Mehta shares his experience of Education Loan:
Like Shourya, even I come from a very humble background. Taking an education loan was a must for me and during my time in 2004, my maternal uncle, who himself was working in Punjab National Bank, had to give his guarantee for the Loan.
Things at home were tough during the first few years, where even though I was sailing and earning but could not payback even a single installment to the Bank authorities. Many times my Uncle’s salary used to be deducted and a lot of letters from Bank came to my house, CIBIL Score was at an all-time low, my Education loan was declared NPA. That period was tough but there was always a ray of hope that just kept me motivated and I knew that very soon good times will come.
Well, I managed to clear the loan, when I was sailing as Third Engineer second contract, in just a matter of three months sailing, even the Bank Authorities were surprised as well as relaxed. So, for all those who are worried about Education Loan, how are we going to repay the loan? Please don’t worry about the paying the education loan but worry about getting into a good Shipping Company and College, everything else will fall into place.
With this article, I would like to thank my Uncle Sh. Yogesh Khumman , who believed in me at a time when even I did not believe myself. Today my CIBIL Score is good , I don’t have any loans on myself and things are finally falling into pace , slowly and steadily.
Lastly a message to all the Parents , please let your child study on education loan and let him repay it himself. This will develop a sense of self confidence in your child and most importantly a self belief system, when he repays the loan himself and feels proud about it. Most importantly , sometimes the pressure of education loan works wonders for a child who works only under pressure. Please don’t try to shield your child from struggle , as these struggles will define his future tomorrow.