Educational loans appliers have doubled in the last five years; data compiled by the Indian Banks' Association has shown.
The data, compiled annually from records of all 28 nationalised banks in the country, shows that 3.25 lakh loan applications were received in 2009-10 against 1.48 lakh applications in 2004-05.
Bankers attribute this to an increase in the number of people pursuing higher education and a relaxation of educational loan norms. "Earlier, the criteria were stricter and only meritorious students were given educational loans. Now, even an average student is eligible," says Nupur Mitra, executive director of Indian Overseas Bank, Chennai. "Moreover, there is no collateral for loans up to Rs 4 lakh," she said.
Indian Overseas Bank, which in 2006 received around 11,000 applications in Tamil Nadu, sanctioned about 30,000 applications from April to June this year.
The bank disbursed about 48,000
Educational loans in 2010-11. Educational consultant Jayaprakash Gandhi says although engineering fees have remained stable in Tamil Nadu, there has been a huge rise in the costs of management courses. "Management students have to shell out between Rs 5 lakh and Rs 15 lakh. Most can't afford to study without a loan," he said. "Along with tuition fees, allied expenditure on hostel facilities, travel and laptops has also risen over the last five years. Many banks now provide loans that cover these costs as well," he said. Banks attribute the increase in the number of takers to the fact that loans are now available for a wider variety of courses.
"Along with professional courses, loans are now available even for courses like teacher's training," says a bank official.
Gandhi says even parents who can afford the fees prefer their children to take a loan. "They feel it makes the student more responsible about finding a job and repaying the amount." Students are comfortable with the arrangement. "There are tax benefits, too, with an educational loan," says IIT student J Nachiketa, who has taken an educational loan of Rs 2 lakh. "The bank gave me 10 years to pay back the amount, which is very convenient," he adds.
