Federal Bank Education Loan

Overview:

Established in the pre-independence era, Federal Bank is a leading Indian Commercial Bank in the private sector. Headquartered in Aluva, Kerala, the bank has a strong network of more than a thousand branches and ATMs spread across the nation.

Education is a way of life. It is a basic necessity that helps one evolve as a person and broaden their perspective. Federal Bank helps the young minds from not missing an opportunity to educate themselves due to lack of finance. Federal Bank offers Education Loan to assist the financial needs required for education of your child. Shape your child’s future with Federal Bank’s Education Loan known as Special Vidya Loan.

Purpose of Federal Bank Education Loan:

Special Vidya Loan (Federal Bank’s Education Loan) gives an opportunity for students to pursue education, by providing financial support. The loan can be availed for various educational courses in India and abroad. Vocational training and skill development study courses are not eligible for this loan.

Features and Benefits:

Expenses Considered for Federal Bank’s Education Loan:

To maximise the benefit for students, Special Vidya Loan covers the following items –

• Tuition fee payable to the student’s college/school for the purpose of examination, library, lab, etc.
• Hostel fee. This is applicable in case of a school/college providing residential facilities to its students.
• Cost of laptop (only if essential for the course), books, uniform, equipment and instruments required for the course and travel expenses of the student.
• Expenses incurred for project work, study tours, thesis, etc.
• Caution deposit fee charged by the institution, amount payable towards the institution’s building fund, any other refundable deposit. All of these need to be supported by bills/ receipts, and cannot exceed 10% of the tuition fee of the course.

Amount of Education Loan:

For courses in India, the loan amount is up to Rs.10 lakhs, and Rs.20 lakhs for courses abroad. This loan can’t be availed for vocational training and skill development courses, whether in India or abroad. The loan quantum depends on the repayment capacity of the parents or student. To ensure a continued disbursal of the loan, the student needs to deliver a satisfactory performance throughout the course.

Margin:

• No margin is applicable on loan amount up to Rs.4 lakhs.
• 5% margin is applicable on loan amount above Rs.4 lakhs, for studies in India.
• 15% margin is applicable on loan amount above Rs.4 lakhs, for studies abroad.

Rate of Interest:

For convenience of students and parents, Federal Bank offers Education Loans at affordable rates of interest. It ranges from Base Rate + 3.25% to Base Rate + 4.90%. The Base Rate is 10.2% per annum with effect from 16^th June 2014. Only simple interest is charged during moratorium period.

Repayment Options:

Repayment towards the loan can be made in easy EMIs. No repayments need to be made during the moratorium period. The moratorium period is the duration of the course + one year/six months after the student gets a job, whichever is earlier. The following methods can be used to repay the loan, in Easy Monthly Instalments –

• Cheques
• Standing Instructions at your Federal bank branch/automated payment through ECS.
• Through the bank’s internet banking facility called FedNet
• Mobile Banking

Loan Period:

The loan period is the moratorium period + 5 to 7 years. The moratorium period is the duration of the course + one year/six months after the student gets a job, whichever is earlier.

Security:

• For loan amount up to Rs. 4 lakhs, no security is required.
• For loans up to Rs. 7.50 lakhs, bank accepts third party guarantee and collateral security.
• If a loan above Rs. 7.50 lakhs has been availed, then collateral security with a stipulated margin is needed.

Documents required:

To avail an Education Loan from Federal Bank, you need the following documents –

• Proof of Identity issued by the government – passport, driving license, PAN card, etc.
• Proof of Residence – ration card, electricity bill, lease agreement, etc.
• Offer letter/admission letter from the educational institution
• Basic qualification certificate and marks card
• Proof of fee structure from the educational institute

In case of co-obligation, documents should be executed by the parent/guardian and the student, as joint borrowers.

Federal Bank Education Loan Eligibility and Loan Application Procedure:

Following are the eligibility criteria to avail Federal Bank’s Special Vidya Loan-

• Applicant should be a citizen of India.
• Applicant needs to secure admission to the professional/technical course (for which the loan is availed) through a formal entrance test/selection process.
• The educational institution and course need to hold a government approval/recognition.
• Vocational training and skill development courses are not eligible to avail this loan.
• A course certificate needs to be issued by a body formed by enactment of Parliament/ Government Department/University.

To apply for the loan, you can download the loan application form from the bank’s official website and submit it to the nearest branch, after duly filling it up. Federal Bank’s customer care executives and branch representatives can also assist you through the entire process.

Subsidy Scheme:

Federal Bank offers Central Government Interest Subsidy Scheme for Educational Loans. Please refer to the bank’s website or visit the nearest bank branch to attain more clarity on this scheme.

Federal Bank Education Loan FAQs:

1. What is the interest charged during moratorium period?
Only simple interest will be charged during the moratorium period. Once the moratorium period is over, the rates of interest mentioned in the interest rate chart will be charged, depending on the tenure.
2. I am planning to study abroad. Am I eligible to apply for an Education Loan?
Yes, Federal Bank offers up to Rs. 20 lakhs for courses pursued abroad. Your travel expenses and study tours will also be covered by the loan.
3. How does the documentation work, in case of co-obligation?
In case of co-obligation, documents should be executed by the parent/guardian and the student, as joint borrowers.
4. Is there a range on the rate of interest charged on Education Loan offered by Federal Bank?
Yes, the interest rate ranges from Base Rate+3.25% to Base Rate+4.90%.