State Bank of India Student Loan Scheme
The SBI Student Loan Scheme helps students who want to pursue higher studies in India and abroad afford the cost of the course and related expenses. This loan scheme is based on the Indian Banks Association IBA Model Education Loan schemes. You can get an unsecured loan for up to Rs. 7.50 lakh. The maximum loan amount is not mentioned on the bank’s website.
Features of SBI Student Loan Scheme for Pursuing Higher Studies in India and Abroad
Why this Loan?
- The loan is meant to help students fulfil their dreams of pursuing higher education in India or abroad
- It is disbursed as a series of payments over the required number of years and not as a lump sum
- The SBI Student Loan Scheme can be taken for all institution fees as well as related expenses including purchase of books, laptops, hostel fees, lab fees, examination fees, etc.
- The maximum loan amount depends on the needs of the student on a case-to-case basis subject to ceiling. Unsecured loans of up to Rs. 7.5 lakh can be availed by the borrowers
- Loans up to Rs. 7.5 lakh: The rate of interest is a sum of 3-year MCLR and a factor of 2.00% where MCLR is the Marginal Cost of Funds-Based Lending Rate (MCLR). As of October 2020, the 3-year MCLR of State Bank of India is 7.30% which brings the effective rate of interest to 9.30% for the Student Loan. For girl students, the interest rate on the loan is lower than the standard rate by 0.50%
- Loans Above Rs. 7.5 lakh: The rate of interest is a sum of 3-year MCLR and a factor of 2.00% where MCLR is the Marginal Cost of Funds-Based Lending Rate (MCLR). As of October 2020, the 3-year MCLR of State Bank of India is 7.30% which brings the effective rate of interest to 9.30% for the Student Loan. For girl students, the interest rate on the loan is lower than the standard rate by 0.50%. Students who avail SBI Rinn Raksha or another similar policy assigned in favour of SBI, they can avail a concession of 0.50%
- The moratorium period for this loan scheme is course period plus 12 months after the completion of the course
- The loan amount for each year is repayable in equated monthly instalments up to a period of 15 years after the end of the moratorium period
- This means that you pay only interest during the moratorium period and then EMIs every month until the complete repayment of the loan
- If interest is serviced during the moratorium period, EMIs are fixed based on the principle amount only. However, if interest is not paid during the moratorium period, EMIs are fixed based on the principle and interest accrued during the moratorium period
- For loan up to Rs. 7.5 lakh: No collateral security is required. Parents must be co-borrowers of the loan
- For loan above Rs. 7.5 lakh: Parents must be joint applicants. Tangible collateral security that covers at least the quantum of the loan is required
- The applicant must be a resident Indian national (Indian citizens who have stayed in the country for over 180 days in the last financial year)
- The student must have secured admission in a higher studies programme at a recognised educational institute in India or abroad
- Graduate courses that are of a professional or technical nature and help the student land a job
- MCA, MBA, MS. etc. post-graduation courses
- Degree and Diploma courses in aviation and shipping approved by the local foreign aviation or shipping authority and Director General of Civil Aviation or Director General of Shipping, or any other competent authority
- Premier institutes that offer management, medicine, STEM courses (Science, Technology, Engineering and Mathematics), and other courses such as law, economics, design, fine arts and performing arts
- Job-oriented programmes from recognised foreign colleges and universities. Study programmes from recognized institutes or bodies such as CIMA-London, CPA USA, etc.
Margin Money (Borrower Contribution to the Total Cost)
- Loans up to Rs. 4 Lakh: The borrower does not have to offer any margin money to get the loan
- Loans above Rs. 4 Lakh to Study in India: The borrower must offer 5% of the loan amount as margin money to get the loan
- Loans above Rs. 4 lakh to Study Abroad: The borrower must offer 15% of the loan amount as margin money to get the loan
Note: Margin money refers to the amount the borrower contributes to the overall amount required. Suppose a house costs Rs. 40 lakh in which case the borrower usually has to provide a margin money percentage of 15-25% of the total house value while the lender bank offers the rest
Processing and Other Charges
- Loans up to Rs. 20 lakh: There are no processing or documentation charges for this loan
- Loans above Rs. 20 lakh: The borrower has to pay Rs. 10,000 + taxes as processing charges for this loan
Uses of the Loan
- College, school and hostel fees
- Examination, library and laboratory fees
- Insurance premium for the borrower student, if applicable
- Travel expenses including any passage money for foreign studies
- Caution deposit, building fund or refundable deposit supported by institution bills or receipts
- Cost of books, equipment, instruments, uniforms
- Cost of computer if required for the course
- Other expenses needed for completing the course such as study tours, project work, thesis, etc.
Other Features to Know
- The loan is granted jointly with the parent/guardian (co-borrower) of the applicant
- The bank may ask the borrower to submit progress report during the course
- The loan is disbursed directly to the school, book seller or publisher, computer seller, and so on and not to the applicant(s)
- If a second loan is availed for a higher education programme later, the repayment of the combined loan amount can be done in 15 years after the end of the moratorium period of the second loan
- Application Form duly filled and signed by applicant and/or guarantor along with details of applicant and/or guarantor and family
- Two Passport Size Photographs of student, applicant and/or guarantor
- Personal Identification Proofs (Any One) of the Student and Co-borrower: Electoral I-Card, Passport, Driving License, PAN Card or Aadhaar Card
- Residential Address Proof (Any One) of the Student and Co-borrower: Electricity Bill, Landline Telephone Bill, Electoral or Voter ID Card or Passport
- Admission Letter, Course Details and Prospectus
- Statement of the cost of study and Fee Details with Demand of Fee by the Institution
- All Proofs of Past Academic Record including Mark Sheets and Certificates
- Copy of Passport is mandatory
- Proof of Income of the Co-borrower (Salaried): Salary Slip of last 3 months, Copy of Form 16 of last 2 years and Bank Account Statement of last 6 months
- Proof of Income of the Co-borrower (Self-employed): Business Address Proof, IT return of last 2 years, TDS Certificate, Bank Account Statement of last 6 months and Certificate of Qualification if Doctor, CA, etc.
- All documents must be self-attested
- State Bank of India Website: www.sbi.co.in and www.onlinesbi.com (net banking)
- Headquarters: Mumbai, Maharashtra
- Call Centre Toll-Free Number: 1800 11 2211, 1800 425 3800
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