Looking for a suitable education loan from Union Bank of India for higher education in India and abroad?

Look no further. This page summarises the important information you will need on Union Bank of India’s Education Loan.

Union Bank of India Education Loan for Higher Studies in India and Abroad

This Union Bank of India study loan helps students finance their education and realise their dreams of pursuing higher education at recognised educational institutions in India or abroad. The maximum loan amount is not specified for Indian students as it is a need-based loan but NRI students get a maximum of Rs. 20 lakh for regular courses in India and Rs. 30 lakh for premium institutes.

Features of Union Bank of India IBA Model Education Loan

Why this Loan?

  • The loan is meant to help students who have secured admission into a higher education course in a recognised institution in India or abroad through Entrance Test or Merit-based Selection Process
  • This Union Bank of India Education loan is disbursed as a series of payments over the required number of years and not as a lump sum
  • The loan can be taken for all expenses directly related to the course including for fees, purchase of books, laptops, hostel fees, lab fees, examination fees, etc.
  • The loan can be taken in later years of the course also if not taken at the start of the course and no other education loan has been taken from other banks or financial institutions

Loan Amount

  • This is a need-based loan and UBI has not specified any maximum cap for Indian students
  • For NRI students, the maximum loan amount for studying in India is Rs. 20 lakh. For premium institutes, it is Rs. 30 lakh

Interest

  • Loans Covered Under CGFSEL
    • Loans upto Rs. 7.5 lakh: The interest rate for this quantum of loan is External Benchmark Lending Rate (EBLR) + 2.00%. As of November 2020, the EBLR of Union Bank of India is 6.80% which brings the effective interest rate for this loan to 8.80%
    • There is no concession on the interest for female students
  • Loans Not Covered Under CGFSEL
    • Loans upto Rs. 4 lakh: The interest rate for this quantum of loan is EBLR + 3.25%. As of November 2020, the EBLR of Union Bank of India is 6.80% which brings the effective interest rate for this loan to 10.05%
    • Loans from Rs. 4 lakh to Rs. 7.5 lakh: The interest rate for this quantum of loan is EBLR + 3.00%, which brings the effective interest rate for this loan to 9.80%
    • Loans Above Rs. 7.5 lakh: The interest rate for this quantum of loan is EBLR + 2.10%, which brings the effective interest rate for this loan to 8.90%
    • Girl students get a concession in interest of 0.50% for all loans not covered under CGFSEL
  • UBI provides a concession in the interest rate if interest is regularly paid during the course and moratorium period
  • Simple interest is charged during the course and moratorium periods and compound interest is charged thereafter

Note: The External Benchmark Lending Rate (EBLR) for UBI which is 6.80% is the sum of the RBI Repo Rate (4.00%) and a spread of 2.80%.

Repayment

  • The repayment period for this loan is 15 years
  • The loan amount for each year is repayable in 12 equated monthly instalments, with the first instalment becoming due after the end of moratorium period
  • The moratorium period for this loan is course duration + 12 months

Security Needed

  • Loans upto Rs. 4 lakh: Parent or guardian must be a joint borrower. No security required
  • Loans from Rs. 4 lakh to Rs. 7.5 lakh: Parent or guardian must be a joint borrower. No security required but a third-party guarantee is required for loans not covered under CGFSEL
  • Loans Above Rs. 7.5 lakh: Parent or guardian must be a joint borrower. A tangible collateral of value more than or equal to the loan amount is needed

Eligibility

  • The applicant must be an Indian national
  • The student should have gained admission into a recognised higher education course in a recognised institution in India or abroad through Entrance Test or Merit-based Selection process
  • An NRI student should have an Indian Passport and secured admission in an India educational institution

Eligible Courses

  • Graduation, postgraduation, diploma or doctorate courses from recognised universities in India
  • Graduation, postgraduation or doctorate courses from recognised universities abroad. Foreign diploma courses are not covered
  • Technical, management or professional courses
  • Certified degree courses from CIMA-London, CPA-USA and other such institutes

Borrower Contribution to Total Cost (Margin Money)

  • Loan up to Rs. 4 lakh: Students do not have to pay margin money
  • Loans above Rs. 4 lakh: Students studying in India need to pay 5% of total course expenses as margin money. However, students studying overseas need to pay 15% of total course expenses as margin money
  • NRI Students: The margin for NRI students is 15% irrespective of loan amount

Note: Margin money refers to the amount the borrower contributes to the overall amount required. Suppose a course costs Rs. 20 lakh in which case the borrower has to provide margin money of Rs. 1 lakh for studying in India (5% of Rs. 20 lakh) or Rs. 3 lakh for studying abroad (15% of Rs. 20 lakh) while UBI offers the rest.

Processing and Other Charges

  • No processing charges need to be paid by Indian students
  • Processing charges of 0.50% of the loan amount, subject to a maximum of Rs. 10000 plus GST is applicable for NRI students
  • Applicable charges for valuation, legal, stamp duty, memorandum registration charges, etc. must be paid by the applicant

Uses of the Loan

  • Admission acceptance fee
  • Tuition fee payable to college, school or university
  • Hostel or mess charges
  • Examination, library and laboratory fees
  • Any caution deposit, building fund or refundable deposit required by the institution
  • Cost of books, equipment, instruments and uniforms
  • Reasonable cost of a computer or laptop, if needed for the course
  • Cost of study tours, project work, thesis, etc.
  • Travel expenses or passage money for foreign studies
  • Insurance premium for the student borrower
  • Any other expenses required to complete the course

Other Features to Know

  • Parent(s) of the student are compulsorily required to be co-applicants. If parents have passed on then guardian(s) or close relatives have to be co-borrowers. Married students can have their spouse or parents-in-law also as co-applicants
  • The bank may ask for the student’s progress report to be submitted with the bank at regular intervals
  • The loan is disbursed directly to the school, bookseller or publisher, computer seller, and so on and not to the applicant(s)
  • The applicant must pay applicable margin money upfront for each disbursement
  • The student’s life insurance equivalent to the loan amount is mandatory for this loan
  • There are no pre-payment charges for the loan

Documents Needed

  • Application Form duly filled and signed by applicant and/or guarantor along with details of applicant and/or guarantor and family
  • A declaration/ affidavit from the borrower confirming that, no educational loans have been availed from other banks
  • Two Passport Size Photographs of student, applicant and/or guarantor
  • Photocopy of PAN Card of the student that needs to be submitted at the time of application or during the course period
  • Personal Identification Proofs (Any One): Electoral I-Card, Passport, Driving License, PAN Card or Aadhaar Card
  • Residential Address Proof (Any One): Electricity Bill, Landline Telephone Bill, Electoral or Voter ID Card or Passport
  • Admission Letter, Course Details and Prospectus as proof of admission
  • Fee Details with Demand of Fee by the Institution
  • All Proofs of Past Academic Record including Mark Sheets and Certificates
  • For the co-borrower, documents as age, ID, signature, address, employment/business/income proofs are required
  • For studying abroad, a self-attested copy of the passport is also required along with a self-attested form issued by the institute for visa purposes. The Indian passport is a must for NRI students

Reference Facts:

  • Union Bank of India Website: www.unionbankofindia.co.in and www.unionbankonline.co.in (net banking)
  • Headquarters: Mumbai, Maharashtra
  • Call Centre Toll-Free Number: 1800 2222 44, 1800 208 2244