Soon, no guarantee will be required for education loans of up to 10 lakhs: Report
The central government may increase the guarantee limit for education loans by 33 per cent to Rs 10 lakh from the current Rs 7.5 lakh.
Education loans are guaranteed under the Central government’s Credit Guarantee Fund Scheme for Education Loans (CGFSEL).
As per the scheme, a student can avail education loan without any collateral security or third-party guarantee up to a maximum loan amount of Rs 7.5 lakh.
The Department of Financial Services under the Ministry of Finance is said to be consulting the Education Ministry to raise the maximum guarantee limit to Rs 10 lakh, according to an Indian Express report.
The revised guarantee limit could be raised to about Rs 10 lakh or even higher; the report quoted an official source.
The Department of Financial Services held a meeting with all the 12 government-owned banks in August to discuss disbursal targets of educational loans. In the meeting, a bank official had asked the department to bring uniformity in the guarantee limit on education loans.
The official had highlighted that while the CGFSEL scheme provides a guarantee for education loans up to Rs 7.5 lakh, some state governments had set up to Rs 10 lakh as the guarantee limit, the report added.
The CGFSEL scheme benefits students who belong to the Economically Weaker Section (EWS).
The annual gross family income of the student seeking a loan should not be more than Rs 4.50 lakh. The interest rate charged by the lender for education loans under the scheme can be only up to 2% per annum over the base rate.
In addition, EWS category students can also claim full interest subsidy for these loans during the moratorium period, which is the entire course period plus one year.
The subsidy is provided for the maximum loan amount of Rs 7.50 lakh.
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