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    Features of an education loan for vocational courses

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    Features of an education loan for vocational courses
    Vocational courses are non-academic course which train students in a particular trade or occupation. These courses train students on specific technologies and, vocations, these courses are also known as professional or technical programs.
     

    Vocational Education and Training aims at providing financial support to those who, have a minimum educational qualification, as required by the institution / organization.

    Vocational courses in India include beauty care and hair dressing, tailoring, mobile repairing, repairing of electronic appliances to name a few.

    Criteria

    There is no specific restriction with regard to the age of the student to be eligible for the loan.

    However, if the student is a minor, while the parent executes documents for the loan, the bank will obtain a letter of ratification from him / her upon attaining majority.

    He should have passed 10th standard examination. The student should have enrolled in a institution or university recognized by the central or the state government.

    Loan amount

    The amount of the loan depends on the tenure of the course.

    - For courses of duration upto 3 months Rs 20,000/-

    - For courses of duration 3 to 6 months Rs 50,000/

    - For courses of duration 6 months to 1 year Rs 75,000/-

    - For courses of duration above 1 year Rs 1,50,000/-

    Banks may also consider sanction of higher limits for courses of duration above one year, if required, for specific courses offered by reputed institutions having regard to the nature of such courses and employability (ability to repay out of job earnings).

    Expenses

    The expenses which are covered as part of the loan scheme are:

    • Tuition fees or Course Fees
    • Caution money
    • Examination fees
    • Library fees
    • Laboratory fees
    • Charges for the purchase of books, equipments and instruments
    • Other expenditures required to complete the course

    Interest rates

    Interest rates vary with banks. Most of the banks charge interest rates between 12 percent to 13.75 percent.

    Security

     

    No collateral or third party guarantee will be taken. However, the parent will execute loan document along with the student borrower as joint borrower.

    Moratorium Period

    The period post completion of the course after which the repayment of the loan amount would begin.

    Courses up to 1 year - 6 months from the completion of course

    Courses above 1 year - 12 months from the completion of the course.

    Repayment of Loan

    The loan will be repaid after the moratorium period as indicated in Equated Monthly Instalments (EMIs) as follows :

    Courses upto 1 year - In 2 to 5 years

    Courses above 1 year - In 3 to 7 years.

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