Helping hand for higher studies

A handful of banks have come to the students' aid, offering educational loans so that they can fulfill their dreams.

Even as it is becoming necessary for students to pursue higher studies for gaining competitive edge in his/her career, education is becoming costlier by the day. This takes its toll on parents too. Footing huge college bills when they are ill equipped for it is no easy task.

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However, for young scholars with a good academic record, nothing stops them from fulfilling their dreams. A handful of banks have come to their aid, offering educational loans.

For parents, the unpredictability arises from various situations. They are particularly based on the rank of the student and the status of an institution - aided or un-aided - that one wishes their children to join.

Ready reckoner

Expenses considered Fee payable to college, school,hostel etc. Examination/library/laboratory fees Purchase of books,equipment, instruments, uniforms Caution deposit, building deposit, refundable deposit Travel expenses for the studyabroad For purchase of computers, if necessary Cost of a two-wheeler in somecases Documentation required Mark sheets of the last qualifying exam Proof of admission to scholarship or studentship Schedule of expenses for the specified course Two passport-size photographs Borrowers' account statement for the last six months Income-tax assessment order of the last two years A brief statement of assets and liabilities of the co-borrower(usually parents) Proof of income

The annual fees of un-aided and partly aided institutions are going up year after year. For example, the annual fee at the Indian Institute of Management (IIM), Ahmedabad, has gone up from approximately Rs 3,000 in 1983 to Rs 175,000 today. Severe are the problems faced by parents of students who fail to find seats in government medical and engineering colleges.

For the same course, the difference in annual fee between private and government colleges is huge, sometimes going beyond five times the fee charged in government colleges. However, this differs from state to state.

For example in Maharashtra, private engineering colleges charge Rs 45,000 per annum, while in government colleges it is Rs 15,000.

Government initiative To provide access to higher education in the country, and at the behest of the Centre and the Reserve Bank of India (RBI), banks agreed in 2000, to provide loans of up to Rs 7.5 lakh for studies in India and Rs 15 lakh for studies abroad. There are some public sector banks that offer loans above these limits in specific cases. These public sector banks follow the RBI guidelines.

These norms limit the interest rate charged to the benchmark prime lending rate (BPLR) of the respective bank for loans up to Rs 4 lakh and at BPLR plus one per cent above Rs 4 lakh.