A STUDY ON STUDENTS PERCEPTION ON EDUCATIONAL

LOAN WITH SPECIAL REFERENCE TO ERNAKULAM DISTRICT

A PROJECT
Submitted to Mahatma Gandhi University in partial
Fulfilment of the requirements for the award for the degree of
BACHELOR OF COMMERCE
By
ANN THERESE (210021071649)

ARCHANA. C.S (210021071650)

ARJUN. K.S (210021071651)

ARJUN. N (210021071652)
Under the guidance of
Dr. ANUPAMA. R

POST GRADUATE AND RESEARCH DEPARTMENT OF COMMERCE

THE COCHIN COLLEGE
KOCHI- 6882002
2021-24

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 CERTIFICATE

This is to certify that this dissertation titled “ A study on students perception

on educational loan with special reference to Ernakulam district” is a
record of original work done by Ann Therese, Archana CS, Arjun KS, Arjun N
under my supervision and guidance.

Signature of the guide :

Name of the guide : Dr. Anupama. R
Signature of the Head of the Department :
Name of the Head of the Department : Dr. Rekha PG

Kochi – 2
Date Ann Therese
Archana CS
Arjun KS
Arjun N

DECLARATION

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We, Ann Therese, Archana CS, Arjun KS, Arjun N hereby declare that this dissertation
entitled 'A study on Students perception on educational loan with special reference to
Ernakulam district’ is a bonafide record of work done by us under the guidance of Mrs Dr.
Anupama R and is submitted to Mahatma Gandhi University in partial fulfilment of the
requirement for the Degree of Commerce.
We further declare that this work has not formed the basis for the award of any
academic qualification, fellowship or other similar title of any other University or Board.

Cochin-2 Ann Therese

Date : Archana CS
Arjun KS
Arjun N

ACKNOWLEDGEMENT

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The accomplishment of this dissertation titled 'A study on Students perception on educational
loan with special reference to Ernakulam district’ has been considerably influenced by the
valuable assistance received from various sources. No task is single man's effort. Any job in
this world however trivial or tough cannot be accomplished without the assistance of others.
We express our sincere gratitude to the Principal of our college Dr. M Geetha and to Dr.
Rekha PG head of P.G and Research Department of Commerce and Dr Anupama. R (project
guide), for their guidance, encouragement , suggestions and valuable comments at every
stage of our project. We extend our thanks to all our friends and teachers of the Commerce
Department for their valuable guidance and cooperation for the success of the project and
also we express our gratitude to our parents.

Ann Therese
Archana C.S
Arjun K.S
Arjun. N

CONTENTS

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 Chapters Contents Page No
Chapter 1 INTRODUCTION

Chapter 2 REVIEW OF LITERATATURE

Chapter 3 THEORETICAL FRAMEWORK

Chapter 4 DATA ANALYSIS AND

INTERPRETATION

Chapter 5 FINDINGS,SUGGESTIONS
AND CONCLUSIONS

BIBLIOGRAPHY

APPENDIX

LIST OF TABLES

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TABLE NO TITLE PAGE NO

4.1 GENDER OF RESPONDENT 32

4.2 AGE OF RESPONDENT 32

4.3 EDUCATIONAL QUALIFICATION 33

4.4 PARENTS EDUCATIONAL 33

QUALIFICATION
4.5 FAMILY TYPE 34

4.6 INCOME OF THE FAMILY 34

4.7 SOURCE OF AWARENESS OF 35

EDUCATIONAL LOAN
4.8 CATEGORY OF BANK FROM WHICH 35
LOAN WAS AVAILED
4.9 RATE YOUR LEVEL OF AWARENESS
REGARDING EDUCATION LOAN
4.10 LIMIT OF EDUCATION LOAN
4.11 REPAYMENT PERIOD OF LOAN
4.12 COLLATERAL SECURITY TO BANK
4.13 SATISFACTION LEVEL
4.14 PROBLEMS RELATED TO
EDUCATION LOAN

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 CHAPTER 1
INTRODUCTION

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1.1INTRODUCTION
An education loan is a sum of money borrowed to finance post-secondary education or higher
education-related expenses. Education loans are intended to cover the cost of tuition, books
and supplies, and living expenses while the borrower is in the process of pursuing a often
differed while students are in college and, depending on the lender, for an additional six-
months period after earning a degree. This deferment period is also referred to has a "grace
period".
Education is the method of instruction aimed towards the all round development of
people, providing necessary tools to participate in day-to-day activities. It dispels ignorance
and boosts moral values in the individuals. It inspires confidence to face challenges besides
providing skills to become self-directed and increase awareness. Education not only impacts
the human development and economic growth, but it is the fundamental requirement of
democracy.
Through education, individuals become responded to informed citizens and may
voice their considerations and problems in the form of government of their society. It is a
necessary component for democracy and eradicating economic condition. Education has a
significant role in the economy. Higher education is an increasing paradigm From schools to
high-end universities, the cost of education is only the rise. And, as parents strive to provide
their children with quality education that will be a doorway to higher salaries, better jobs,
placements in better companies. Education is the key, which allows people to move into the
world, seek better jobs and ultimately succeed in their life.
Education loan is the one service which has helped for years to aid
aspiring students in achieving their academic pursuits. Many-a-times students stop from
pursuing higher education because of financial limitations. But it's a curious and enlightening
fact that many eminent personalities like Barack Obama and Ted Cruz have studied with
education loans and achieved feats. Students who have more information about education
loan norms and are ambitious enough to attain good education are always able to pay back
their education loan. All information about knowing the education loan phenomenon is listed
below so that you can assess if you can avail an education loan in India to attain the kind of
worthy education deserve. Loans are termed as money or assets shared with any
demandant/applicant with a promise of repayment in feature by a certain time line. All though
the financial system as turned this simple definition to a more twisted concept the core idea
remains the same. Students in need of huge consolidated fund for pursuing their education
generally take the education loan in India, from banking institutions. Applicants with
aspirations to pursue courses with outcomes of employability or business generally are able
to secure these loans for their higher education. The education loan programme since its
inception has been rapidly growing both in terms of number of students who have taken
education loans for pursuing higher education and the amount of education loans released.
Nevertheless, these financing mechanisms of higher education do not appear to improve
access and equity in the higher education system as evidenced from the National Sample
Survey Organization (NSSO) and bank data. Given the growing demand for access to higher
education, and the declining quality and available resources from governments, many
governments, particularly in developing countries, have attempted to increase student
contributions. In many instances, however, governments have encountered problems

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increasing cost recovery without deterring access among lower income student. Despite clear
economic and financial rationale, tuition increases can be difficult to implement because of
the inability of many students (and their parents) to pay fees out of current income. Many
economists have advocated student loan programs as a means to increase private access. This
paper analyses the experiences of existing loan programs. Particularly in developing
countries, in order to understand their role in fostering cost recovery. Education is one of the
primary area which the Govt. of India identified as a priority sector segment for Banks to
finance. Accordingly, Education loan scheme was formulated and propagated and public
sector, banks and other Financing in this category in last decade. Education loans form a part
of the priority sector advances of the Public Sector advances of the public Sector Banks and
most of the educational loans are taken for pursuing higher education courses. In the
knowledge era, higher education has gained significance all across the world. Like other
developing nations, India also faced financial crunch in the early nineties and higher
education suffered in the terms of allocations. And in the pursuit of rising access ratio in
higher education, private institutions entered the field and there has been steep rise in user
charges in the most sought-after professional courses like engineering and management in
India in the post-reforms period. In the light of facts that scholarships going to higher
education have declined, in real terms, and it is a vehicle of upward mobility, the education
loan scheme comes in to focus in order to raise access ratio in higher education.

1.2. STATEMENT OF THE PROBLEM

Education has its vital role in the development of every society and the nation as a whole
Education was nearly low-cost in older times. But nowadays the cost of education is
increasingly increasing considering the fact that the government have succeeded up to certain
heights in providing free basic education. But none of these attempts made any changes in the
rising cost of higher education. Here comes the importance of an external financial support
for the poor students. Government argues that these facility should be more fair and smooth
but banks try to tighten the norms for the same in order to ensure the timely repayment. These
results in unwanted clashes between the borrowers and banks. In turn meritorious students
lose their hopes and dreams of a promising career, several reports on the suicides and suicide
attempts are there in this regard. Although the facility is of a significant importance in the
educational structure of the society, there arises a lot of clashes between the two entities on
the timely repayment. Sometimes even after the completion of the courses the salaries
received by them is lower than other jobs and maybe even less than the monthly instalment
amount they needs to repay.

1.3 SCOPE OF STUDY

Education loans usually cover the full course fee payable to the university. They also include
examination fee, library and laboratory fee, hostel fee, and travel expenses to study abroad.
In addition, purchase of books, uniforms, and equipment is also included

1.4 SIGNIFICANCE OF THE PROBLEM

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The study attempts to analyse the various bankers providing financial assistance to the
students Pursuing higher education and on the other side to the study the students
understanding about loans and other problems faced by the students during the process of
educational loan. This study is very significant as it is under taken in a region that has seen
rapidly increasing of higher education institution and a great number of students migrated
from different parts of the country for educational purpose alone.

1.5 OBJECTIVES OF STUDY

1. To know the sources of awareness towards educational loan among the students.
2. To study the terms and conditions imposed by banks for educational loan in India.
3. To find out the problems faced by students in availing the educational loan.
4. To examine the students satisfaction level towards educational loan

1.6 RESEARCH METHODOLOGY

1.6.1 Source of information
Data required for the study have been collected from both primary and secondary sources.
Primary data is collected directly from the respondents. Direct interview and questionnaire
methods are used to collect data from banks and borrowers respectively.
Secondary data:
Information regarding the education loans are taken from secondary sources like internet,
newspapers, articles etc...
1.6.2 Nature of study
The study is descriptive in nature.
1.6.3 Method of sampling
convenience sampling method is used for collecting data.
1.6.4 Sample size
Data was collected from 60 respondents who have availed education loans during 2021 -
2023
1.6.5 Tools for analysis
The analysed data are interpreted by using charts and diagram.

1.7 LIMITATIONS OF STUDY

1. Possibility of sampling errors.

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2. Loans below 4 lakhs required no guarantor but for once above this amount a guarantor is
mandatory
3. Unwillingness of the borrowers to disclose the complete information regarding their
borrowings

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 CHAPTER 2
REVIEW OF LITERATURE

2.1 REVIEW OF LITERATURE

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 Review of literature provides a descriptions, summary and critical evaluations of each
work done by earlier analysts related to the particular area of the study. It also enables the
researchers to measure the scope for future study and to frame appropriate objectives for the
present study
The financing of higher education in India fits well in the overall development strategy
and economic policy of the country. The cost of higher education attracted researchers
attention at a very early stage. The abstracts of some of the important articles are given under.

Ravi F. H., (1960) had examined the pattern of expenditure on higher education
against the backdrop of economic development and opined that the proportion for total
expenditure allocated to higher education was much below the expected level of investment
and concluded that under financing create burden to the government and higher education
beneficiary groups

Woodhall and Blaug (1967) attempted to construct an index of total factor productivity
for the British's secondary education sector, with discussion on the theoretical and practical
problems of measuring inputs and outputs of education It shows the decline in total factor
productivity in the UK's secondary education over the study period. Vaizey and Sheehan
(1968) pointed out the dramatic changes which had happened in the British education system
and indicated the true trends in educational expenditures in that country from 1920-1965. The
study observed that the share of educational expenditure in the country's GNP had
risenfrom2.5 per cent between the two World Wars to five per cent in the mid- 1960s. During
the same period, its share in total government expenditure had also increased from 13.5
present to 18.9 per cent.

Robbins Committee (1968) was appointed (i) to review the pattern of higher education in
Great Britain; and (ii) to advice the government about the rules to be adopted for the long
term development of higher education in the light of national needs and available resources.
It pointed out the rising level of public

Leite, et al. (1968) in a research report examined unit cost of education in a number of
countries. They tried to establish a genuine base for the international comparison of
educational costs estimated across the many countries .The study includes some interesting
points about the determinants of educational costs and oncost behaviour with a useful
illustrative data Knight (1968) made an interesting attempt to study. on the basis of factual
data, the relationship between the earning structure, the employment conditions and the cost
of education in the specific cases of African countries. Blaug, Layard and Woodhall (1969)
reviewed the problem of unemployment among the matriculates and graduates in India with
an attempt to apply cost-benefit analysis to India's education sector.

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 Rao (1969) discussed the economic aspect of the education. In order to study the cost of
education, he adopted several approaches. In one approach, the main component was the cost
borne by the students. In other approach, it has divided into three parts: (i)) institutional cost,
(ii) student's cost and (iii) opportunity cost. Jha (1974)11 while studying the financial
behaviour of the Patna University concluded that government grants is the main source of
finance. The study also noted that in 1964-65, the state government itself had faced a deficit
of funds due to the lack weak tax collections. This situation reduced the flow of funds to the
coffers of university.

Mridula (1985) 18 analysed the sources of financing universities' maintenance grants.

The study based on a large number of state universities found that the main source of
financing
5
maintenance expenditure was the UGC's grants and the majority of these grants were in the
form of the block grants. Var these (1991)20, in his research work illustrated that the cost-
recovery from beneficiaries implies a reduction in the public subsidies to higher education
sector. This could be done by shifting the incidence of financial burden either to the
beneficiaries (students) or to their users (employers).

Hansen, 1987 & Mortenson, 1989 In a study conducted in United States of America
(USA) on student borrowing over the last two decades prior to 1987, found that students
borrow more than they used to, and more students take out educational loans. Student loans
were popular with both the middle class and lower income families and are commonly taken
at community colleges and proprietary schools. And it was also found that most of the
educational loans were taken by students studying in private colleges (Hansen, 1987).
Majority of the Americans are favourable towards borrowing. to finance educational
expenses. People from low-income groups found to be reluctant to borrow for educational
expenses when compared to middle- and upper-income groups (Mortenson, 1989).

Tilak and Varghese (1992) studied the student loan scheme in India and considered some
of its problems. They made a detailed comparison between loan and other alternatives
methods of funding higher education in India.

Narayana (2005) In his paper "Student Loan by Commercial Banks: A Way to Reduce
State International Journal of Pure and Applied Mathematics Special Issue 3083 Government
Financial Support to Higher Education in India" studied about them student loan scheme in
Karnataka state. The empirical results of Karnataka state have two important policy
implications. First, a proposal to reduce budgetary subsidy only through fee increase, even if
the entire fee increase is financed by student loan through commercial banks, it may not
support the students financing in Karnataka state. Second, the student loan may not be a
perfect substitute for budgetary subsidy to help the students in collegiate education. Student

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loan scheme is not limited to payment of fee. Rather, it includes fee plus other expenses for
completing the course of study. Hence, demand for student loan will be higher than the
amount of fee to be paid by the students in the State.

Narayana M.R. (2005) has made an empirical analays is about the role of commercial
banks in financing the budgetary subsidy to general collegiate education by government and
private aided colleges in Karnataka state in India. He concluded that the current model
schemes of student loan and Subsidies. Gupta (1982) and Shah (1987)59 estimated private
costs of college education and found that among the main components of private cost, fee
consisted of a very small proportion of the total private cost.

Hauptman (2006) points out that funding process of higher education followed in India
continues to be on the basis of historical allocation. He suggested a shift to policy-driven
funding by introducing policy variables into funding process or performance-based funding
that recognize outputs rather than just inputs (as in UK).

Choy and Li (2006) showed that default rates increased by as much as á percent among
some groups of students and by as these numbers were asking again how much default is
acceptable and what factors contribute to it. Their efforts to define default and to decide if
default rates should be used as indicators of institutional quality or loan program efficacy
raise complicating questions. Is default a function of the characteristics of students are of the
institutions they attend? Do the types of loans influence the probabilities of default? Do life
circumstances like the types of jobs and income levels of students after they graduate have an
impact on default rates? To help policymakers and practitioners answer these and other
questions surrounding the reauthorization process, we offer this review of the research
literature on the predictors of student loan default.

Elistina et al, 2006 & Adam 2008 In a study of 1,500 students of University Putra of
Malaysia, it was found that students have good knowledge about National Higher Education
Fund Corporation (PTPTN) loan agreement but there were a significant proportion of
students with negative attitudes towards the repayment of the loan. Majority of them
perceived the loan as a burden to them (Elistina et al, 2006). Adam (2008) discusses how
American Congress has eliminated the possibility of discharging educational loans by
bankruptcy

Dongbin (2007) He examines the relationship between undergraduate student loan debt
and college degree attainment. The results of his study find that higher student loan debt in
the first year of college is associated with lower chances of degree attainment among low-
income and Black students. Her findings suggest that students' increased reliance on loans for
financial aid may widen the income and racial/ethnic gaps in degree completion, despite the
fact that a primary goal of financial assistance is to narrow those gaps.

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 Jain Vibha (2007): examined that the problem of NPA is a serious concern for the
banking Industry of India. The research has been conducted to understand the movement of
NPA during 1997-2003. The root cause of the problem is inadequate credit appraisal
mechanism. Early recognition may reduce the problem of bad loan up to certain extent,
alertness of the bank in invariably related with the profitability.

Sankar Thappa (2007): has deal with the Securitization process at the time of lending
and borrowing money from the banks and financial institution. Globalization has resulted into
rapid transformation of the financial system all over the world. As a result capital market,
money market and debt market are getting widened and deepened. The study has involved the
process of securitization and five stages involved in securitization of the assets. The author
has also revealed the future for securitization in India.

Henry James (2007): deals with the problems on rising volume of overdue of the loan of
the banking system both credit cooperative credit societies and of commercial banks, but also
other regulating agencies like RBI and other policy makers at national level. It also gave a
solution that high overdue payment leads to the bank in inconvenient position at the time of
availing refinance facilities from the external sources. The author in his research has
preferred drought prone areas since the trend recovery of loan has been worsening. The
demand for the recovery was higher than actual recovery.

According to Ravi S. Srivastava (2008), the Indian higher education system has
undergone phenomenal qualitative change and expansion since the advent of the modern
system in the first half of the nineteenth century. The first universities in the three
presidencies of Madras, Calcutta and Bombay were formed in 1857 and were followed by the
universities in Lahore and Allahabad in 1882 and 1887 respectively. In the early part of the
20th century, nationalistic and social aspirations led to the creation of a few universities, such
as Banares Hindu University (1916), Viswabharathi (1921 ), Aligarh Muslim University
(1920), Delhi University (1922) and a large number of colleges. The funding of these
universities and colleges depended primarily on philanthropic effort, with some support from
the state. By 1951, India had 28 universities and less than colleges imparting higher education
with less than halfa million enrolled students. By 2005-06, there were over 325 universities,
including Central, State and deemed and more than 17,000 colleges, enrolling an estimated
ten to fifteen million students.

G.C. Goel (2008): The Indian banks need to manage their advances portfolio in such a
manner that risk factor should be minimized at the early stage of their bearing capacity. The
author has resorted to Alternate Dispute Resolution (ADR) which can entail a fair deal to all
concerned without unlawful means and pro-court bias. The articles has made an effort to
bring awareness to banks and customers for settlement of NPA dues promptly and also settle
various other banking disputes in the best interest of both the parties.

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 P. Geetha Rani (2009), are of the opinion that it is unambiguous that Policy of the
Government of India now encourages augmentation of resources for covering a larger portion
of cost of higher education. Recent policy changes in India often favour to divert resources
from higher to primary level of education and favours for full cost recovery from students
even in public higher education institutions. Cost recovery measures comprising of increase
in fees, student loans currently operated by commercial banks and privatization will
exacerbate inequality in the society. Indeed, there seems to be a nexus between the present
student loan scheme and full cost recovery. Increasing reliance on student fees, student loans
and privatization without considering the low- income groups may produce regressive effects
in the society. Under the deep waves of globalization and competition, important economic
rationale for government funding especially for higher education is neglected. Public support
for higher education remains essential to ensure a balanced achievement of educational and
social missions, apart from surviving in the knowledge- based society. It is essential that
funding sources must be diversified but cost-sharing with students has social and political
limits, and excessive commercialization of higher education should be forbidden.

Rama Krishna, Y and Venkoba Rao D (2009)l, in their study “Virtual banking does it
really work?" aim to find out whether services was to satisfy customers. There is a need to
understand customer awareness, perception and importantly the level of satisfaction. In this
paper we measured these issues on four virtual banking services offered by Indian private
banks in Hyderabad city. These services include Automated Teller Machine (ATM),
Telephone Banking, Internet Banking and Integrated Voice Response System (IVRS). Based
on findings of the study, we conclude that, banks have to do a lot to take advantage of virtual
banking services. We also penned down few

Justin R. La Mort (2010)", in his study "Generation Debt and the American Dream: The
Need for Student Loan Reform", states that President Mr. Obama was able to pay off his
student loans only after authoring two bestselling books and becoming a prominent figure on
the national political scene. This is not a strategy that can be easily replicated by the rest of
us. As tax dollars are being spent to bailout AlG and GM and ignored helping those who are
drowning in student debt. WNe can either rearrange the deck chairs as the band plays on or
we can seize this unique opportunity in time to provide a Iite preserver to some of the
country's best and brightest. The American dream is predicated that through education and
hard work one can accomplish anything Sadly, my generation will be less educated and in
greater debt than the generation of parents. Never before has having a college Degree meant
so much in competing in the global marketplace yet never before has the financial barriers
been so great to earning that degree. This paradox must be resolved if students and country
are to reach their full potential. The present system restricts innovation among the
entrepreneurs, inventors and artists who cannot longer risk taking a chance when facing five
to six figures of debt. Society loses the talent of those unable to afford a career in public
service. These effects are especially true for the middle and working class who we most want
to break from the cycle of poverty but whose best route is by entering modern day
indentured.

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 Sailabala Debi (2010), are of the firm opinion education is widely accepted as a basic
human right. The goal of achieving UEE is now at the fore front of international policy
agenda particularly in the context of Globalization and MDG. Government of India and all
the state governments have also taken up this agenda seriously and striving hard to achieve
the goal. But one cannot ignore the role of higher education in general and technical higher
education in particular to meet the competing challenges of Cilobalization. Even within the
education sector, relative priority assigned to higher education has been on the decline. It is to
be realized that higher education institutions play an important role in setting the academic
standard for primary and secondary education. They are also responsibhle for not only
providing the specialized hurancapitalin order to corner the gains from globalization, but also
for training the manpower inside the couritry. provide policy advice and so forth Education is
necessary for the development but higher education is essential for sustainable development.

Piyush Prakash and Shikha Agarwal (2010), find that, in recent years, the Indian
economy has grown remarkably and caught the world's attention. It has become a world
centre for the IT industry and IT services. India's economic success is mainly due to its
investment in education, especially higher and professional education. Despite economic
constraints, India has built world standard IITs. This experience needs to be shared,
internationally, especially with the developing countries. In the age of economic
globalization, India is planning to boost its economic strength by using comparative
advantages in its labour force and its consumption market. The government plans to
transform its big population into huge human capital. This can be only achieved through
continued investment in education in general and higher and professional education in
particular. Indeed, this investment is also necessary to sustain India's current level of growth.
India is conscious that barriers must be overcome to meet these goals. They include a short
fall in professional and technological personnel, a misalignment between the content and
emphasis in current higher education and the needs of the economy, as well as diminishing
quality due to rapid expansion in institutions of higher and professional education. India is
taking steps to inform its system, as it has done in the past. India's success full experiences in
solving problems of higher and professional education that are common to many countries
should be learned and shared in international community.

According to Suresha R and B. C. Mylarappa (2012)", increased need to universalize

elementary education has resulted in serious focus on elementary education and at the same
time rather total neglect of higher education. A few countries or states could succeed in
providing universal elementary education by ignoring higher education; giving an impression
to the educational planners that universalisation of elementary education is possible only if
one ignores higher education. The paper has also briefly reviewed some general presumptions
about higher education- higher education development relationship, the level of expansion of
higher education and the policy reforms being attempted in financing higher education. It has
been strongly argued here that India has to enhance its priority for higher education.

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 As found by Rajeev Darolia (2013), student loan debt and defaults have been steadily
rising, igniting public worry about the associated public and private risks. This has led to
controversial attempts to curb defaults by holding colleges, particularly those in the for profit
sector, increasingly accountable for the student loan repayment behaviour of their students.
These efforts attempt to protect taxpayers against the misuse of public money used to
encourage college enrollment and to safeguard students against potentially risky human
capital investments. Recent policy proposals penalize colleges for students poor repayment
performance, raising questions about institutions' power to influence this behaviour. Extant
research does not conclusively establish a causal link between type of college and loan
default. Available evidence, moreover, suggests that student demographics and family
financial resources are related to default. As a result, policies targeting schools where
students default on loans at high rates may disproportionately affect the postsecondary
decisions of certain categories of students such as low income, minority and financially
independent students. Policymakers therefore face the challenge of promoting the efficient
use of public funds and protecting students while also encouraging access to higher
education.

As per Jacob John (2013), higher education sector in most developing countries faces a
major crisis of funding This crisis threatens the fundamental right of a person to higher
education. A paradigm shift in the pattern of funding of higher education is urgently needed.
Education loan can be popularized as an alternate source of funding of higher education. The
study talks about equity issues in higher education and the relevance of education loan in
India, a developing country. It also discusses the distinguishing features of educational loan
schemes of select countries in a comparative perspective. There are wide variations among
countries in respect of administration of education loan. These disparities are mainly in
respect of targeting of the loan programme and loan recovery. From the experiences of
different countries, four different models of education loan schemes can be drawn: (1)
education loan: government guarantee to commercial bank, (2) education loan: government
direct lending. (3) education loan: outsourced with core public management and (4) education
loan: loan repayment integrated with the taxation system. The Indian model of student loan is
in an evolutionary stage. However, the Indian education loan system has similarities with
Model 1 that provides a guarantee of repayment of student loan to the commercial bank by
the government. As a case study of a developing country, the salient features of education
loan in India with special reference to procedures for availing education loan, student loan
schemes of select banks and operational issues of its implementation are also discussed in the
study.

Joshi K.M. and Kinjal Vijay Ahir (2013)", conclude that higher education system in
India is complex. The regulators associated with governance are overlapping and entangled
across various ministries and regulatory bodies. With a Gross Enrolment Ratio of 15 per cent,
India is still below the world average. With relatively stagnant growth of public sector,
private sector now accounts for 63 per cent of the total higher education institutions and 52
per cent of the total enrolments in Indian higher education. Despite various intervention
measures to address equity objectives, disparity still exists in terms of gender, ethnic groups,

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and economic criteria and by location. Quality and efficiency policy responses and their
endeavours have been insufficient accompanied by poor regulations and its subsequent
implementation. Multiple regulations and measures have been envisaged by different
commissions and committees to enhance the access, quality and equity to face the challenges
of opening-up this sector globally.

According to Misha Sharma (2014), declining public expenditure in the education sector,
increasing cost per student without the support from credit markets, and dominance of private
sector in higher education worsens the problems of finance in higher education. While on one
hand, it is argued that Government of India should playa pivotal role in financing higher
education, on the other hand, heavy public subsidization of higher education could lead to
unequal distribution of welfare, since public expenditure on higher education is made out of
general taxes, which essentially means transfer of resources from poor to rich. Therefore, an
ideal situation is that of a public – private partnership, where government acts as an anchor to
the sector and aims to provide equitable access to education

B. Navaneetha (2014)", conclude that education has a significant role in the Indian
Economy. Higher education is increasing with the new paradigm. Higher education involves
creation of intellects of world standards and also training of skilled human power at mass
level without compromising on quality. Education has become a costly affair recently. There
are different fee structures, followed by different institutions. Most of the students find it
difficult to just enter in to the field of education. The problem of finance for education has
been prevailing matter now. It is met by the nationalized and private sector banks through
educational system. The study has been approached from the point of view students /
customers in Coimbatore, who intended to avail the education loan offered by the State Bank
of India. The study discusses on detail about the factors motivating them students to borrow
their money from State Bank of India.

Working Paper Higher Education in India: THE NEED FOR CHANGE, By Pawan
agarwal June 2015 working paper, no. 180 provided in cooperation with: Indian council for
research on international economic relations (ICRIER)
1. As of 30 June 2005, Public Sector Banks had a total outstanding exposure of
Rs.71billionagainst 488,000 education loan accounts.

2. Financing of higher education through student loans is still insignificant. On 2-3 %

students avail of student loans. In comparison, 85 % students in UK and Sweden, 50% in
USA and Canada and 77 % in Australia had availed of student’s loans in recent years.
(Usher, 2005).

3. A market research company conducted a com-prehensive study of the students’ loan

performance in India. The study covered 350+ branches of 78 banks covering public and
private sector banks including foreign and cooperative banks in 20 cities in Maharashtra
and Delhi.

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4. It was seen from the study that more than half of the banks did not offer students loans
at all. For the remaining banks, student loan portfolio was only about 3.77% of their
entire loan port-folio with personal loans, automobile loans and home loans constituting
the major part of it.

5. On analysis of the 751 m student loan cases of various banks across the state, it was
found that the average loan amount was around Rs.0.3 million and interest rate 12.5%.

6. Majority of students who availed of loans were pursuing professional degree programs
with 46.17% studying engineering, 22.64 % pursuing MBA and 12.71%doing medical
programs.

7. The default and delinquent levels in student loans were found to be extremely low with
1.1% and 0.7% figures respectively (I-Tenable, 2006).

Jayadev. M (2017), in the article titled “An Analysis of Educational Loans", found that
educational loans are a relatively new phenomenon when it comes to funding higher
education in India There has been a significant rise in the volume of outstanding educational
loans with an annual growth rate of 12% since March 2008 Banks are concerned about
increasing assets with respect to educational loans. This paper argued for a statutory
framework that addresses all aspects of funding higher education through loans and
scholarships

NEWS REPORT (INDIAN EXPRESS –Dt. 17-07-2017)

a) Indian banks have seen a 142 per cent rise in default by students who have taken
education loans during the past few years, at a time when hiring for new jobs has slowed
down and tech companies have started laying off employees.
b) State-owned Banks, which are already weighed down by huge defaults by corporates, are
the worst hit as they account for over 90 per cent of educational loans.
c) The total non-performing assets (NPAs), or loans on which borrowers have defaulted on
payments for more than the stipulated 90 days, stood at Rs 6,336 crore at the end of
December 2016, against Rs 2,615 crore in March 2013, the Reserve Bank of India (RBI) has
revealed.
d) The rise in bad loans in the education loan segment in 2013-2016 coincided with the
Indian industry battling overcapacity, demand slowdown, stalling of new projects and
defaults by top corporates.
e) At the same time, the demand for loans was up as educational institutions, especially
engineer-ing and management colleges, mushroomed, without a check on quality

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 Kim & Park (2017) use secondary data and analyze it where the data used is data
obtained from related ministries and statistical data centers. State subsidy programs must
consider equity and advantage. For guaranteed equity, all universities must be evaluated on
the basis of their quality and make improvements in management as well as support them in
mentoring them with what is lacking. Financial support is required when considering the
poor conditions of university education. Upgrading some of the best universities is important
but helping lagging universities and improving the overall level of quality in universities is
also important. If the government limits support for specific purposes, universities will
reduce or eliminate their own budget items.

The method used by Elmira & Surydarma (2019) is to form a pricing model to
estimate income after graduation. Elmira & Surydaarma (2019) state that income and work
dynamics need to be combined to obtain an accurate estimate of life cycle income. The
limitation of the study is that there is no Indonesian data set that meets these two
requirements. The only panel is the dataset available which is the Indonesian Family Life
Survey, with surveys in 1993, 1997, 2000,2007, and 2014. However, the sample size is too
small to allow for dynamic estimates of lifetime income therefore, in this paper, Elmira &
Surydarma (2019) estimate that conditional quantitative regression is the right model to
measure this ICL scheme.

The research paper proposed the theoretical framework based on the four theories:
Theory of reasoned action, Theory of Planned Behaviour, Theory of Human Capital and
Theory of ability to pay. The paper also identified some of the determinants which may
influence intention of students to repay Educational Loan (Srivastava, 2020).

A study on status of higher education and education loan in India is written by Sangeetha
Aror and Jagdish Kaur. The major objectives of this study are 1. To analyze the trends in
growth of higher education in terms of number of universities / institutions, number of
colleges, and enrolment of students, 2. To study the growth of education loan and examine
the relationship between higher education and education loan, and 3. To look into the present
education loan scheme and milestones by the Government of India in education loan scheme.
the present paper is based on analytical study and secondary data have been collected for
this study which were collected from State Government documents, State Level Banker
Committee, related journals, MHRD, AISHE, economic survey and UGC annual reports. The
study found that there is a linear increase in the number of higher education institutions,
student enrolment and education loans in India and Punjab. The study concludes that
government launches education loan scheme and made improvement from time to time to
fulfill the needs of the students.

The paper attempts to investigate the trends in financing higher education which
convey that student loan is the dominating source of financing higher education in India. This
leads to explore various factors that influence. The research question of this study is What is

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the relationship between cost of higher education across courses and demand for student
loans? Is demand for student loans are more as cost of higher education is increasing? How
does it vary between public and private institutions of higher education? Secondary data were
used in this study. The study conclude that fees, grants/scholarships and student loans need to
be examined in the context of increasing cost and role of markets in higher education along
with affordability within the domain of family characteristics.

The Financing and Management of Higher Education: A Status Report on Worldwide

Reforms by D Bruce Joimstone State University of New Yorkt Buffalo with the
collaboration of Alka Arora and Willian Experton, importing the efficiency and viability
of existing student loan programs while broadening their courage is a major challenge for
developing countries. Despite the poor performance of many systems, the positive experience
of countries like Columbia and the Dominican Republic, for example, show that it is possible
to design and administer fnancially sustainable programs if effective collection programs,
appropriate interest rates, and income contingent schemes, can be made operational While
the increasing number of private colleges helped meet the swreling demand for higher
education, protided access to many more students, and created diversity--all at no cost to the
government, they also brought with them the ills of high tuition, falling quality, and an
uncontrolled increase in their number.

Sailabala Debi has written a monograph on loan financing to higher education. This
study raises few research question are what is the socio economic background of the students
taken loan? What is the repayment pattern of the loans? Is it a burden on the student or on the
parents? Is the retum to education of the loan holders higher? Does it meet specific
manpower necds? Does the government further reduce the expenditure on higher
education'subsidy as a result of loan financing to higher education? Based on these research
questions the study used both primary and secondary data. The study found that (i) bank loan
is directly related to income of the family and fathers occupation when it is higher income
earning occupation. It indicates that the loan is not able to solve the problem of inequality in
access to higher education, (ii) More than half of the loan holders are general castes and only
3 percent are scheduled castes,(ii) Across gender the loan is always found to be lower for
females than their male counterparts as about 3/4th of the loan goes to male students and the
rest goes to female students, (iv) The average loan amount is the highest for MBBS degree
followed by M.Tech degree. The lowest amount of loan is found for the diploma course. The
study said that the empirical evidence of the present study seems to confirm that bank loan
does not fulfill the social objective of equity criteria of higher education.

An article on 'Student's perception regarding student financing' written by Aarti Dewan,

Rekha Goel, Ruchi Malhotra. The major objectives of this study are to study the student 's
perception towards education loan with respects to their loan features and to compare the
student's perception towards education loan with respect to their gender. This study fixed two
hypnoses are namely 1. There is no significant difference between the student's perception
towards education loan with respects to their loan feature, and 2. There is no significant

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difference between male and female students perception towards education loan. The present
study is carried out in the Palwal and Faridabad District of Haryana. The aim of the study is
to examine the student's perception towards education loan and compare male and female
students with respect to various loan features like value Addition, Mortgage, Effectiveness,
Eligibility Criteria, Procedure or Convenience, Disbursement and Rate of Interest regarding
education loan. Primary and secondary data have been used and analyzed in this study and 53
respondents have covered in this survey from both male and female students in Faridabad,
Haryana. The target group is undergraduates and graduates students. Data have been collected
through personal survey. Descriptive statistical tool have been used for data analysis with the
help of SPSS. The study found that Respondents from the both districts said that they always
prefer bank whenever they require loan for education purpose, Respondent shows that rare of
interest highly attracted themselves, They prefer first of all, low interest rate, There should be
flexibility in mortgage, Eligibility criteria should be based on need as well as merit,
Disbursement of loan should be start after completion of loan or after joining a job, and Value
addition services are also accepted by students. The study concludes by saying that the
procedure of getting loan should be easy to student, the rate of interest should be low, and to
encourage higher studies disbursement should be flexible.

The study on financing higher education in India deals with present pattern of funding
higher education in India and to discuss the desirability and feasibility of various alternative
methods of funding the same. It is argued here that given the resource constraints and equity
considerations, financing higher education mostly from the general tax revenue may not be a
desirable policy in the long run. Accordingly some of the alternative policy choices are
discussed, including financing higher education from the public exchequer, student loans,
graduate tax, student fees, and the role of the private sector. Among the available alternatives,
it is also argued that a discriminatory pricing mechanism would be relatively more efficient
and equitable. While given the socio economic and political realities, the government has to
continue to bear a large responsibility for funding higher education, instead of relying on a
single form of funding. efforts should be made to evolve a model of funding that provides a
mix of the various methods. Finally the study argued that fee and subsidy policies need to
make distinctions across various layers and forms of higher education.

In a study Narayana has stated that it is pertinent to all developing countries to allow
educational loans to supplement budgetary shortcomings as well as to maintain reasonable
fee structure by Government and aided colleges as was done in Karnataka and for that matter
in other states in India.

Harsh Gangadhar conducted his study on educational loan schemes by scheduled

commercial banks in Chandigarh. He has highlighted absence of previous studies on
education loan schemes. During the years 2004 to 2010 when his study took place, the
interest on educational loans were high and that it was disbursed on purely commercial basis.
In some cases the loans were taken to get visa to foreign countries and after reaching there
the loans were fully repaid. The banks did not reveal the identity of the borrowers as it will

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breach the privacy of the banker customer relationship. The National Loan Scholarship
Scheme introduced long back in 1963 was the oldest form of educational loans in India. This
National Loan Scholarship Scheme was managed through the state Governments. Under this
scheme, interest free loans were provided to meritorious students for pursuing post-Metric
education. But the scheme had to be stopped in the year 1991 due to bad recovery of loans
and economic crisis facing Government of India at that time.

In his study Jandhyala BG Tilak stated that the Government is paying too much
attention for the primary education for long. It has recently come up with supplementing the
expansion of higher education through private participation. This he believes that, is based on
a neo-liberal market philosophy.

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 CHAPTER 3
THEROTICAL FRAMEWORK

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EDUCATION LOAN

3.1 INTRODUCTION
Education, in the general sense, is any act or experience that has a formative effect on the
mind, character, or physical ability of an individual. In its technical sense, education is the
process by which society deliberately transmits its accumulated knowledge, skills, and values
from one generation to another. Education can also be defined as the process of becoming an
educated person.
Education is a process of cognitive cartography, mapping your experiences and
finding a variety of reliable routes to optimal states when you find yourself in non- optimal
states. Educated persons refer to persons who have access to optimal states of mind
regardless of the situation they are in that persons are able to perceive accurately, think
clearly and act effectively to achieve self-selected goals and aspirations.

3.2 SIGNIFICANCE OF EDUCATION

The role of education in facilitating social and economic progress is well recognized. It opens
up opportunities leading to both individual and group entitlements. Education is the most
crucial input for empowering people especially youth with skills and knowledge and giving
them access to productive employment in future. Improvements in education have not only
expected to enhance efficiency but also augment the overall quality of life.

3.3 GROWTH OF EDUCATIONAL LOAN IN INDIA

Development of higher education depends on various factors, among which finance plays a
major role. Bank credit has an important role in promoting the education and development of
skilled professionals required by an emerging market economy such as India. The idea to
encourage educational loans was first coined through the introduction of education scheme
loan formulated by Indian Banks Association (IBA) in 2001. Financing for higher education
is being met through various sources including direct student loan from banks and other
financial institutions, Parents borrowings through other channels including from friends and
relatives, credit card borrowings, loan against property and other unorganized sources. The

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overall educational loan portfolio is about Rs.80,000crorecomprising mainly of scheduled
commercial banks (-Rs.73,000 crore), co-operative Banks (-Rs.2,000 crore) and Non-
Banking Financial Companies (NBFCs) (Rs.5,000 crore). Indian Banks' Association (IBA),
formed on 26 September 1946 as a representative body of management of banking in India
operating in India - an association of Indian banks and financial institutions based in
Mumbai. With an initial membership representing 22 banks in India in 1946, IBA currently
represents 237 Development of higher education depends on various factors, among which
finance plays a major role. Bank credit has an important role in promoting the education and
development of skilled professionals required by an emerging market economy such as India.
The idea to encourage educational loans was first coined through the introduction of
education scheme loan formulated by Indian Banks Association (IBA) in 2001. Financing for
higher education is being met through various sources including direct student loan from
banks and other financial institutions, Parents borrowings through other channels including
from friends and relatives, credit card borrowings, loan against property and other
unorganized sources. The overall educational loan portfolio is about Rs.80,000crore
comprising mainly of scheduled commercial banks (-Rs.73,000 crore), co-operative Banks
(Rs2000 crore) and Non-Banking Financial Companies (NBFCs) (Rs5,000 crore)
Indian Banks' Association (lBA), formed on 26 September 1946 as a
representative body of management of banking in India operating in India - an association of
Indian banks and financial institutions based in Mumbai. With an initial membership
representing
22 banks in India in 1946, IBA currently represents 237 banking companies operating in
India. IBA was formed for development, coordination and strengthening of Indian banking
and assist the member banks in various ways including implementation of new systems and
adoption of standards among the members. Indian banks association is managed by a
managing committee and the current the managing committee consisting of chairman, three
deputing chairman, one Honorary secretary and 26 members.
Educational loan is becoming popular day by day because of rising fee
structure of higher education. It came into existence in 1995 started by SBI and after that
many banks started offering student loan. The Indian banking sector began giving educational
loan from 2001 onwards. But recently, in the wake of increasing non-performing assets
(MPA) on educational loans, the Indian bankers associations (IBA) as revised the educational
loan scheme framed in 2001. A large part of lending to the education sector in the country has
been done by public sector banks. A recent Reserve Bank of India (RBI) report disclosed that
the share of public sector banks (PSBs) in lending to the education sector is 91.42 percent.
Banks disburse educational loans under the Model Educational loan scheme of Indian Banks
Association (IBA). Under the scheme, interest is charged from the first year, but the interest
is payable only after the moratorium period. However, the Government is implementing the
interest subsidy schemes on educational loans for higher education under Central Sector
Interest Subsidy Scheme (CSIS). Interest charged by the PSBs on educational loans ranges
from 8.60 percent to 11.50 percent per annum, depending on the Marginal Cost of lending
rate of the respective bank and the size of the loan.

3.4 EDUCATION LOAN SCHEME

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Education is central to the human resources development and empowerment in any country.
National and State level policies are framed to ensure that this basic need of the population is
met through appropriate public and private sector initiatives. While government endeavour to
provide primary education to all on a universal basis, public funding of higher education is
not considered feasible. Cost of education has been going up in recent times and since the
student has to bear most of the cost, there is a clear case for institutional funding in this area.
Indian Bankers Association (IBA) has formulated and circulated to all member banks a
"Model Education Loan Scheme" for providing financial support to meritorious students for
pursuing higher education in India and abroad. The Reserve Bank of India (RBI) has advised
all Scheduled Commercial Banks to adopt Education Loan Scheme, formulated by IBA.
SALIENT FEATURES
 Loan upto Rs 10 lakh for study in India and upto Rs 20 lakh for study abroad.
 Collateral free loans upto Rs 7.5 Lakh under the Credit Guarantee Fund Scheme for
Education Loans (CGFSEL).
 No Margin for loan up to Rs 7.50 Lakh.
 Repayment period of 15 years
 One year moratorium for repayment after completion of studies in all cases.
Moratorium taking into account spells of unemployment/under-employment, say two
or three times during the life cycle of the loan. Moratorium for the incubation period
if the student wants to take up a start-up venture after graduation.

3.5 OBJECTIVES OF THE EDUCATIONAL LOAN SCHEME

The Educational Loan Scheme outlined below aims at providing financial support from the
banking system to deserving/ meritorious students for pursuing higher education in India and
abroad. The main emphasis is that every meritorious student though poor is provided with an
opportunity to pursue education with the financial support from the banking system with
affordable terms and conditions. No deserving student is denied an opportunity to pursue
higher education for want of financial support.

3.6 ELIGIBILITY CRITERIA

The student should be an Indian Resident .They should submit documents of prior education
courses that have been completed from recognised institutions in India or Abroad through
entrance test/ merit based selection process after completion of HSE (10,+2 or equivalent).
However, the entrance test of selection process purely based on marks obtained by the
student. In such case, banks will declare certain special criteria based on employability and
reputation of the institution concerned

3.7 COURSES ELIGIBLE FOR FINANCE

Graduation- For job oriented profession/ technical courses offered by reputed universities.
Post-Graduation - MCA, MBA, MS etc. Courses conducted by CIMA - London, CPA in USA

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etc, Graduate Post Graduate studies in Arts, Science, Commerce and Business
Administration. Graduate/ Post Graduate studies in Pharmacy. Graduate' Post Graduate
studies in any Professional/ Technical courses. PhD (Doctor of Philosophy)

3.8 EXPENSES CONSIDERED FOR LOAN

 Fee payable to college++/ school/ hostel

 Examination/ Library/ Laboratory fee
 Travel expenses/ passage money for studies abroad
 Insurance premium for student borrower, if applicable
 Caution deposit, Building fund/refundable deposit supported by Institution
bills/receipts.
 Purchase of books/ equipments / instruments/ uniforms***
 Purchase of computer at reasonable cost, if required for completion of the course
 Any other expense required to complete the course - like study tours, project work,
thesis, etc.
 While computing loan required, scholarships, fee waiver etc., if any available to the
student borrower may be taken into account.

3.9 RATE OF INTEREST

Interest rates of education loan’ means the percentage amount that will be charged from the
applicant for borrowed principal amount. The interest rates in India are floating and based on
changes as regulated by IBA (Indian Banking Association) and RBI (Reserve Bank of India).
Most banks charge a standard percentage over the regulated MCLR (Marginal Cost of
fund based Lending Rates) as the interest rate for student loans. Applicants who wish to
apply for loans to pay for their education should always keep a tab on the changing MCLR
of various banks. Simple interest to be charged during the study period and up to
commencement of repayment. Servicing of interest during study period and the moratorium
period till commencement of repayment is optional for students. Accrued interest will be
added to the principle amount borrowed while fixing EMI for repayment.

3.9 CO-OBLIGATION
Co-obligation of parents is required. Wherever parents are not there, Bank could consider
grandparents as co-obligator to the loans taking into account their net worth. In case of court
appointed guardians, their co-obligation shall be obtained. In case of married person, co-
obligator can be spouse or the parents(s) Parents-in-law

3.10 REPAYMENT OF LOAN

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 Repayment is a structured action of repaying the loan that has been taken by the borrower
and if not planned smartly can be an issue of concern for most of the students. Due to lack of
proper planning students consider repayment as a major liability because of which it is
necessary to chalk out your plan from selecting the bank till repayment of the education loan.
For the purpose of planning the student loan repayment, it is obligatory to understand the
bank’s policies and their conditions. Read this article to gain profound knowledge on
education loan repayment and how to plan your repayment method in an effective way.
Although you are allowed a moratorium period in education loans, it is
advisable to start repaying the loan as soon as you can. This moratorium period is not interest
free. And education loan interest rate in India is quite high. Interest keeps accruing if you do
not start repaying the principal amount. And even in moratorium period, interest needs to be
paid. This means without decreasing the outstanding loan amount, you end up increasing the
burden of interest and hence the cost of the overall loan. Apart from that, you can also earn a
good credit score if you start the repayment early. Repayment of education loan is not a big
process as such. You just need to get in touch with your bank manager who will take note of
your account details and start the repayment on an auto deduction mode. You can also check
out the various education loan repayment schemes available in India.

3.11 CENTRAL SECTOR INTEREST SUBSIDY SCHEME

The Central Government scheme to pay the interest during the moratorium period for
students from economically weaker Sections (gross annual family income of up to Rs 4.5
lakhs) availing of loans for technical or professional courses. Applicants must have an income
certificate from the certifying authority to be eligible for this scheme. The Indian Bank
Association had formulated a comprehensive model education loan scheme for adoption by
all Banks aimed at providing financial support from the banking system to deserving/
meritorious students or pursuing higher education in India and abroad.

3.12 DOCUMENTS REQUIRED FOR EDUCATIONAL LOAN

To get an educational loan from a bank one has to submit certain documents to the
bank .These includes mark sheet of 10th, 12th graduation (if applicable) entrance exam
result, income proof, proof of admission to course (offer letter/admission letter / ID card if
available),age proof which is usually the birth certificate, residence proof, aadhar card& pan
card of the student, schedule of expense for course. If a student wants to go abroad for studies
,the bank will asked for recommendation letter from the related university's head of the
department, approved visa document, travel document, GRE/GMAT/SAT scores.

3.13 IMPACT OF STUDENTS EDUCATION LOAN

Education plays a crucial function in human capital development and it is like wise a potent
weapon for social change, social mobilization and social dominance. Education enables
people to move upward in the socio-economic ladder. Education is the corner stone of
Progress and upliftment. It leads to increased awareness and social consciousness of the

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people and provides for more responsible leadership of the nation. Man has been aspiring
from more and beer education in order to earn more and improve his social status. All people
are equal and have equal claims to right to education. Equality of educational opportunity is
closely related to economic development of the individual as well
as the nation. Equality of educational opportunity is essential for improvement of human
resource an acceleration of the pace of national development. The main objective of the
Constitution of India is to provide equal education opportunity to the people irrespective of
castes, sex, religion. colour and socio economic status. Therefore the government has been
launching from time to time several programs and policies for educational development of all
communities ever since the commencement of the Constitution of India.

3.14 CONSEQUENCES OF EDUCATION LOAN

When a Student or their family decides to take loan for the further studies, there are often
times when they aren’t able to repay the loans at the given period, there are certain
consequences which they have to face when something like this happens. In India, the lender
will send notices to the borrower and the guarantor (if there is one). The borrower will then
become a defaulter if they ignore the notices that had been sent. The credit score will also
have a big impact. Because this will also affect you in taking loans in the future. When a
Student takes a loan so that they can study abroad, they are given a due date by which they
have to repay the amount through EMIs. Once the student misses the first payment, the
lenders usually report to the credit bureau which in return reflects as a Due Past Date (DPD)
on the credit report.
If the EMI isn’t paid after 30 days then, the Lender starts applying a penal interest
after reporting to the credit bureau. This is an extra penalty interest which is added to the
normal interest rate. Public Banks charge 2% interest annually whereas Private Banks and
NBFCs charge 3-4% interest rate annually. But if it crosses the 90-day mark, the Lender than
declares the borrower as a Non-Performing Asset (NPA) which means now the Lender has
given you the tag of a Defaulter. This brings a drastic change to the credit report which also
impacts your credit score deeply.

3.15 OTHER FEATURES OF EDUCATION LOAN

Banks may issue financial capability certificate based on the financial condition of the
student. Existence of education loan may effect other students loan availability within the
same family. No age restriction is there to avail education loan. Usually parents lor guardian
will be joint borrower but in the case of married student, either this spouse or parents may be
the joint borrower.

3.16 BENEFITS OF EDUCATION LOAN

A student loan facilitates a student to complete their education even if they are unable to
afford it at present. By keeping in consideration the future earning potential of an educated

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individual, it helps them live up to their true potential. Apart from purely economic reasons,
there are multiple benefits associated with Education Loans, making them the apt choice for
funding your education. Here’s a look at a few benefits of considering an education loan for
funding your studies are : Low interest rate, Easy availability of study loan, Good payment
terms, Tax deductible , Self – dependence etc.

3.17 PROCESSING CHARGES

No processing / upfront charges may be collected on educational loans in India.

3.18 NO DUE CERTIFICATE

No due certificate need not be insisted upon as a pre-condition for considering educational
loan. However, banks may obtain a declaration/ an affidavit confirming that no loans are
availed from other banks.

3.19 FLEXIBILITY IN TERMS

In order to bring flexibility in terms like eligibility, margin, security norms, banks may
consider
relaxation in the norms on a case-to-case basis delegating the powers to a fairly higher level
authority.

3.20 TOP UP PLANS

Banks may consider top up loans to students pursuing further studies within the overall
eligibility limit, with appropriate re-schedulement, subject to taking required security.

3.21 CREDIT GUARANTEE FUND

The government is planning to come up with Credit Guarantee Fund (CGE) before the end of
this fiscal (2012-13), which seeks to provide education loans up to Rs.7.5 lakh without any
collateral security and third party guarantee. Under the Credit Guarantee Fund Education
Trust (CGFT) scheme, education loans up to Rs.7.5 lakh without any collateral security and
third party guarantee, would be covered up to 75% of the amount in default.

3.22 WHICH BANKS IN INDIA OFFER EDUCATION LOANS

Most nationalized banks, private banks, foreign banks and private lending institutions provide
students loans. Some of the loans from the most popular banks are as follows:
a) Axis Bank Study Loan

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b) Allahabad Bank Loan
c) Bank of India Loan
d) Bank of Maharashtra Loan
e) Bank of Baroda Loan
f) Bank of Rajasthan Loan
g) Canara Bank Student Loans
h) Federal Bank Vidya Loan
g) IDBI Bank Education Loans
h) HDFC Education Loan
i) UCO Bank Education Loan
j) ICICI Bank Education Loan
k) Punjab National Bank Loan
l) Syndicate Bank Loans
m) Indian Overseas Bank Loan
n) Oriental Bank of Commerce
o) State Bank of India Loan
p) United Bank of India Loans

3.23 SECURITIES
Securities required for loan :-
You need to have a guarantor for the education loan to be sanctioned. If you fail or are
incapable of repaying the student loan, the guarantor will have to clear the debt. Usually,
most banks require the guarantor to have a net worth and/ or annual income equivalent or
more than the education loan amount. Only education loans above Rs 4 lakh require tangible
collateral, security for the full value of the loan or third-party guarantee, depending on the
amount. However, the co-borrower – the parent or guardian - is required to furnish his/her
bank account statement, tax returns of the last two years, statement of assets and liabilities
and proof of income. The usual security that banks accept are National Savings Certificates
(NSCs), bonds, gold, vehicle, house, property .etc. Loans above Rs 4 lakh and up to Rs 7.5
lakh: Collateral in the form of a suitable third-party guarantee. The bank may, at its
discretion, waive third-party guarantee if satisfied with the net worth /l means of the parent
who is executing the document as a joint borrower. Loans above Rs 7.5 1akh: Collateral
security of a suitable value or a suitable third-party guarantee, along with the assignment of
the student's future income for payment of installments. When the education loan amount is
greater than Rs 1 lakh, banks usually prefer students who have life insurance policies
equivalent to, or more than, the education loan amount. This is nothing more than a security
27 | P a g e
feature and also forms part of your collateral. If something unfortunate happens to the
borrower, the bank does not lose money and can recover the outstanding amount from the
insurance policy. Some banks have tied up with specific institutions to provide education
loans to students for select courses. In such cases, the banks may be willing to forgo collateral
requirements.

3.24 PROCEDURES
Step 1: Fill in the loan application form
Like in case of every loan, the applicant has to fill in an application form which may ask
for details such as contact details, details relating to academics etc. it is important to fill in
accurate information.
Step 2: Personal Discussion
Once the applicant, is the student fills in the form, there is a round of personal discussion
wherein he/she may be asked various question relating to the academic performance, the
course one has selected, probably the institute etc. At this stage, it is very important to be
lucid and clear about one's selection of course and its future potential of generating income.
While some banks are known to hold the academic record important, some may give it a
slightly lesser attention. This does not go to say that one needs an excellent academic record.
But, make sure that there are answers to those mishaps that could have occurred during the
academic life.
Step 3: Provide validated supporting documents
Unlike other loans where the talk of documents relating to say property, might come in at a
later stage and may cause delay-documents are a must. In case of education loans, documents
relating to admissions are mandatory even before the bank considers the loan application. The
bank will verify the enrollment of the student from the concerned institute. One may also
require collateral security such as papers relating to property to be mortgaged if the loan
amount is above Rs. 4 lakh.
Step 4: Stage of loan approval or denial
When one takes some other kind of loan, there is a co-guarantor., especially in case of
personal and home loans. For an education loan, a guarantor is mandatory. The guarantor
could be an applicant's parents or guardians. The bank will run a thorough check of the
guarantor and his/her credit history before sanctioning the loan. After completion of the
process, the loan may be sanctioned or denied.
Step 5: Borrower's signature on a Promissory Note
While the parents/guardians are guarantors, the student is the actual borrower of the loan.
Once the loan is sanctioned, the student has to sign a promissory note to the bank.
Step 6: Disbursal of the loan

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 Once the formalities are completed (additional documents and signed post-dated cheques
may be required). the bank will disburse the loan. The bank may disburse the college/institute
fee directly to the concerned institute.

3.25 TREND TOWARDS PRIVATIZATION

The participation of private sector is increasing day by day. The budgetary support for higher
education is low, with the central government funding on higher education at 1.25% of GDP
(UGC, 2012). Private institutes now account for four-fifths of the enrollment in professional
higher education and one-third in overall higher education. According to the FICCI and Ernst
&Young report on higher education 91% engineering schools, 95% pharmacy, 64% business
and 50% medical schools in India are non-government. The national skill development
corporation has the target is to cover 500 million people cumulatively by 2022 under skill
development programs. The national skill development policy recognizes that 93 per cent of
the country’s workforce is in the unorganized sector, but contributes only 60 per cent of
GDP

3.26 INTERNET BANKING

Internet banking is recently emerged as a important factor in banking. Every customer of the
bank is provided with a unique user id using which the customer can log into his account and
carry out banking transactions online easily. Whether it is making fund transfers, monitoring
individual accounts, applying for loans or investing in fixed deposit schemes, internet
banking has the solution for every need

3.27 APPRAISAL/SANCTION/DISBURSEMENT
In the normal course, while appraising the loan the future income prospects of the student
will be looked into. However, where required, the means of parent l guardian could also be
taken into account to evaluate repayment capability. The loan to be sanctioned as per
delegation of powers preferably by the Branch nearest to the place of residence of parents. No
application for educational loan received should be rejected without the concurrence of the
next higher authority The loan to be disbursed in stages as per the requirement / demand
directly to the Institutions/ Vendors of books/ equipments / instruments to the extent possible.

3.28 TYPES OF LOANS

1,. Federal Student Loans
Most borrowers first seek federal government financing if they need to borrow funds for
education expenses. The first step in seeking education loans through the federal government
is to complete a free application for federal student aid (FAFSA). Depending on the
applicant's status, particularly in regard to their parent dependency, different information may
be required to complete the applicant A credit check is not generally required as part of the
application process The amount of principal on the loan or loans is primarily based on the

29 | P a g e
cost of attendance at the school the student is planning on attending. Once a FAFSA form is
completed, the schools listed on the FAFSA application work to identify the financial aid
package that the student is eligible for. Various types of federal student loans exist, including
direct subsidized, direct unsubsidized, and direct consolidation loans. If offered and accepted,
funds will be issued by the federal government to the specified university to cover the
student's academic costs. If there are remaining funds available, they will be disbursed to the
student. A student may use these funds to cover other expenses that they incur while pursuing
a degree. If a student qualifies for subsidized loans, the borrower's interest will be covered
while they are in school If a student qualifies for unsubsidized loans, the interest on their
loans will be deferred as long as they are enrolled in classes and remaining good academic
standing.
2. Private Student Loans
In some cases, the student loan package that a student is issued through the federal
government may suggest that the borrower applies for additional funds through private
lenders. Private student loans also include state-affiliated lending nonpro fits and institutional
loans provided by the schools. These types of loans will generally follow a more standard
application process(like what is typical of any private-sector loan). Applications for private
student loans typically require a credit check. Borrowers can apply directly to individual
private-sector lenders for funds. Similar to federal funds, the approved amount will be
influenced by the school a borrower is attending. If approved, funds for educational expenses
will first be disbursed to the school to cover any pending bills; the remaining amount is then
sent directly to the borrower.

3.16 DISADVANTAGES OF EDUCATION LOAN

Education loans can lead to accumulating interest, resulting in a significant increase in the
total repayment amount. The interest rate of education loan is quite high. Generally for loan
below 4 lakhs no guarantor is required. If the amount is above 4 lakhs guarantor is
mandatory. There is also the possibility of sampling errors. The collection of secondary data
was time consuming. Unwillingness of the borrowers to disclose the complete information
regarding their borrowings is yet another disadvantage of educational loan

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 CHAPTER 4
DATA ANALYSIS AND INTERPRETATION

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INTRODUCTION
Data interpretation is the process of reviewing data and arriving at relevant conclusions using
various analytical methods. Data analysis assist researches in categorizing, manipulating and
summarizing data to answer critical questions. In this project data analysis and interpretation
focused on the higher education loan in nearby district. Financing for higher education is
being met through various sources including direct student loan from banks and other
financial institutions, parents borrowings through other channels including from friends and
relatives, credit card borrowings loan against property and other unorganized sources.

4.1 GENDER OF RESPONDENTS

4.1 Gender of respondents

Gender No of respondents Percentage
Male 27 45.0%
Female 33 55.0%
Total 60 100
Source :- Primary data

INTERPRETATION
Out of sixty students, 45 % are male and 55% are female.

4.2 AGE OF RESPONDENTS

4.2 Age of respondents

Age No of respondents Percentage
18 – 21 40 66.7%

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 22 – 25 16 26.7%
26 – 29 4 6.7%
Above 30 0 0.0%
Total 60 100
Source :- Primary data

INTERPRETATION
Out of sixty students, fourty (66.7%) are in the age group 18 – 21. Sixteen (26.7%) are
included in the category of 22 – 25. Four (6.7%) are included in the category of 26-29

4.3 EDUCATIONAL QUALIFICATION

4.3 Educational qualification

Educational qualification No of respondents Percentage
UG 41 68.3%
+2 15 25.0%
PG 4 6.7%
10th 0 0.0%
Total 60 100
Source :- Primary data

INTERPRETATION
Out of 60 people surveyed 68.3% people are graduates, 25% people have completed 12 th,
6.7% people are Post graduate.

4.4 PARENTS EDUCATIONAL QUALIFICATION

Table 4.4 Parents Educational Qualification

Qualification Number of respondents Percentage
10th 31 51.7%
+2 17 28.3%
UG 10 16.7%
PG 2 3.3%

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 Total 60 100%
Source :- Primary data

INTERPRETATION
This table shows the educational qualification of the students parents. Out of 60 students
parents, 51.7% of them are 10th passed, 28.3% are +2 passed, 16.7% of them are UG
graduates and 3.3% are PG graduates. In this survey we can understand that most of the
students parents are 10th passed.

4.5 FAMILY TYPE

Table 4.5 Family Type

Family type Number of respondents Percentage
Nuclear 54 90%
Joint 6 10%
Total 60 100%
Source :- Primary data

INTERPRETATION
Out of 60 students 90% of them are living in a nuclear family and 10% are from joint
families. In this survey we can understand that most of the students are from nuclear families

.4.6 INCOME OF THE FAMILY

Table 4.6 Family Income

Income Number of respondents Percentage
Up to 3Lakhs 48 80%
3-5Lakhs 7 11.7%
5-10Lakhs 5 8.3%
Above 10Lakhs 0 0

Total 60 100%
Source :- Primary data

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INTERPRETATION
This table shows the family income of the students. Out of 60 students 80% of them are
having the family income of up to 3lakhs, 11.7% are having the income of 3-5lakhs, 8.3% of
them are having 5-10lakhs and there’s no one who is having the family income above
10lakhs. In this survey we can understand that majority of the students are having the family
income of up to 3lakhs

4.7 SOURCE OF AWARNESS OF EDUCATIONAL LOAN

Table 4.7 source of awareness of educational loan

Different ways Number of respondents Percentage

Friends or relatives 25 41.7%

Banks 19 31.7%

Word of mouth 12 20.0%

Educational Institutions 4 6.7%

Total 60 100%

Source :- Primary data

INTERPRETATION
Out of 60 students, 41.7% of students got awareness of educational loan from friends or
relatives, 31.7% of students from banks, 20% of students from word of mouth and the
remaining 6.7% of students got awareness from educational institutions. In this survey we
can understand that most of the students got awareness from friends or relative

4.8 CATEGORY OF BANK FROM WHICH LOAN WAS AVAILED

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 Table 4.8 Category of Bank from which loan was availed

Number of respondents Category of Bank Percentage

33 Public sector 55.0%

27 Private sector 45.0%

60 Total 100%

Source :- Primary data

INTERPRETATION
Out of 60 students, 55% of students taken loan from public sector banks, 45% of students
taken from private sector. In this survey we can understand that most of the students are taken
from public sector banks

4.9 RATE YOUR LEVEL OF AWARNESS REGARDING THE

FOLLOWING ASPECTS RELATING TO EDUCATIONAL LOAN

Table 4.9 Rate your level of awareness regarding the following aspects relating to
educational loan

Levels of Highly Aware Neutral Less Not aware Total

Awareness aware aware

Procedure 82% 5% 7% 6% 0% 100%

of
documents

Repaymen 60% 17% 17% 6% 0% 100%

t schedules

Rate of 60% 17% 19% 4% 0% 100%

interest

Time taken 25% 26% 32% 17% 0% 100%

for
sanction

Borrowing 36% 17% 30% 17% 0% 100%

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 limit

Collateral 30% 38% 15% 10% 7% 100%

security

Processing 39% 30% 21% 10% 5% 100%

fee

Pre- 21% 25% 30% 9% 15% 100%

closure
charges

Source:- Primary data

INTERPRETATION

Through this survey find the awareness of students on educational loan. Out of 60 students,
82% of students says they are highly aware about procedures of documents ,5% of students
says they are aware ,6% says they are less aware and 0% says they are not aware. 60% of
students are highly aware about repayment schedules, 17% of students are aware, 6% of
students are less aware and 0% are not aware. 60% of students says they are highly aware
about rate of interest, 17% of students are aware and 4% of students are less aware and 0%
are not aware. 25% of students are highly aware about time taken for sanction ,26% are
aware ,17% of students are less aware and 0% are not aware.36% of student are highly aware
about borrowing limit,17% are aware ,17% are less aware and 0% are not aware. 30% of
students say they are highly aware about Collateral security, 38% says they are aware,10%
are less aware and 7% are not aware. 39% of students are highly aware about Processing
fee ,30% are aware ,10% are less aware and 5% are not aware. 21% of students says they are
highly aware about Pre-closure charges ,25% says they are aware,15% says they are not
aware and 9 % says they are less aware.

4.10 LIMIT OF EDUCATIONAL LOAN

4.10 Limit of educational loan

Amount Number of respondents Percentage
Below 5 lakhs 25 41.7%
5-10 lakhs 18 30.0%
10-15 lakhs 9 15.0%
15-20 lakhs 5 8.3%

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 25-30 lakhs 3 5.0%
Total 60 100
Source :- Primary data

INTERPRETATION
Out of 60 respondents 41.7% which is 25 students says that the limited amount is below 5
lakhs .30% of respondents which is 18 students says that the limited amount is between 5 to
10 lakhs.15% of respondents which is 9 students says that the limited amount is between 10
to 15 lakhs.8.3% of respondents which is 5 students says that the amount is limited to 15 to
20 lakhs and 5% respondents which is 3 students says that the amount is limited up to 25 to
30 lakhs. from the survey we can understand that the limited amount is 5 lakhs.
4.11 REPAYMENT PERIOD OF LOAN
Table 4.11 Repayment period of loan
Number of years taken Number of respondents Percentage

5 years 39 65.05

14 years 12 20.0%

15 years 9 15.0%

Total 60 100

Source :- Primary data

INTERPRETATION
out of 60 respondents 39 students which is 65.05% people says that the repayment period is 5
years.12 respondents which Is 20.0% students says that the repayment period is 14 years.9
respondents which is 15% students says that the repayment period

4.12 COLLATERAL SECURITY TO BANK

Table 4.12 collateral security provided or not

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 Response Number of respondents percentage

Yes 32 53.3%

No 28 46.7%

Total 60 100%

Source:- Primary data

INTERPRETATION
From the table we can understand that 32 respondents which Is 53.3% students has provided
collateral securities such as house properties etc to bank and 28 respondents which is 46.7%
students have not provided any collaterals. Most of people had submitted collaterals.

4.13 SATISFACTION LEVEL

Table 4.13 satisfaction level regarding the following aspect

Aspects Highly satisfied neutral Less Not total percentage
satisfied satisfied satisfied
Amount of loan 56.8 26.6 16.6 0 0 60 100

Time taken for 45 30 20 5 0 60 100

sanction
Time taken for 45.2 21.6 26.6 3.3 3.3 60 100
disbursement
Rate of interest 20 15 21.6 13.3 3.3 60 100

Repayment 20 25 16.6 5 1.6 60 100

schedule
Terms of loan 13.3 20 28.3 3.3 0 60 100

Collateral 13.3 26.6 16.6 8.3 0 60 100

securities
offered
Cooperation of 18.3 28.3 15 5 0 60 100
bank officials
Source:- Primary data

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 INTERPRETATION
Out of 60 respondents ,56.8% students are highly satisfied with the amount of loan,26.6% are
satisfied and 16.6% are neutral. there is no one with less satisfaction and no satisfaction level.
Out of 60 respondents 45% students are highly satisfied with the time taken for the sanction
of loan,30% are satisfied ,20 % are neutral and 5% are less satisfied . there is no one who is
not satisfied Out of 60 respondents 45.2% are highly satisfied with the time taken for
disbursement,21.6% are satisfied ,26.6% are neutral ,3.3% are less satisfied and 3.3%
students are not satisfied Out of 60 respondents 20% are highly satisfied with the rate of
interest ,15% are satisfied,21.6% are neutral,13.3% are less satisfied and there are 3.3%
students which are not satisfied Out of 60 respondents 20% students are highly satisfied with
the repayment schedule of loan taken,25% are satisfied ,16.6% are neutral,5% are less
satisfied and there are 1.6% of students which are not satisfied with the repayment schedule.
Out of 60 respondents, 13.3% of students are highly satisfied with the terms of loan,20% are
satisfied,28.3% are neutral and 3.3 % are less satisfied. there is no one with no satisfaction
about the terms if loan. Out of 60 respondents,13.3 % students are highly satisfied with the
collaterals which they had offered,26.6% are satisfied,16.6% are neutral and 8.3 % are less
satisfied with the collaterals offered. There is no one with no satisfaction about it. Out of 60
respondents there are 18.3 % students who are highly satisfied with the cooperation of the
bank officials ,28.3 are satisfied,15 % are neutral and there are 5 % students with less
satisfaction. there are no one with no satisfaction about the cooperation of bank officials.

4.14 INDICATE YOUR RATINGS RELATED TO THE FOLLOWING

PROBLEMS WHILE AVAILING EDUCATION LOAN

4.14 Problems while availing education loan

problem Strongly Agree Neutral disagree Strongly Total percentage
s agree disagree

Repayment 80% 14% 6% - - 60 100

burden is high

Difficulty for 36% 44% 20% - - 60 100

financially
backward to
secure loan
Processing 32% 36% 28% 4% - 60 100
charges is high

Need for good 32% 44% 24% - - 60 100

CIBIL score

Amount received 20% 20% 40% 8% 12% 60 100

is insufficient

Many number of 36% 40% 20% 4% - 60 100

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visit to bank
branches
Difficulty to 32% 16% 36% 12% 4% 60 100
prove as
recognized
college
Difficulty to 24% 38% 28% 6% 4% 60 100
meet collateral
security
requirement
Source :- Primary data
Interpretation

Through this survey find out the problems while availing educational loan .out of 60
students 80% says that they strongly agree to that the repayment burden is high ,14% agree
that the repayment burden is high and 6% students are neutral . out of 60 respondents 36%
says that it is difficult to secure loan for financially backward people,44% agrees with this
statement and 20% students are neutral. Out of 60 students 32% says that the processing
charge is high ,36% agrees with this statement .28% students are neutral and 4% students
disagree with this statement. Out of 60 students 32% students says that there is in need of a
good CIBIL score to secure loan.44% students agree with this statement and 24% students are
neutral. Out of 60 students,20% says that the amount received is insufficient,20% students
agree with this ,40% students are neutral ,8% students disagree with this statement and 12%
students strongly disagree with this. Out of 60 students 36% says that they have to visit bank
for many times,40% students agree with this statement ,20% are neutral and 4% students
disagree with this statement. Out of 60 students 32% students found difficult to prove as a
recognized college ,16% agree with this ,36% students are neutral,12% students disagree with
this and 4% students strongly disagree with thus statement. Out of 60 students 24% students
found difficult to meet collateral security requirement38% agree with this ,28% students are
neutral ,6% students disagree with this statement and 4% students strongly disagree with this
statement.

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 CHAPTER 5
FINDINGS AND SUGGESSIONS

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5.1 FINDINGS
▪ Majority of the students are female
▪ Majority of the respondents belongs to the age between 18-21
▪ Majority of the students are graduated
▪ Majority of the students parents are 10th passed
▪ Majority of the students are from nuclear family
▪ Majority of the students are having the family income up to 3 lakh

Objective 1- To know the source of awareness towards educational loan among the
students
▪ Majority of the students got awareness from friends or relatives
▪ Majority of the students are taken educational loan from public sector banks
▪ Majority of the students says that they are highly aware about procedures of documents
▪ Majority of the students says that they are highly aware about repayment schedules
▪ Majority of the students says that they are highly aware about rate of interest
▪ Majority of the students says that they are neutraly aware about time taken for sanction
▪ Majority of the students says that they are highly aware about borrowing limit
▪ Majority of the students says that they are aware about collateral security
▪ Majority of the students says that they are highly aware about processing fee
▪ Majority of the students says that they are neutraly aware about pre -closure charges
▪ Majority of the students says that they are highly aware about procedures of documents
▪ Majority of the students says that they are highly aware about repayment schedules
▪ Majority of the students says that they are highly aware about rate of interest

43 | P a g e
 Objective 2- To study the terms and conditions imposed by banks for educational loan
in India
▪ Majority of the students says the limited amount is 5 lakhs
▪ Majority of the students says the repayment period is 5 years
▪ Majority of the students had submitted collaterals

Objective 3- To trace out the problems faced by students in availing the educational
loan
▪ Majority of the students are strongly agree the repayment burden is High
▪ Majority of the students are agree that it is difficult for financially backward students to
secure loan
▪ Majority of the students agree that processing charge is high
▪ Majority of the students are agree that there is a need for good CIBIL score
▪ Majority of the students are neutrally agree the amount received is insufficient
▪ Majority of the students are agree that there is many number of visits to bank branches
▪ Majority of the students are neutrally agree that there is difficulty to prove as recognised
college
▪ Majority of the students are agree that there is difficulty to meet collateral security
requirements

Objective 4 - To examine the students satisfaction level towards educational loan

▪ Majority of the students are highly satisfied about amount of loan
▪ Majority of the students are highly satisfied about time taken for sanction
▪ Majority of the students are highly satisfied about time taken for disbursement
▪ Majority of the students are neutrally satisfied about rate of interest
▪ Majority of the students are satisfied about repayment schedule
▪ Majority of the students are neutrally satisfied about terms of loan
▪ Majority of the students are satisfied about collateral securities offered
▪ Majority of the students are satisfied about cooperation of bank officials

5.2 SUGGESTIONS

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 The researchers formulates the following suggestions after the study was made to enhance
students perception on educational loan

▪ It is suggested to take action to reduce the repayment burden of educational loan

▪ It is suggested to take necessary steps for the easy availability of educational loan to
financially backward
▪ It is suggested to reduce the processing charge
▪ It is suggested to take action to improve the awareness about borrowing limit

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 BIBLIOGRAPHY

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https://www.scribd.com/artical//education-loan
https://www.buddy4study.com/artical/education-loan
https://www.vidvaloans.com/blog/know-features-and-benefits-o f-education-loan-in-india
https://www.forbes.com/advisor/in/education-loan/what-is-an-education-loan/
https://www.monev9.com/news/households/loans/de faulted-on-education-loan-know-the-
Consequences-31251.html
https://cleartax.in/educational loan
https://sbi.co.in/web/personal-banking/loans/education-loans
htps://v.hdfcbank.com/amp(personal/borrowipopular-loans/education -loan/educational-loan-
for-indian-education/index.html
https://www.federalbank.co.in/education-and-career-loans
https://www.questionpro.com/survey-templates/student-loan/
https://www.academia.edu/421 1 1522/customer satisfaction on Education Loan with
reference
to ICIC Bank in Ahmedabad
https://www.studocu.com/in/document/bharati-vidyapeeth-university/economics-ii indian-

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 APPENDIX

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 1. Name

2. Gender
MALE
FEMALE
3. Age
▪ 18-21
▪ 22-25
▪ 26-29
▪ Above 30
4. Educational Qualification
a)10th
b)12th
c)UG
d)PG
5. Family type
Nuclear
Joint

49 | P a g e
 6. Income of the family
a)Up to 3 lakh
b)3-5 lakh
c)5-10lakh
d)Above 10 lakh
7. How did you know about educational loan?
a) Friends or relative
b) Educational Institutions
c) Banks
d) Word of mouth
8. Category of Bank from which loan was availed
Public sector
Private sector
9. Parent educational qualification
a) 10th
b) 12th
c) UG
d) PG
10. Rate your level of awareness regarding the following aspects relating to educational loan
Highly aware | Aware| Neutral | Less aware |
Not aware
a) Procedure of documents
b) Repayment schedule
c)Rate of interest
d)Time taken for sanction
e) Borrowing limit
f) Collateral security
g) Processing fee

11. What is the limit of educational loan ?

a) 5-10lakh

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 b) 10-15lakh
c) 15-20lakh
d) 25-30lakh

12. What is the repayment period of loan

a) 5 years
b) 14 years
c) 15 years

13. Did you provide any collateral security to bank such as house property etc
YES
NO
14. Indicate your level satisfaction regarding the following aspects
Highly satisfied | Satisfied | Neutral | Less satisfied | Not
satisfied
a) Amount of loan
b) Time taken for sanction
c) Time taken for disbursement
d) Rate of interest
e) Repayment schedule
f) Terms of loan
g) Collateral security offered
h) Cooperation of Bank customers
15. Indicate your rating relating to the following problems while availing educational loan
Strongly agree | Agree | Neutral | Disagree | Strongly
disagree
a)Repayment burden is high
b)Difficult for financially backword
to secure loan
c)Processing charge is high
d)Need for good CIBIL score

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e)Amount received is insufficient
f)Many number of visits to banks
g)Difficult to prove as recognised college
h)Difficult to meet collateral security requirement

THANK YOU

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