In an effort to encourage the meritorious students, who intend pursue their higher education, the revised ‘Model Education Loan Scheme’ has been introduced. This scheme disregards the parental income/ family wealth and assesses the employability and working potential of the deserving students as the main criteria for loan sanctioning. It should be noted that the non-merit students of technical and professional courses admitted under the management quota will be ineligible for the revised scheme.

Educational loans are considered to be a national investment as it goes towards development of the human capital which will have an impact on the national economy at the future date. In the same manner, the future earnings of the students will be used to repay the loan, thereby easing stress of repayment during the course of their higher education. This assessment system is under discussion and the Indian Bank’s Association is planning to fix the earning potential of each course to avoid subjectivity and ensure that the loan is sanctioned based on sound commercial logic.

The revised scheme has also addressed that disparity in job scenario by extending the loan repayment period to 10 years for loans up 7 Lakhs INR and 15 years for 7.5 Lakhs INR as opposed to the previous loan repayment period of five to seven years.

Educational loan for studying abroad will now be devoid of the processing fee and students will not be charged with a prepayment penalty if they are fortunate enough to earn more than what they anticipated.

The ‘Model Education Loan Scheme’ scheme is also available for student requiring less than 4 Lakhs INR. This loan will be collateral-free and again based on the student’s earning potential regardless of the family’s monetary situation. The collateral-free loan will be available for siblings provided they pass the assessment.