Azar Zaidi was ecstatic when the acclaimed UK-based School of Oriental and African Studies (SOAS) accepted his application to pursue a course in Media Studies. Though the course fee and the cost of living in the UK would be steep, Zaidi was optimistic that an education loan would enable him to meet his funding needs. After much legwork, Zaidi put together all the documents required for the loan application. But alas, when he applied, the banks turned him down. Reflecting on his experience, Zaidi says: “For an education loan usually your parents stand guarantor. I was brought up by my grandmother. I think the banks had an issue with my grandmother’s advanced age.” Warning fellow students who might think that obtaining an education loan is a cakewalk, he says: “Banks also ask for collateral worth at least 100-125 per cent of the value of the loan. Make sure you can arrange that.”

With higher education, especially abroad, turning prohibitively expensive, a large number of students nowadays take recourse to an education loan. The government treats these loans by public sector banks (PSBs) as priority-sector lending, so PSBs too have an incentive to lend to students. Nonetheless, as Zaidi’s experience shows, many hurdles remain and admission to a prestigious institute is no guarantee that you will get a loan.

Basic features and procedures

Interest rates. They vary from 10 per cent to as high as 15.75 per cent. Both variable- and fixed-rate loans are available. A concession of 0.5 to 1 percentage point is given to girls students.

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