Global Economy Demands For People Finance Essay
Global Economy demands for people with higher education and degrees in addition to all the skills required for a person to fit in a job he has been appointed for. Gone are the days when people with no degrees made it to the top rung and took the world by storm. Bill Gates and Steve Jobs were college drop-outs and are classic examples of people who made it without the sought after degrees and certifications. However, a time has come where the companies and institutions are looking for talent with degrees that certify their level of education. Perhaps, the world will pop out a genius who has never gone beyond elementary level but that is only a dream that may never materialize.
There has been more inclination towards going to college and universities among the youth even in the developed countries in the recent years. The cost of attending college, though, has always been something to debate upon. The cost of being a university student in the USA, UK or Australia is far more dearer than in the developing countries like India where the fees is more affordable. A common man can send his children to Delhi University or Kumaon University without having to worry about filing a petition for bankruptcy.
However, a student opting to study abroad especially in the universities that have a great reputation, predominantly in the developed nations will need more than his or his family's income to realise his wish to go for higher studies. This is where the Education Loans come into picture. Education Loans, today are also sought after by students intending to study in private institutions in India that offer education at an exhorbitant price. Studying in medical, engineering and management colleges too have been expensive in comparison to colleges that provide conventional courses. Education Loan is required to study in these colleges too.
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. This model education loan scheme is an attempt to bring out a viable and sustainable bank loan scheme to meet the aspirations of our society.
Knowledge and information would be the driving force for economic growth in the coming years. The current rate of economic growth of the country demands technically and professionally trained man power in large numbers. In this backdrop, loans for education is seen as investments for economic development and prosperity. The model Education Loan Scheme was developed by the Indian Banks’ Association to help meritorious students pursue higher education in technical and professional courses. As the focus is on development of human capital, repayment of the loan is expected to come from future earnings of the student after completion of education. Hence the assessment of the loan will be based on employability and earning potential of the student upon completion of the course and not the parental income/family wealth.
In simple language, we can define this loan as the financial assistant provided by the bank to the students to complete their whole education if the students fulfil certain criteria. The main objective of this loan is that each deserving student in India can fulfil his or her dream of study irrespective of his financial status. The main criterion which makes this loan different from home loan or other types of loan is the easier terms and conditions for education loan.
In other words, this loan is meant to provide the basic education for poor and to provide the higher study to the deserving students on nominal interest rates.an
An education loan is a loan taken to help pay for an education, usually at a college or trade school, but may also be used to pay for private schools or prep schools as well. The education loan is available in several different types
The student should be an Indian National.
Should have secured admission to a higher education course in recognized institutions in India or Abroad through Entrance Test/ Merit Based Selection process after completion of HSC(10 plus 2 or equivalent). However, entrance test or selection purely based on marks obtained in qualifying examination may not be the criterion for admission to some of the post graduate courses or research programmes. In such cases, banks will have to adopt appropriate criteria based on employability and reputation of the institution concerned
Note: It would be in order for banks to consider a meritorious student (who qualifies for a seat under merit quota) eligible for loan under this scheme even if the student chooses to pursue a course under Management Quota.
a. Studies in India: (Indicative list)
Approved courses leading to graduate/ post graduate degree and P G diplomas conducted by recognized colleges/ universities recognized
by UGC/ Govt./ AICTE/ AIBMS/ ICMR etc.
Courses like ICWA, CA, CFA etc.
Courses conducted by IIMs, IITs, IISc, XLRI. NIFT,NID etc.
Regular Degree/Diploma courses like Aeronautical, pilot training, shipping, degree/diploma in nursing or any other discipline approved by Director General of Civil Aviation/Shipping/Indian Nursing Council or any other regulatory body as the case may be, if the course is pursued in India.
Approved courses offered in India by reputed foreign universities.
The above list is indicative in nature. Banks may approve other job oriented courses leading to technical/ professional degrees, post graduate degrees/diplomas offered by recognized institutions under this scheme.
Courses other than the above offered by reputed institutions may also be considered on the basis of employability.
Studies abroad :-
Graduation : For job oriented professional/ technical
courses offered by reputed universities.
Post graduation: MCA, MBA, MS, etc.
Courses conducted by CIMA- London, CPA in USA etc.
Degree/diploma courses like aeronautical, pilot training, shipping etc provided these are recognized by competent regulatory bodies in India/abroad for the purpose of employment in India/abroad.
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.
++ For courses under Management quota seats considered under the scheme, fees as approved by the State Government/Government approved regulatory body for payment seats will be taken, subject to viability of repayment.
* Reasonable lodging and boarding charges will be considered in case the student chooses / is required to opt for outside accommodation.
** These expenses could be considered subject to the condition that the amount does not exceed 10% of the total tuition fees for the entire course.
*** It is likely that expenditure under Item Nos. vi, vii & viii above may not be available in the schedule of fees and charges prescribed by the college authorities. Therefore, a realistic assessment may be made of the requirement under these heads. However, the maximum expenses included under vi, vii & viii may be capped at 20% of the total tuition fees payable for completion of the course.
QUANTUM OF FINANCE:
Need based finance to meet the expenses worked out as per para 4.3 above will be considered taking in to account margins as per para 6 subject to the following ceilings:
- Studies in India - Maximum upto ₹ 10 lakhs.
- Studies Abroad - Maximum upto ₹ 20 lakhs.
The ceilings fixed for studies in India and Abroad correspond to the limits fixed by the RBI for treatment as priority sector lending. Banks may consider higher quantum of loan on course to course basis (eg: courses in IIMs, ISB etc). It may also be noted that even loans in excess of ₹ 10 lakhs qualify for interest subsidy under Central Sector Interest Subsidy Scheme for loans up to ₹ 10 lakhs.
Upto ₹ 4 lakhs Nil
Above ₹ 4 lakhs Studies in India 5%
Studies Abroad 15%
- Scholarship/ assistantship to be included in margin.
Margin may be brought-in on year-to-year basis as and when disbursements are made on a pro-rata basis.
Upto ₹ 4 lakhs Parents to be joint borrower(s).
Above ₹ 4 lakhs
and upto ₹ 7.5 lakhs Besides the parent(s) executing the documents as joint borrower(s) , collateral security in the form of suitable third party guarantee will be taken. The bank may, at its discretion, in exceptional cases, waive third party guarantee if satisfied with the net-worth / means of parent/s who would be executing the document as joint borrower(s).
Above ₹ 7.5 lakhs Parent(s) to be joint borrower(s) Tangible collateral security of suitable value acceptable to bank, along with the assignment of future income of the student for payment of instalments.
The loan documents should be executed by both the student and the parent/ guardian as joint-borrower.
The security can be in the form of land/ building/ Govt. securities/ Public Sector Bonds/Units of UTI, NSC, KVP, life policy, gold, shares/mutual fund units/debentures, bank deposit in the name of student/ parent/ guardian / any other third party or any other tangible security acceptable to the bank with suitable margin.
Wherever the land/ building is already mortgaged, the unencumbered portion can be taken as security on second charge basis provided it covers the required loan amount
RATE OF INTEREST :
Interest to be charged at rates linked to the Base rate as decided by individual banks
Simple interest to be charged during the study period and up to commencement of repayment.
Note: 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 principal amount borrowed while fixing EMI for repayment.
APPRAISAL / SANCTION/ DISBURSEMENT :
Applications will be received either directly at bank branches or through on-line mode. Upon receipt of application, standard acknowledgement giving a reference number will be issued. The acknowledgement will contain contact details of the bank official who, could be contacted in case of delay in disposal of application.
Normally, sanction/rejection will be communicated within 15 days of receipt duly completed application with supporting documents.
In the normal course, while appraising the loan, the future income prospect of the student only will be looked into.
Rejection of loan application, if any, shall be done with the concurrence of the controlling authority of the branch concerned and conveyed to the student stating reason for rejection.
Students may submit their loan applications either at the bank branches near to the residence of parents or to the educational institution. However, after the loan is sanctioned, the cases be transferred to the bank branch near to the institution for follow up with student / institution. The KYC compliance for the purpose has to be done by the branch nearest to the residence of parents.
The loan to be disbursed in stages as per the requirement/ demand directly to the Institutions/ Vendors of equipments/ instruments to the extent possible.
Course period + 1 year or 6 months after getting job, whichever is earlier.
If the student is not able to complete the course within the scheduled time, extension of time for completion of course may be permitted for a maximum period of 2 years. If the student is not able to complete the course for reasons beyond his control, sanctioning authority may at his discretion consider such extensions as may be deemed necessary to complete the course. In case the student discontinues the course midway, appropriate repayment schedule will be worked out by the bank in consultation with the student/parent
The accrued interest during the repayment holiday period to be added to the principal and repayment in Equated Monthly Instalments (EMI) fixed.
1% interest concession may be provided by the bank, if interest is serviced during the study period and subsequent moratorium period prior to commencement of repayment. Repayment of the loan will be in equated monthly instalments for periods as under:
For loans upto ₹ 7.5 lakhs - upto 10 years
For loans above ₹ 7.5 lakhs - upto 15 years
While EMI based repayment is the generally accepted practice, many times the salary levels at the start of the career may not facilitate comfortable payment of EMI in certain cases (e.g. professionals like Doctors). Telescoping of repayment with stepped up instalments with passage of time may be considered in such cases.
Note: No prepayment penalty will be levied for prepayment of loan any time during the repayment period.
Banks may, with the consent of the student, arrange for life insurance policy on the students availing Education Loan. Individual Banks may work out the modalities with insurance companies.
Banks to contact college / university authorities to obtain progress report on the student at regular intervals in respect of those who have availed loans. In case of studies abroad, bank may obtain the SSN/Unique Identification Number (UIN)/Identity Card and note the same in the bank’s records. The UID number issued by UIDIA may also be captured in bank’s system as and when available. Banks to enter into Memorandum of Understanding (MoU) with the educational institutions to provide the educational loans to the students. There should be an annual review of the asset quality of educational loans between banks and educational institution.
PROCESSING CHARGES :
No processing / upfront charges may be levied on loans sanctioned under the scheme. (Banks may charge processing fee for considering loans for studies abroad. The fee would however, be refunded upon the student taking up the course)
Banks can also issue the capability certificate for students going abroad for higher studies. For this purpose financial and other supporting documents may be obtained from applicant, if required.
(Some of the foreign universities require the students to submit a certificate from their bankers about the sponsors' solvency/ financial capability, with a view to ensure that the sponsors of the students going abroad for higher studies are capable of meeting the expenses till completion of studies.)
Sanction of loan to more than one child from the same family
Existence of an earlier education loan to the brother(s) and/or sister(s) will not affect the eligibility of another meritorious student from the same family obtaining education loan as per this scheme from the bank.
There is no specific restriction with regard to the age of the student to be eligible for education loan. However, if the student was a minor while the parent executed
documents for the loan, the bank will obtain a letter of ratification from him/her upon attaining majority.
Top up loans
Banks may consider top up loans to students pursuing further studies within the overall eligibility limit, if such further studies are commenced during the moratorium period of the first loan. The repayment of the loan will commence after the completion of the second course and further moratorium period, as provided under the scheme.
The joint borrower should normally be parent(s)/guardian of the student borrower. In case of a married person, joint borrower can be either spouse or the parent(s)/parents-in-law.
No Due Certificate
No due certificate will not be insisted upon as a pre-condition for considering education loan. However, banks may obtain a declaration/ an affidavit confirming that no loans are availed from other banks.
Disposal of loan application
Loan applications have to be disposed of in the normal course within a period of 15 days to 1 month, but not exceeding the time norms stipulated for disposing of loan applications under priority sector lending.
REVIEW OF LITERATURE
The objectives of this paper is to study the practices followed in selecting the beneficiary student for grant of education loan for pursuing higher studies in India; problems faced by applicants; background of the problematic borrowers and steps taken to overcome the problems in getting loans. This research paper uses probit model for statistical analysis. From the analysis it can be concluded that a student pursuing postgraduate professional courses is more likely to get education loan than a student pursuing undergraduate course. Similarly, banks prefer giving loans to students seeking admission in government owned/approved institution. However, there does not seem to be any discrimination between students with or without prior work experience, for getting education loan. The study further reveals the reluctance of private sector banks in extending loans. This paper is useful to aspiring students.
International Journal of Management and Strategy (source)
Student loans are becoming more of a problem for college students across many campuses’ nation wide because of increasing tuition costs and decreasing amounts of grants and scholarships. Data was collected from a campus online survey and focus groups were conducted with University of Illinois Students, both methods focued on student loans and how they affects a college student’s consumption. The results of the research have shown that college students at this university are not worried about their student loans and it does not affect their current consumption greatly, but does affect larger purchase decisions slightly. This finding has shown that college students should possibly be more aware of their student loans while attending college.
(source) Student Loans and their Effects on College Consumption University of Illinois at Urbana-Champaign
Education loans form a part of the priority 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 terms of allocations. And in the pursuit of raising access ratio in higher education, private institutions entered the field andthere has been steep rise in user charges in most-sought-after professional courses like engineering and management in India in the post-reforms period. In the light of the 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. This paper is a humble attempt to review its growth & performance during the period 2004-10 through a case study of scheduled commercial banks in Chandigarh(2007); to enlist deficiencies in the scheme and suggest some policy options in this regard. The main conclusion of the study is that the scheme is run purely on commercial basis and does not offer any soft options for the meritorious and the needy.Key words: Education Loans - priority loan advances - Education Loan Scheme
Shastree (2004) conceives that there had been three waves of the privatization drive in higher education in the world, as mentioned below –
The first wave of growth in contemporary HE was noticed in Latin America, which involved Catholic Universities with a religious role. Later Indonesia, Tanzania, Ukraine etc. followed.
The second wave was more a `reaction to the perceived massification’ or `decline in quality of public higher education’, which attracted private sector to the higher education arena.
The third wave in the later twentieth and early twenty-first century mostly captured rising demand for higher education that exceeded the supply of public or free higher education. As the public budgets were unable to meet the still rapidly growing demand for higher education, students paid for finding out a viable alternative.
Nyborg (2003) is of the view that public responsibilities must remain a pillar of European Higher Education Policies as Europe faces the challenges of the global marketplace and threat to higher education as a public good. He opines that the public authorities should have substantial financial responsibility for higher education. Public funds must be supplemented by private money, but should never be a pretext for the public authorities not to provide substantial public resources. The public authorities should bear the main responsibility for ensuring equal opportunities in higher education, including access policies and student finance. These responsibilities are crucial for making higher education as much of a public good as possible. While there should be no monopoly on higher education provision, the public authorities must contribute to the provision of good educational opportunities in reasonable conditions to ensure that higher education encompasses a wide variety of disciplines.
Hilman(2003) rightly comments that the alternative to free/subsidized access to publicly financed education is private payment. Student may, however, lack the means to pay for their education and may wish to borrow to finance their education costs. The private lenders may be unwilling to lend for studies. The impediment to lending, according to him, is asymmetric information that results in moral hazard. The asymmetric information, that results in moral hazard. The asymmetric information is that students know their own effort input and motivation, but lenders can observe neither effort input into studying nor the motivation to study. Repayment of loans based on the expectation of the future earnings, and the risk of default facing the lender depends on the observed effort of the student in studying and preparing for exams. A moral hazard problem arises because, according to him, it is the non-observable behavior of the student that determines whether education will provide an income or not which, in turn, will anticipate the repayment of loan. He opines that this moral hazard introduces government involvement into student loans. Government can provide loans directly through a government agency or security to the private lender by guaranteeing repayment of loans. Accordingly, he advocates government-supported student loans on the following grounds:
equity in sharing the costs of higher education; and
efficiency by making students more serious with respect to their education and careers. .
Albretch and Ziderman (1995) analysed the government supported deferred-cost-recovery programs of twenty different countries on the basis of rate of return of these schemes, results of which are summarised below:
in only six loan programs the loan recovery ratio exceeded 50 percent (incase of Colombia’ Hong Kong, UK, Norway, Barbados & Sweden)
in ten programs the loan recovery ratio was 30 percent or less (Chile, Honduras, Jamaica, Brazil, Indonesia, Venezuela, Kenya, Sweden etc.)Carlson (1992) presents broadly the similar results of loan recovery for selected loan schemes from Latin America. Taking account of loan repayments, default and administrative costs, he estimates overall loan recovery of 52% for both Chile (1989) and Colombia (1985), 34% for Brazil (1989), 30% for Jamaica (1988) and 27% for Honduras (1991).
They concluded that the financial efficacy of any loan scheme depends certainly on the ‘loan- recovery-ratio’: the extent to which loan is repaid in full, or in other words how much cost of burden of higher education is borne by the government. According to them, a successful support program needs to be targeted effectively to those who are deemed most deserving of the support. Without effective targeting, growing enrolments on one hand and less- than-full –loan recovery on the other hand, will put unsustainable pressures on the limited loan funds.
Tilak (1996) found many of the arguments made against student loans to be valid in India; and therefore, he did not lend support in favor of student loans. Student loans, without any carefully formulated policy, may affect the access and equity adversely. Even American critics of student loans express their apprehensions in this regard while saying that student loans may lead to inequality of access by restricting participation of (ethnic) minorities in higher education. He visualized student loans as a method of generating finances for higher education than a measure to improve access & equity. Ram (1996) observed that the Students Loan Programme was quite successful in Singapore. He noticed in this regard that full employment, continuous demand for skills, labor shortages and higher economic returns to educational investment all tantamount to a degree of economic development in case of Singapore, where the concept of loans for education becomes acceptable with little persuasion and public debate. Actually, Ram agrees with the school of thought (few researchers) which opines that a country could afford to introduce student loans only at a given level of development.
Research is a systematic and self critical enquiry of Facts for some specific purpose. The enquiry is aimed at understanding a things or phenomenon or solving a problem. When an enquiry is aimed at understanding it is termed as basis or fundamental research. When pursue knowledge and may or may not have practical or commercial use.
When the enquiry is aimed at applying the available knowledge for practical or commercial use or solving a problem faced in practice, it is termed as applied research
Research is a systematic and objective proc of collection, compilation, analysis, and interpretation of facts for some specific purpose.
The size of sample which has taken for the purpose to know the awareness level between students are 200 samples.
Method of sampling:
The sample method which has been taken by me to study on the topic "Awareness of Educational Loan among the students of Asian Business School, Sector 127, Noida (UP)" are as follows. I have taken three sampling methods as Convenient, Area and Multi stage so that the study could be effective.
(a) Convenient sampling:- It is a non-probability sampling method that attempts to obtain a sample of convenient elements. The selection of sampling units is left primarily to the interviewer. Often; respondents are selected because they happen to be in the right place at the right time. Convenient sampling is the least expensive and least time consuming of all sampling technique. The sampling units are accessible, easy to measure, and cooperative.
(c) Multi-stage sampling: - Multi-stage sampling as the name implies, involves the selection of units in more than one stage. In this study, I took multi stage sampling because of taking the sample of employees in insurance sector from each department so In such a sampling, the population consists of a number of first stage units, called primary sampling units (PSU). Each of these PSUs consists of a number of second stage units. (a) a sample is taken from the PSUs, than a sample is taken of the second stage units. This process continuous until the selection of the final sampling units. It may be noted that at each of sampling, a sample can be selected with or without stratification.
Area of work:
The area of work where I have worked to study the "Awareness of Educational Loan among the students of Asian Business School, Sector 127, Noida (UP)"
Research design is a framework or blueprint for conducting the research project. It details the procedures necessary for obtaining for information needed to structure or solve research problems. Although a broad approach to the problem already has been developed, the research design specifies the details of implementing that approach. A research design lays the foundation for conducting the project. A good research design will ensure that the marketing research project is conducted effectively and efficiently. To study "Awareness of Educational Loan among the students of Asian Business School, Sector 127, Noida (UP)" I have used these three research design which makes the study effectively and accurately. These are discussed as below:
Exploratory research:- The objectives of exploratory research is to explore or search through a problem or situation to provide insights and understanding. Exploratory research is used to formulate a problem or define a problem more precisely.
Casual research:- it is used to obtain evidence of cause and effect relationship. Casual research is appropriate to understand which variables are the cause and which variables are the effect of phenomenon and to determine the nature of the relationship between the casual variables and the effects to be predicted.
Hypothesis is a predictive statement about the population under study which is capable of being verified on the basis of facts through statistical analysis. To test a hypothesis facts or data are collected from the study of a sample taken from the population. A hypothesis is assumed to be true for its verification.
A hypothesis about population parameter is known as statistical hypothesis. A statistical hypothesis is of two types:
Null hypothesis: The term null refers to invalid or negligible of insignificant. In testing significance of difference between two factors, a null hypothesis states that there is no significant difference between the two factors. A null hypothesis is denoted by Ho
Alternative hypothesis: All the alternative available against a null hypothesis are called alternative hypothesis. An alternative hypothesis is denoted by H1
Testing of hypothesis for the study "awareness of education loan among the students of asian business school sector 127"
Hypothesis 1: students having lack of knowledge about education loan will have low interest towards education loan.
Hypothesis 2: The eligibility criteria should be more effective .
Hypothesis 3: Level of awareness in students preferring education loan for higher studies in abroad was found more as compared to the student preferring higher studies in India.
Ho: There is a significance difference between awareness level of education loan between Bachelor courses and Master’s courses among students
H1: There is no significance difference between awareness level of education loan between Bachelor courses and Master’s courses among students
DATA COLLECTION METHOD
The data related to the customer again consists of two sub divisions.
Primary data - This is the original source of the information, First hand in nature where the researcher himself goes to different people covered under the sample and collects the data himself. Primary data is collected through the following method.
1. Observation method: this data has collected though observing the 200 students
2. Questioning method: it can be of two types-
(a) Personal interview method: it requires a person known as the interviewer asking questions generally in face to face contacts to the other person or persons. The sort of interview may be in the form of direct personal investigation. In the case of direct personal investigation the interviewer has to collect the information personally from the sources concerned.
(b) Questionnaire method: a questionnaire is a form containing a series of questions and providing space for their replies to be filled in by the respondent himself. Schedule is the name usually given to a set of questions which are asked and filled by an interviewer in a face to face situation with another person.
2. Secondary data - Secondary data is one, which is derived by any other person or institute or body. It already exists and processed. The researcher has only to decide that how it will be handy to appraise his project.
The various method of collection of secondary data are :
National source such as Government source, Commercial source, Industry source
DATA ANALYSIS & INTERPRETATION
1. Name: ____________________________
The above pie chart clearly shows that out of the 200 respondents, 60% of the respondents are male and 40% are female.
3. Marital Status:
Out of the
4. Type the course you are Pursuing
5. You have a bank account
6. You have been using your account since
Less than 6 months
6 months to 1 year
1 year to 2 years
2 years and above
7. Type of account
8. Type of the bank
9. Your awareness about education loan
The researcher found that out of 200 respondents 15% pursues excellent knowledge about education loan whereas there was a higher %age of respondents who have moderate knowledge of education loan coming to 65% and 20% respondents were found to have poor knowledge of education loan.
10. Your awareness about the eligibility criteria required
The above analysis shows that out of 200 respondents 20% pursues excellent knowledge about eligibility criteria whereas there was a higher %age of respondents who have moderate knowledge of eligibility criteria was 65% and 20% respondents were found to have poor knowledge of eligibility criteria.
11. From where did you get the information about education loan
The above analysis shows that that out of 200 respondents 10% respondents got information about education loan through print media whereas 15% from Electronic Media, 25% from relatives and 50% from friends respectively.
12. Give your Opinions on each factor stated below for education loan
Simplifed Application Procedure
The above analysis shows that that out of 200 respondents 15% respondents each prefer brand & brand image respectively whereas there were 35% respondents prefer interest rates and processing charges respectively and there were 25% respondents who preferred margin money. It was also found that 25% respondents preferred simplified application procedure.
13. Reasons for Lack of awareness about education loan
Lack of Interest
Lack of Advertisement
Lack of knowledge
The above analysis shows that 15% respondents have lack of awareness about education loan due to lack of interest, 25% due to lack of advertisement, 35% due to lack of knowledge, respectively whereas 25%. 25% respondents were found having lack of awareness due to some unspecified reasons.
The researcher found that out of 200 respondents 30 respondents pursues excellent knowledge about education loan whereas there was a higher number of respondents who have moderate knowledge of education loan coming to 130 and 40 respondents were found to have poor knowledge of education loan.
The researcher found that out of 200 respondents 40 pursues excellent knowledge about eligibility criteria whereas there was a higher number of respondents who have moderate knowledge of eligibility criteria was 130 and 40 respondents were found to have poor knowledge of eligibility criteria
The findings shows that out of 200 respondents 20 respondents got information about education loan through print media whereas 30 from Electronic Media, 50 from relatives and 100 from friends respectively.
The researcher found that out of 200 respondents 30 respondents each prefer brand & brand image respectively whereas there were 70 respondents prefer interest rates and processing charges respectively and there were 50 respondents who preferred margin money. It was also found that 50 respondents preferred simplified application procedure.
The above analysis shows that 30 respondents have lack of awareness about education loan due to lack of interest, 50 due to lack of advertisement, 35% due to lack of knowledge, respectively whereas 50, 50 respondents were found having lack of awareness due to some unspecified reasons.
CONCLUSION AND SUGGESTIONS.
The Education Loan market in India has grown at a rapid and alarming rate of over 40% over the period of last 4 yrs and from the e reports from some of the industry experts, it is evident that there is very little chance that there will be any significant decline in growth rates in the future.
Therefore, it becomes important at this point in time to examine the key factors that have been instrumental in triggering this high growth period .there are several reasons that can be considered as having attributed to the growth of the Education Loan market..on the demand side.. The first and the most important factor for the growth has been faster rise in incomes as compared to property prices thus making housing more affordable.
Most of the housing finance companies in India have introduced several new Education Loan products in order to meet the needs of a variety of a customer. The various Education Loan schemes have their different interest rates in the market. The customer can choose those schemes which he feels is good for him and have the capacity to repay it on the specified time period. If unwavering liability is what suits your profile ,then fixed interest rate Education Loan should be the natural choice. On the other hand, if you can handle risks and are willing to go the extra mile to benefit from any further fall in interest rate, floating rate Education Loans will be best suited for you.
Finally some recommendations for the banks are as follows:-
To make people aware about the benefits of education loan, following activities of advertisement should be done through;
Hoardings and Banner.
Stall in trade fares.
Distribution of leaflets containing detailed information.
Processing in getting Education Loan should be easier so that it can be effective.
EMI should be calculated on the monthly income of an individual.
People should be aware about the Tax benefits acquiring by Education Loan.
The bank should invite a system where customer can online apply for Education loan.
The bank should provide online details of education loan to the customers.
The Bank should conduct monthly/quarterly seminars in different colleges and universities to create awareness about education loan.
The loan processing should be more students friendly to increase motivation level of students and also to create interest towards education loan.
The Margin money should be less in terms of students preferring higher education in India.