The most important factors a person considers while taking an education loan are:
• Need of collateral security
• Repayment and moratorium period
• Interest rate charged by the financing firm
An innovative product in this field has been recently introduced by Union Bank of India (UBI). Union Bank of India has launched a special education loan scheme which would cater to the requirements of students pursuing MBA in the prestigious and expensive B-schools. The loan is titled 'Union Education (Special Education Loan Scheme)'.
Characteristics of the 'Union Education (Special Education Loan Scheme)'
The scheme provides a fixed interest rate of 10.50% and also a concession of 50 basis points (0.50%) for female aspirants. The loan would be offered for a maximum of Rs. 15 lakh. This would thus encompass the high fees set by the B-schools.
Repayment and moratorium period
The repayment period of the loan is also high. The bank provides a repayment period of seven years for the loan whereas other banks on an average offer around four years. The moratorium period for the loan is the degree/course period plus one year or 6 months after attaining employment whichever is earlier.