The demand of education loans for studying abroad has not been affected by the uncertainty prevailing in the job market and increased cost of overseas education due to the appreciating value of dollar.
However senior officials from banks say that there might be a reduction in the number of people applying for such loans. In terms of the number of applications, education loan for overseas account to 10%-20% of the overall educational loan portfolio of banks. But the total amount for these loans is higher than those of education loans for studying within the country.
Education loans for overseas are normally averaged at Rs 10 lakh and the tenure ranges from 5 to 7 years. The applications for these loans are high during May-June as the first session in foreign countries starts in August or September.
The country's largest lender, State Bank of India (SBI) has reported a growth of 50% to Rs 6,500 crore in its overall educational loan portfolio. The bank has been clocking a growth rate of 35-45% in this segment from the past three years.
SBI's Chief General Manager, Personal Banking, Mr P. Nandakumaran said, "We have not experienced any slow down for overseas education loans so far. Overseas loans account for less than 20 per cent of total loan portfolio. We anticipate the growth impetus to continue, as there is a continuous demand for quality education and have estimated a growth of about 36 per cent in 2009-10. We expect overseas education loans to contribute at least 20 per cent of the total growth."
Allahabad Bank's Chairman and Managing Director, Mr K.R. Kamath said that the current slowdown would not have an impact on overseas education as the courses are usually extended for 2-3 years and scenario is expected to improve by the time of course end.
Executive Director of United Bank of India, Mr T.M. Bhasin said, "There has been a 20 percent drop in the number of applicants for GRE and GMAT. However, the reputed universities abroad have not reduced the number of seats and people are still going for quality education abroad so we do not anticipate a significant drop in the number of applicants."
UCO Bank's Chairman and Managing Director Mr S.K. Goel said, "Though there has been a shift from global institutes to domestic ones the demand for recognized universities abroad still remains high."
The bank's overseas education loans account for 2% of the overall educational loan portfolio in terms of the number of applicants but in terms of quantum, they amount to 8-10% of the total education loan portfolio.