How to get an education LOAN for vocational courses

Here's what you must know in order to avail of loans that can help you pursue a professional course.

Vocational courses are those which train students for employment in fields that are manual or practical in nature. These are traditionally non-academic courses and often relate totally to a particular trade or occupation. They are also known as technical or professional programmes as the student is directly developing expertise in a specific vocation, technology or series of procedures.

Some popular vocational courses in India include beauty care and hair dressing, tailoring, mobile repairing, repairing of electronic appliances, electrical technician, library assistant and so on.

Training in these courses is offered by ITIs (Industrial Training Institutes), ITCs (Industrial Training Centres), polytechnic institutes and other technical bodies, which are either run by the government or private institutions.

Government statistics reflect about half of the students enrolled in these courses having left training in between for lack of funds. This highlights the importance and necessity of education loans for these courses. Banks have started providing loan schemes for vocational courses only recently after Indian Banks' Association came up with the Model Loan Scheme for Vocational education.

Courtesy:

Features of education loan schemes for vocational courses

Eligibility

• The student should be an Indian national having passed the Class X examination
• The student should have secured admission in a course recognised by the central or the state government, which preferably leads to a certificate, diploma or degree and is employment-oriented
• The course can have a tenure ranging from two to three months to three years.

Expenses

The expenses which are covered as part of the loan scheme are:

• Tuition fees or course fees
• Caution money
• Examination fees
• Library fees
• Laboratory fees
• Charges for the purchase of books, equipments and instruments
• Other expenditures required to complete the course

Loan amount

Depending upon the duration of the course, banks lend anywhere between Rs 50,000 to Rs 1,50,000 for these small ticket loans.

Security

No collateral or third party guarantee is asked for these loans, but, banks require the parent/ guardian to be the co-borrower.

Interest rate

Banks charge interest rates ranging from 12 per cent to 13.75 per cent for education loan schemes meant for vocational courses.

Repayment

Generally, these loans can be repaid in 3 to 7 years, though some banks limit the repayment period to 5 years.

Processing fees, margin, prepayment penalty

Banks have made these loans more affordable by waiving off extra expenses on them like processing fees, margin and prepayment penalty.

Some public sector banks which are providing education loans for vocational courses are:

• State Bank of India's Loan Scheme for Vocational Education and Training
• Andhra Bank's Model Scheme on Educational Loans for pursuing Vocational Courses
• Oriental Bank of Commerce's Oriental Education Loan Scheme for Vocational Courses
• Corporation Bank's CorpVidya scheme for vocational & skill development courses
• Abhyudaya Co-operative Bank Ltd.'s Scheme for Education Loan for Vocational Courses
• Punjab National Bank's PNB Kaamgar
• United Bank of India's United Education Loan Scheme for Vocational Education and Training
• Bank of Baroda's Baroda Education Loan for Vocational Education & Training