Sudden increase in the interest rates for education loans! Parents’ burden up!
Posted on: 13/May/2014 4:34:21 PM
There is a sudden increase in the interest rates for education loans! This will put an additional burden on the already harried parents.
Nationalised banks as well as private banks offer education loans for the students especially pursuing engineering & medical degree courses. The parents have to pay the interest on the loan on monthly installments. The principal amount will be paid by the student after completing education.
Traditionally, the parents are inclined to approach for educational loans for their sons rather than daughters as they apprehend that the daughter may not repay the loan after marriage, etc. Just in order to counter this fear, the banks have lower interest (0.5% less) for girls/women.
The parents complain the the banks keep increasing the interest on education loan every year.
For example, Indian Bank offered education loan at 12.05% interest for boys & 12% for girls. Now, this has been raised by 0.5% for boys & 0.05% for girls.
On the average, the education loan is given as Rs. 1 Lakh per year.
Indian Overseas bank charges an interest rate of 12.25% for boys & 11.75% for girls.
A private bank, Tamil Nadu Mercantile Bank charges 14.25% interest for education loan for both boys & girls. These 2 banks have declared that there would be no upward revision on the interest rates.
State Bank of India charges an interest of 13.5% for loans up to Rs. 4 Lakhs for boys & 13% for girls. This was raised last year by 0.20%.
Liberalisation of economy is observed to be the main reason for increase in the interest rate for education loans.
The politicians do not seem to be too concerned on this extra burden for the parents.
