Engineering courses have always been amongst the top choices for students to opt for, but with the rising costs of education more and more students have been nudged to opt for education loans to help ease the financial burden.
Even though there is not much change in the basic tuition fee from what it was before but overheads like transportation cost, mess fees, etc. have resulted in an increase in the overall annual fees of colleges as the both put together mostly constitute at least 50 per cent of the annual fee paid by day scholars.
Indian Bank constitutes almost 80 per cent of its educational loans to engineering courses. “With seats in medical colleges remaining static, there is more demand for finance for engineering degrees,” said TM Bhasin, Chairman and Managing Director, Indian Bank as per the report of Times of India.
Credila Financial Services also reports more than half of the loans, 53 per cent, have been paid against those students who had opted for engineering courses, during the last fiscal year.
This practice is not only limited to big lenders but for smaller private lenders like City Union Bank as well. Banks such as Union Bank have been lending three to four lakh with over three fourths of loan taken for pursuing an engineering degree, informed N Kamakodi, CEO of the bank.
The trend seems to be growing more and more especially owing to the factor that students today have become more independent and want to make efforts to fund their own education.
The interest rates on educational loans vary between 12.5 per cent and 13.75 per cent. The greatest off-take lies in the four lakh category and below as these do not require any collateral and thus becomes easier for students to manage on their own.