Students entering top institutes have better chances of landing a job and paying up

Merit list can get you a discount on study loan

Students entering top institutes have better chances of landing a job and paying up

Getting through a reputed management institution might just get you a cheaper education loan as banks look to encourage meritorious students. Public sector banks are offering education loans to students of top institutes in the country at rates up to 200 basis points, or two percentage points, below those charged on regular education loans. Central Bank of India, which has an education loan book of around `1,680 crore, provides student loans at base rate plus 150-200 bps, while for students who get admission in a reputed college can get it at a discount of nearly 1% under its Cent Vidyarthi scheme. "We want to encourage meritorious students and therefore this discounted rate," says Ram Sangapure, general manager - retail banking at Central Bank. Most public sector banks have a list of 100-150 'reputed' institutions, which can be accessed on the respective websites of these lenders. State Bank of India (SBI), another major player in the education loan business, presents a list of about 109 such institutions. The list is largely populated by domestic management, medical and technology institutions. SBI offers its "scholar loans" at an interest rate of 12% compared with 13-14.5% for regular student loans. "Students under the scholar loans scheme are also exempted from producing collateral security for loans up to `4 lakh," said V Murali, general manager at SBI. The initiative sure helps deserving students, while for banks, the main attraction is a greater likelihood of repayment. "Banks have no prejudices for or against a particular institute. Students who get through these particular institutes have a high probability of landing good jobs, which ensures the loans are repaid on time. So this should be looked at as more of a method to avoid risk," says Suresh Sadagopan who runs Ladder 7, a financial planning firm. Sangapure of Central Bank echoes the sentiment. "These students get a 100% placement as soon as they step out of the campus. Thus, we do not need to worry about repayment of the loans. Besides, in our case, students have been very honest and have repaid the loan amounts within the stipulated time period. Apart from these, loans are available at discounted rates to girl students and students belonging to scheduled cast, scheduled tribes and other backward communities.