There is no denying that the first choice of the majority of the students for their abroad education loan has to be the SBI. After all, the SBI likewise other Government banks provides education loan benefits to the students.

A lot of students who borrow an SBI education loan to fund their higher studies often fail to gather sufficient information about the terms and conditions regarding the SBI education loan repayment process. And so the SBI education loan repayment becomes students' next topic of concern. 

The education loan repayment process followed by most government banks, including prominent ones like the SBI, is almost similar. The SBI education loan repayment terms and conditions discussed in this article will highlight some of the common doubts asked by students at all times.

A brief look at the education loan options in India

It is common knowledge that pursuing a postgraduate or undergraduate course abroad is no cheap affair, especially when it comes to higher education in countries like Canada and Germany where students need to arrange funds for their living expenses even before their student visa application is processed. This is the reason why a major percentage of students who aspire to study abroad opt for abroad education loans.

In India, abroad education loans are mainly divided into two categories

Education loans provided by major government banks like the SBI, Bank of Baroda, etc. are granted on the basis of collateral securities. This means, that you are required to pledge collateral for SBI education loans. 

The benefits of borrowing an abroad education loan in SBI outnumber those of unsecured education loans from private lenders. Also, the terms of SBI education loan eligibility criteria are much more student-friendly especially when it comes to co-applicants.

The following terms are critical in the SBI education loan repayment procedure.

  • Moratorium period
  • Loan Tenure

SBI Education Loan Repayment Process: Moratorium Period

The moratorium period is one of the highlights of the education loan procedure in SBI. A moratorium is only applicable to education loans due to the nature of this type of loan. When students borrow an education loan from SBI or any other similar government bank, they need not begin the loan repayment until after their course period gets over. They are also allowed an extension period of six months to a year, just so they could arrange the sufficient funds to begin their education loan repayment. So does this mean that the SBI education loan interest rate will not be charged for this period?

The SBI education loan interest rate is calculated on the basis of simple interest for the entire moratorium period which includes their entire course duration, plus six months/ a year post that. The moratorium period interest rate is applied to the education loan amount which is disbursed from time to time.

For example, if a loan amount of Rs 1 lakh is released at the start and the interest rate is 11% per annum, a total interest of Rs 11,000 per annum or Rs 33,000 for a three-year moratorium period will be accumulated.

The actual SBI education loan repayment process begins once the moratorium period is over. Students are allowed to make the remaining repayment in easy monthly installments.

SBI Education Loan Repayment Process: Loan Tenure

The repayment tenure granted to all types of SBI education loans is more or less the same. Students who borrow an SBI education loan to support their higher studies abroad are given a 15-year loan term. SBI does not charge students with any penalty if they repay the entire education loan before the tenure ends. 

To understand how can a loan tenure (less or more) impact your future, Use the EMI calculator by WeMakeScholars.

SBI Education Loan Interest Subsidy Schemes

All students who borrow an SBI education loan to fund their higher studies are eligible to avail of a subsidy under any one of the education loan interest subsidy schemes introduced by the government of India for students who meet the required eligibility criteria.

The government of India had introduced three major education loan interest subsidy schemes for students belonging to certain sections of the society who had borrowed an education loan to fund their higher studies in India, as well as abroad. These education loan interest subsidy schemes are

  1. Central Sector Interest Subsidy Scheme (CSIS)
  2. Padho Pardesh Interest Subsidy Scheme 
  3. Dr. Ambedkar Central Sector Scheme of Interest Subsidy

All the above-mentioned education loan interest rate subsidy schemes allow students to avail an exemption of the moratorium period interest of their SBI education loan repayment.

Students who are likely to qualify for an exemption under any of these schemes are also supposed to meet other requirements as well. Do make it a point to watch the 16th episode of Loanflix on YouTube. This episode clearly explains all the requirements students need to meet in order to qualify for an education loan interest subsidy.

Till about three-four years ago, government banks had an education loan repayment support scheme stating that students get to avail of a 1% rebate on regular payment of full interest during the moratorium period. However, this scheme was called off roughly about three-four years ago. So if you happen to come across any such terms that mention this scheme, please be aware that no such provision exists! 

This education loan repayment support scheme is obsolete now. You can now get to know how much amount you are supposed to repay by using the education loan repayment calculator facility available on government banks’ official websites.

The factors mentioned above are extremely crucial to the education loan repayment process of government banks and they will help you in the long run in your education loan process. To know specific details about the education loan process of your lending bank, get in touch with our team by requesting a callback.