*Sujata has cleared her CAT exam and wants to join the IIM but is faced with paucity of funds.

*Roshan has got an admission in a foreign university, but his parents do not have enough funds to ensure his passage abroad.
 
Cases like these are common and the government with its motto of ‘Ensuring quality higher education for all’ in consultation with Reserve Bank of India (RBI) and Indian Banker’s Association (IBA) has framed a Comprehensive Educational Loan Scheme to ensure that no deserving student is deprived of higher education for want of finances. The University Grants Commission (UGC) said that the new scheme covers all types of courses, including professional courses in schools and colleges in India and abroad.

Any student wishing to avail these loans can take a loan up to Rs.7.5 lakh for pursuing studies in the country and up to Rs 15 lakh for studies abroad. The UGC said that for loans up to Rs. 4 lakh no collateral or margin was required and the interest rate would not exceed the Prime Lending Rates (PLR).

For loans above Rs. 4 lakh, the interest rate would not exceed PLR plus 1%, the UGC said. According to the new guidelines, the loans are to be repaid over a period of five to seven years with a provision of one year grace period after the completion of studies.

The UGC said that the loans had tax benefits under section 80E of the Income Tax Act for a yearly limit of Rs 40,000 for both principal and the interest. The deduction will be available for a maximum period of eight years from the day of repayment. Loans taken for higher education - fulltime studies in any graduate or post-graduate, professional, and pure and applied science courses – will fall under the category of deduction.
     
The UGC has also asked colleges and universities to provide liberal financial support to meritorious needy students to pursue higher education. Under RBI guidelines, many reputed banks like Andhra Bank, Bank of India, State Bank of Hyderabad, and Corporation Bank have already launched educational loan schemes.