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shivakumar.d (production manager)     31 August 2014

How to getride off educational loan

Hello Sir/madam,

My son took education loan up to Rs.2,32,000 from 14-09-2006 to 16-09-08 in Karnataka. Thenafter my son went for doing his higher education i.e. M.S in Manipal University(Deemed university),Manipal,Karnataka,without taking loan from any bank and any subsidy from state/central Government.I requested bank to give Holiday period during his M.S.study plus one year extra moratorium period ,they considered and gave holiday period.He has completed M.S. in  7.23GPA during sept 2012.

One fine day bank manager came to my house,I was not at home,then myself went to bank manager and explained everything,he has obliged.The bank is rescheduled for the tenure of 10 years to the tune of EMI Rs.7084 p.m.my son paid uptodate,No NPA.If he continuous to pay EMI p.m upto 10 years,he would have to pay total amounting Rs.8,50,080 for 10 years,is it worth of paying for the education loan for just Rs.2,32,000?

Bank started to recover education loan amount during FEB 2014,still my son do not have job becoz of recession period,any how my son has paid 4 installments,still he is jobless,he is trying hard to find job by attending bulk interviews,but no result ,even I too jobless,we are living with littlebit agricultural income and taking unsecured loans from others.

Statement given by our former finance minister Mr.Chidambram as follows:( Hon’ble Members will recall that my predecessor, Shri Pranab Mukherjee, had, in the Budget of 2009-10, introduced the Central Scheme for Interest Subsidy (CSIS) in respect of education loans disbursed after 1.4.2009 under which Government took over the burden of interest for the duration of the period of study and a little beyond).

Again Central Government published that  the liability  will takeover for outstanding interest as on 31.12.2013, but the borrower would have to pay interest from the period after 1.1.2014,if student has availed loan before 2009,my son has eligibility for this.

The bank sent a letter asking some documents your son is eligible to get interest subsidy during UPA Government,becoz of eligibility as per UPA government directions,I gave all the documents,but now the bank is telling that u r not the defaulter,u will not get interest subsidy,becoz of latest circulars from BJP Government.I told manager u said before u r eligible,now u r telling u r not eligible ,what is this ambiguity?bank manager said that if ur son is jobless and defaulter,thenonly ur son is eligible for subsidy as per new rules framed by BJP government,I said that my son has taken education loan before 2009,and he is jobless,the recovery should start from 2011,he said,your son has taken holiday period during his higher studies,that is why,there is no default.

Now my son and myself not able to pay further onwards.Let it become NPA.

Pls suggest me in this regard and clarify?

Tell me what to do? Where to approach? 


 2 Replies

Kumar Doab (FIN)     31 August 2014

The stand of the bank seems to be right.

Pls note that default/deliquency may remain in credit history permanently.

Therefore it is more sensible to continue to pay EMI.

You may wait for other experts/members to post their views.


karnav shah (Executive MBA (Criminology) MBA (Finance) Doctorate (Management))     01 September 2014

Hello It is not wise to go default if you are not having genuine reason. On reality basis, if you really havr no money then write letter to bank reg. Your financial situation and infor. That due to given reason you are facing difficulties paying emi hence you wish to go foe one time settlement. Emphasis on a word that your son is not willfull default and he is ready to accept any job if bank can offer and out of that your son may repay. If you have not mortgage any property then thete is nothing really bank can do for 3/5 years But if yourr son, co borrower and guarantor has any property theb bank may claime through civil.court. Civil court is expensive way for bank for the said amount hence bank will offer settlement. Remember in education loan element of cheating does not exist in general as amount goes to institute except some other circumstances. Send email at chintaless@gmaul.com for more advise. NPA may cause to damage to your credit that other bank may not offer loan to borrower. But after 7 year generally NPA default name from Cbil be removed. However this info. Needs to be varified if it has changed.

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