Higher costs push up education loan size

V Sajeev Kumar Kochi | Updated on January 24, 2018 Published on June 04, 2015

Harshala Chandorkar

Average sanctioned amount touches ₹6 lakh in 2014 against ₹4.5 lakh in 2013: CIBIL

A surge in education cost has led to an increase in the quantum of education loans, with the average sanctioned amount touching ₹6 lakh in the last quarter of 2014 against ₹4.5 lakh in Q4 of 2013.

According to the Credit Information Bureau (India) Ltd (CIBIL), the outstanding education credit, including for loans to study within the country and abroad, as on March 31 stood at ₹63,800 crore against ₹53,334 crore in April 2014.

Harshala Chandorkar, Senior Vice-President (Consumer Relations and Communications), said that 94 per cent of the market for extending loans is dominated by public sector banks and the remaining by private sector, NBFCs and others.

In recent times, loans of less than ₹1 lakh have reduced below 10 per cent of the total sanctions, while loans of more than ₹5 lakh have gone up to almost 30 per cent, she said.

Delinquency declines

However, she pointed out that the delinquency on education loans for 90-plus days amount overdue showed a decline at 2.70 per cent in Q4 of FY14 compared to 3.50 per cent in the same period of the previous fiscal.

Increased financial discipline among customers in making proper payments and considerable improvement in the overall credit quality have helped reduce delinquency on education loans, Chandorkar told reporters here on Thursday.

While the demand for education loans is need based, the number of new accounts opened in the calendar year is almost the same over the last five years. The third and fourth quarters of each calendar year witness spurt in education loans.

CIBIL is conducting several consumer education programmes targeting students to spread awareness on the need for financial discipline and its impact on their future financial aspirations.

Create awareness

It is vital to know that education loan is a credit facility provided to help one pursue higher education and it has to be repaid.

Like any other loans and credit cards, she said education loans are also reported to CIBIL and get reflected in the borrowers CIBIL report and impact the CIBIL Trans Union Score, which shows a borrowers’ credit history.

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Published on June 04, 2015
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