Engineering courses see maximum loan offtake

CHENNAI: With rising costs in engineering education, more students are opting for education loans. While the basic tuition fees for an engineering degree for an accredited course in Tamil Nadu has not changed in the past year and remains at around 45,000 a year, the overall annual fees has risen during the same period, due to increase in transportation costs and mess fees. 

"Both hostel and transport fees have risen by 10%-15% in the last on year," Philip Praveen, director, training and placement, Rajalakshmi Engineering College said. The share of money paid towards dorm facilities is 40% of the total annual fees by boarders while transportation accounts for 20% of the total annual fees paid by day scholars. 

"Both hostel and transport fees have risen by 10%-15% in the last on year," Philip Praveen, director, training and placement, Rajalakshmi Engineering College said. The share of money paid towards dorm facilities is 40% of the total annual fees by boarders while transportation accounts for 20% of the total annual fees paid by day scholars. 

For Credila Financial Services (an HDFC company), more than half of the loans (53%), during last fiscal went towards engineering courses as against 39% during 2012-13. "Engineering, medicine and technology related courses account for over 65% of the loans," co-founder and chief executive officer, Ajay Bohora of Credila Financial Services said. (See box) 

Even smaller private lenders like City Union Bank have seen good traction with respect to advances for engineering studies. As of September 2014, the bank's educational loan book stood at 175 crore. "Our average ticket size ranges from rupees three to four lakh with over three fourths of loan taken for pursuing an engineering degree," chief executive officer, N Kamakodi of the bank said. 

Even new entrants are seeing good growth in credit for engineering. Avanse Education Loans (a division of DHFL) has given funds for higher studies requirement for 1,000 students since the company's inception last May. "We have witnessed that today's youth is more independent than before, and thus wish to fund their own education rather than depending on their parents," CEO of Avanse Education Loans, Neeraj Saxena said. 

Interest rates on educational advances vary between 12.5% and 13.75% with the greatest offtake being in the 4 lakh category and below as these do not require any collateral. 

Source : http://timesofindia.indiatimes.com/city/chennai/Engineering-courses-see-maximum-loan-offtake/articleshow/45290385.cms