Union Bank Education Loan in India Pro and Cons
Union Bank Education Loan in India
about an year ago I made this article about Union bank’s wonderful loan product because that was the first ever time a public sector Bank was offering 40 LS of education loan without any collateral for abroad studies.
Union Bank Education Loan in India
The article went very well more than 42,000 people watched it and the entire student Community started talking about union banks education loan product and a lot of students for fall 2023 opted for this,
but what followed was a series of horrible experiences and torture for these students when they went to the bank to ask for loan disbursement in this article I’ll talk about how uninterested public Bank staff who were worried about recovering a non-pedal loan gave a series of excuses to students to push them away and the flaws in the product which led to this do watch the full article.
Hello all, this is Damini co-founder of easy loan pay India’s largest education Finance platform we started in 2015 with support from government of India and we help students like you to find scholarships and Education Loans for your higher studies abroad.
Hence our articles are the most trusted source of information than watching some random vlogger even though we shared the information through these articles but if any Bank staff denies accepting anything shared by us we are just a callway just call us and we will speak to the bank staff and sort it out for you.
Loan Flix web series talks about everything about Education Loans and this article is to let you know about the issues my post sanction team had been receiving with respect to Union Bank let’s start before I start this article.
I want you to listen to this, hello all I wanted to share my recent experience of applying educational loan from Union Bank of India.
I should say that the bank staffs and managers are completely unaware of the terms and conditions of educational policy they’ll say yes to you unless and until the loan is sanctioned only after the loan is sanctioned the real torture begins.
what happened with me when the fee deadline date was announced of my college as I went to the bank for disbursement of rupes 10 lakh. they saw my file and they said please arrange for R 3.5 LHS only.
Then we’ll give you the rest of 6.5 lakh rupees they made me and my parents run for 4 days and then they introduced the Clause the margin money one of the most stupidest Clause that mentions that only 35% of money is arranged by the student.
The rest 65 will be given by the bank I don’t think so that it is possible for any student to arrange LHS of rupees in a very short notice of time if bank would have told me this earlier I wouldn’t have proceeded.
But they did not inform me I could not arrange the money and at last the bank staff also could not help me they did not help me so because of this I lost an opportunity as the fee deadline date has already passed.
so I’ll tell you this is just a trap guys don’t fall into this trap they’ll just tell you that this is an unsecure loan but what is the the point of getting the loan sanctioned if you’re not getting the disbursement.
I hope this article give you a brief overview of the issu students face while taking disbursement from Union bank. now let me explain you the major problem which is pointed out by the student that is loan margin so the standard loan margin in Union Bank is 15%.
Which theoretically doesn’t seem very high because for almost all the public sector Banks. it is either 10% or 15% but let’s go back a little to understand how exactly the loan margin works. now let’s say your total cost of education is 80 lakh which includes your tution fee, your living, expenses and any other cost which you want to add.
Now one thing you need to know here is that Banks don’t go by the figures which you say they want an official proof for the same.
Now let’s say if you say hey my living expenses is 5 lakhs perom they would not accept it they would ask you for the official proof of what are the living expenses in that location and they would consider as for that now let’s say when you’re going to us the tution fee and living expenses is considered as for what is mentioned on the I20.
Now when you’re going for Canada and you say hey 20, 635 CAD is my GIC amount which is my first year living expenses bank would consider exactly that amount for your second year and even for the further years of studies.
Right now if you’re going to Germany you say € 11,28 is my blocked account which is my first year living expenses bank will consider exactly that amount for your second year of living expenses as well.
So now this 80 lakhs is your total cost of Education considering the official proof so a 15% margin means bank will give you 68 lakh rupees and you will have to bring in 12 lakh rupees. Now what students think is hey 68 LH is more than enough for me because Bank just overestimated it and I probably would not need the 80 lakhs any which ways but what students do not understand is that the bank will not give you the 68 lakhs until unless you bring your margin of 12 lakh rupees.
Now let’s say you go to the bank to ask for your first year fee which is 30 lakh rupees Bank asks you to bring 15% of that which is 4.5 lakh rupes.
Now once you bring in 4.5 lakhs Bank adds 25.5 LHS to it and sends away 30 lakh rupes again you go to the bank to ask for your first year living expenses. which is 10 lakh rupes Bank asks you to again bring 15% of that which is 1 and 2 lakh Bank adds 8.5 lakhs to it and then sends you 10 L rupees.
The same continues for the second year as well so in total you bring in 12 lakh rupees and against that bank adds 68 lakh rupees proportionately. so now you know with 15% margin Union Bank can give you maximum 68 lakh rupees.
If your cost of education is 80 lakhs right but that is with collateral as we all know Union Bank will not give 68 lakhs without collateral they can give maximum 40 lakhs without collateral now if you go ahead with the 40 lakhs non-collateral loan product your loan margin.
If your cost of education is 80 lakhs it will be 50% so now going back to the expenses distribution table if you go ahead with 50% loan margin when you go to the bank to ask for your first year fee which is 30 lakh rupees bank will ask you to put in 15 lakhs and then they would put in another 15 lakhs and send 30 lakhs.
Same thing when you go to ask for your first year living expenses of1 L they would ask you to bring in 5 lakh rupees and they would add another 5 lakh. so in total when the same continues for second year also at the end of it you would have put in 40 lakhs from your end and the bank would have put in 40 lakhs from their end because the margin was 50% so do you think students have that much money to contribute such a huge margin.
Now some of you might argue with me saying hey 80 lakhs is too high of a cost for me to assume for the course but please note that most of these 180 top universities for which Union Bank offers non-collateral loan are the universities of United States.
And when the student is going to the US the I20 amount on an average is about 40 lakh rupees for year right so when you’re going for a 2 years course it is 80 laks for the entire course so Union Bank doesn’t give pre Visa dispersement.
Before I start explaining this issue read this email which we received a month and half ago so for any student who is going to Canada they need money before visa to pay their one-ear tution fees and to make onee GIC deposit only.
Then they can go for Visa right similarly for Germany the student before they apply for Visa they have to make this blocked account for which they need the disbursement from the bank for any student going to Australia.
They have to pay first year fees and has to deposit one year living expenses before they even go for Visa right similarly for UK they have to deposit money to get cast letter only then they can go for visa and similarly for other countries like Ireland and most study abroad destinations so what is the use of taking this education loan when the bank is not even willing to give you this disbursement before visa to meet all these Embassy requirements.
That’s why students are shifting their loan away from Union bank or canceling their loans and choosing other options and for students who are going to Australia they are not even getting a Visa approved when they have taken a loan through Union Bank because it’s a non-collateral loan.
