EDUCATION LOANS

PROJECT REPORT

MASTER OF BUSINESS ADMINISTRATION

SUBMITTED BY:
STUDENT NAME
COLLEGE NAME
 DECLARATION

I undersigned STUDENT NAME XXXXX XXXXX student of MBA 3rd semester declare that I
have done the project on “EDUCATION LOANS” has been personally done by me under the
guidance of Prof. XXXXX XXXXXXX, Mandi (Himachal Pradesh) in partial fulfillment of MBA
Curriculum during academic year 2018-2019. All the data represented in this project is true
& correct to the best of my knowledge & belief.

I also declare that this project report is my own preparation and not replicated from
anywhere else.

Date :

Signature
 ACKNOWLEDGEMENT

First of all I thank the almighty, who has been with me through every walk of my life
guarding me and showering his belongings throughout the endeavor to put forth my
dissertation.

I would like to take this opportunity to express my sincere thanks to our HOD NAME XXXXX,
our Head-in-Charge of MBA for her guidance and support.

I would also like to express my sincere thanks to my guide TEACHERS NAME XXXXXXX for
her constant encouragement, advice and guidance and valuable suggestions which was
most valuable during the project. And also I like to thanks all staff members of the
department for the valuable suggestions, untiring help and proper guidance for the
successful completion of the project.

I would also like to thanks all the officers at the MAHINDRA FINANCE Who assisted and
encouraged me during my training.

(Signature of the student)

CONTENTS

S.NO TOPICS

1 MAHINDRA FINANCE ORGANISATION

2 EDUCATION LOAN

3 EDUCATION LOANS PROCESS

4 DISBURSEMENT AND REPAYMENT

5 CONCLUSION

6 BIBILOGRAPHY
MAHINDRA FINANCE ORGANISATION

Mahindra Finance began as a captive financier of Mahindra Utility Vehicles in the early 90s.
From Mahindra UVs to tractors to non-Mahindra products, the company has diversified into
a financial services provider with a whole suite of financial solutions tailored to the under-
served customer in under-penetrated rural markets.

Our product portfolio consists of vehicle finance, which includes financing of passenger
vehicles, utility vehicles, tractors, commercial vehicles, construction equipment; and pre-
owned vehicles and SME finance, which includes project finance, equipment finance,
working capital finance and bill discounting services to SMEs. The company also undertakes
mutual fund distribution, fixed deposits and personal loans tailor-made to suit its unique
customer set.

With over 33,000 employees, Mahindra Finance has a presence in every state in India and a
footprint in 85% of its districts. It serves customers in more than 3, 60,000 villages– that’s
one in every two villages in the country.

Since inception, Mahindra Finance has served as a positive change agent catering to the
financial needs of millions in rural and semi-urban India. Its deep connection with the
customers and their evolving needs has been the key to its growth and success.

Mahindra Finance is the only Non-Banking Financial Company from India to be listed on
Dow Jones Sustainability Index in Emerging Market Category. Mahindra Finance has been
ranked in Top 15 India's Best Workplaces to Work in BFSI, 2018 by Great Place to Work
Institute India. We have also been recognized as Aon Best Employer 2017 and Best BFSI
Brands 2018 by The Economic Times.
OBJECTIVES

To understand the EDUCATION LOANS provided by MAHINDRA FINANCE to its customers

To study about EDUCATION LOAN disbursement by MAHINDRA FINANCE.

METHODOLOGY

The study is based on secondary data

The study is confined to MAHINDRA FINANCE only

COLLECTION OF DATA

The study is carried out using secondary data like

Internet
Banking books relating to loans
Banking journals

LIMITATIONS OF THE STUDY

The study is restricted only to MAHINDRA FINANCE

The study is limited to quantitative data.
EDUCATION LOAN
A good education is what paves the path to success, and we believe that everyone has the
right to an education that will help them grow and prosper. That’s why our Education Loans
are designed to finance meritorious students who choose to pursue a higher education,
both in India and abroad. With quick approval rates, minimal documentation and high loan
amounts based on income and repayment capacity, you will never be far away from making
your dreams come true.

Education Loan provides financial support to meritorious students who want to pursue
higher education in India and abroad. It helps students to pay their tuition fees, books, living
expenses while studying, etc.

Some of the key factors students should keep in mind before applying for Education Loans
are:

ELIGIBILITY CRITERIA

Age Eligibility

 There is no specific restriction regarding the age of a student in order to be eligible

for an education loan.
 Age of joint applicant / co-borrower / guarantor should be minimum 21 years at the
time of loan origination and maximum age at the time of loan maturity can be 70
years.

If the student was a minor while the joint applicant / co-borrower / guarantor executed the
document for the loan, the bank will obtain a letter of ratification from him/ her upon
attaining majority.

Student Eligibility

 The student should be an Indian National

 The student shall have secured the admission in India or abroad through an entrance
test or through merit based selection process

ELIGIBLE COURSES

India

 Post-Graduation Courses: Masters and Ph.D. from accredited institutions.

 Professional Courses: Engineering, Medical, Agriculture, Veterinary, Law, Dental,
Management and Computer Sciences.
  Other professional courses such as CA, ICWA, CS, and CFA.
 Masters and Diploma Management Programs.
 Other courses leading to degree/diploma conducted by colleges/universities
approved by UGC / Govt. / AICTE / AIBMS / ICMR, etc.
 Regular Degree/Diploma course like aeronautical, pilot training, shipping, nursing or
any other discipline approved by Directory General of Civil Aviation / Shipping /
Indian Nursing Council or any other regulatory body as the case may be, if the course
is pursued in India.
 Any other course as shall be declared from time-to-time.

Studies abroad

 Graduation: Reputed universities.

 Post-graduation: MCA, MBA, MS and other courses as shall be declared from time-to-
time.
 Other courses such as CIMA - London, CPA in USA, CFA, CISA, and other approved
courses as shall be declared.
 Degree/Diploma course like aeronautical, pilot training, shipping, etc. provided these
are recognized by competent regulatory bodies abroad for the purpose of
employment in India/abroad.

HOW TO APPLY FOR A EDUCATION LOAN

Step 1: Enquiry with a financier:

The first step is to get in touch with a lender. It is required to get in touch with as many
lenders as possible and get them to make loan offers. Then negotiate with them to get the
best interest rate.

Check if there are any special offers.

After getting all the banks to make their offers, select the lender based on the information
given.

Step 2: Documents Collection

After finalizing the lender, the lender's direct selling agent will visit and collect documents
supporting proof of income, residence proof, and identity. It may be required to produce
copies of IT returns, salary slips, bank statements, ration card, passport, driving licence, and
other relevant documents. These requirements vary from lender to lender.
Step 3: Field Investigation Agency Representative Visit

After submitting the documents, a field investigator will visit home to double check the facts
provided in the documents, such as the place of residence, tenure at work place and so on.
It is essential to be present during this visit; otherwise the investigator could report that the
facts provided do not actually add up, thus forcing the lender to reject the loan application.

Step 4: Loan approved

Once the lender is satisfied with the veracity of the documents provided, the loan is
approved. The lender then disburses the amount through cheques or demand drafts (DD).

EDUCATION LOAN AMOUNT AND MARGIN:

Most bank offers up to Rs. 10 Lakhs for studying in India and up to Rs. 20 lakhs for studying
abroad.

Students have to bring in their own contribution for loan amount above Rs. 4 lakhs i.e. 5%
for studies in India and 15% for studies abroad.

No collateral security is required for loans up to Rs. 4 lakhs, however Co-obligation of

Parents or Guardians is required. However, for availing education loan of more than Rs. 4
lakhs student will have to furnished collateral security (such as a house, etc.) of at least
reasonable value as compared to the loan and or a guarantor with sufficient income in
relation to the loan.

EDUCATION LOAN EXPENSES COVERED:

Some of the expenses that are covered under education loan are:-

 Fees payable to the college, school or hostel, including tuition fees.

 Examination, library and laboratory fees.
 Purchase of books, equipment, instruments and uniforms.
 Caution deposit or refundable deposit.
 Travel expenses for studies abroad.
 Buying computers for completion of the course.
Any other expenses needed to complete the course like study tours, project work and
theses.

EDUCATION LOAN REPAYMENT:

Repayment for education loan commences after 1 year after course or 6 months after
getting the job, whichever is earlier.

The maximum loan tenure is 10 years for loan amount up to Rs. 7.5 lakhs and 15 years for
loan amount above Rs. 7.5 lakhs.
FEES & CHARGES
DOCUMENTS REQUIRED

 Duly-filled personal loan application form.

 Passport size photo of the applicant as well as the guarantor.
 Proof of identification – Passport, Voter ID card, Aadhaar card, etc.
  Proof of age – Birth Certificate, Voter ID card, Passport, etc.
 Proof of Address – Driving License, Voter ID card, Aadhaar card, etc.
 Proof of income – bank statements of the last 3 months.
 Proof of profession – pay slips, joining letter, etc.
 PAN card copy.

HOW THE EMI CALCULATION FOR MAHINDRA FINANCE PERSONAL LOAN (EDUCATION)
WORK?

Let’s assume that Mr. Robert availed a personal loan from Mahindra Finance of Rs.2 lakh
with a repayment tenure of 3 years and assuming that the interest rate p.a. is 10%. Listed
below is the EMI breakup after adding the principal amount as well as the interest rate for
each month.

To repay the personal loan that Mr. Robert availed from Mahindra Finance, he will have to
pay an EMI of Rs.17,583 for 12 months.
DISBURSEMENT AND REPAYMENT
How is the loan amount disbursed? How and when to start repaying the loan?

Disbursement

The fee for all years is normally disbursed to the college/institute directly by the bank. While
applying for a loan, the bank will verify the tenure of the course and determine its total cost
as applicable at that point of time. Every year, you are required to submit a form to the bank
which gives the details of the money required, after which the bank directly disburses the
loan to the college/ institute.

Although the bank may be in India, you can get your education loan amount in dollars for
studies overseas; the amount is paid directly to the institution abroad. Banks charge you a
fee for the remittance.

Repayment

You start repaying the principal portion of the education loan six months to a year after
finishing the course, or when you get a job, whichever is earlier.

Repayment is done on an EMI (equated monthly installments) basis at the time of starting
the repayment. Let’s take an example of a loan amount of Rs 5 lakh for seven years with an
interest rate of 13.25 per cent. Assume that you earn Rs 5 lakh per annum on completing
your education. When you start repaying the loan, your EMI will be Rs 9,164. You will be
paying Rs 1,09,968 a year.

In the first year of repayment, the interest component will be Rs 64,350. You can deduct this
amount from your total income while calculating tax. As a result, you will save Rs 21,872 on
tax. So, the effective interest rate on the loan works out to around 10.75 per cent (instead of
13.25 per cent) for that particular year.

Some banks will also allow you a moratorium on payment of interest. This means that you
can defer payments of even the interest during this period. Hence, there is no need to pay
anything to the bank at all – till 6 months after the course is complete, or you get a job
(whichever is earlier). If you opt for this option, then the interest is compounded quarterly
and added to the principal sum for repayment. This option carries a higher rate of interest,
but is a boon to those who cannot repay the loan during the course period.

Banks offer lower interest rates if you start repayment during the moratorium period.

Unlike other loans, education loans do not attract prepayment penalty. If you find yourself
able to prepay in the early years of your career, you can pay off the entire outstanding loan
amount without any penalty.
Section 80E – Income Tax Deduction for Education Loan
Section 80E deduction under the Income Tax Act provides tax deduction for educational
loans. The income tax deduction can be claimed on educational loans availed for higher
studies of the spouse or children of a taxpayer. Section 80E deduction is available on the
interest component of an educational loan after an individual has started repaying the loan.

Deductions under Section 80E

Section 80E provides tax deduction on the interest component of an education loan for
higher studies. According to the Income Tax Act, “higher education” means any course of
study pursued after passing the Senior Secondary Examination or its equivalent from any
school, board or university recognised by the Central Government or State Government or
local authority or by any other authority authorised by the Central Government or State
Government or local authority to do so. An educational loan provided for foreign studies are
also eligible for deduction under section 80E. The deduction can also be availed for
repayment of loans for vocational training.

Section 80E Deduction Eligibility Criteria

The taxpayer must conform to the following eligibility criteria for availing Section 80E
deduction.

 Only individuals are eligible for tax deductions under this section. Hindu undivided
families and companies cannot avail deductions under this section.
 Deduction can be claimed only on the interest component of a particular educational
loan.
 Only those loans availed from recognised financial institutions and charitable
organisations are eligible for tax deduction. Loans obtained from friends or relatives
are not eligible under this section.
 Loans can be taken by a taxpayer towards fulfilling the educational commitment of
either himself/herself or his/her spouse or children.
 Deduction can be claimed only if the loan is availed for purpose of higher education.
 Deduction can be availed only for eight years, beginning from repayment from the
first year.
 Deduction can be claimed only if the loan is taken under the name of taxpayer.

Amount of Deduction under Section 80E

The deduction allowed is the total interest part of the EMI paid during the financial year. A
maximum deduction of upto Rs.40,000 can be availed under Section 80E. While availing
deduction under section 80E, the taxpayer must obtain a certificate from the Bank providing
details of principal and interest portion of the education loan paid during the financial year.

Period of Deduction

Section 80E deduction starts from the year the taxpayer starts repaying the loan. It is
available only for seven years starting from the year in which repayment starts or until the
interest is fully repaid, whichever is earlier. It should also be noted that if assessee’s loan
tenure exceeds eight years, then he/she cannot claim the deduction for the interest paid
beyond eight years. So it is always advisable that education loan should be paid within
seven years.

Section 80E Foreign Education

Section 80E deduction can be availed for interest payment of educational loan even when
the student studied abroad. Hence, the deduction is a major incentive to parents and
taxpayers for undertaking higher education in India or abroad.
WHAT IS FORM 16?
Form 16 is an Income tax form. It is used by the companies to provide their salaried
individuals information on the tax deducted. Alternatively, you can consider Form 16 as your
Salary TDS certificate. Suppose the income from your salary for the financial year is more
than the basic exemption limit of Rs. 2, 50, 000. Then, in this case, your employer is
required to deduct TDS on your salary and deposit it with the government. When From 16 is
provided to an employee by their employer, it is considered as a source of proof of filing
their Income Tax Returns. And if your income does not fit the basic exemption limit, the
employer does not deduct any TDS in that case.

In simple terms, Form 16 is a certificate provided by your employer which certifies details
regarding the salary you have earned during the year and how much TDS has been
deducted. It consists of two parts i.e. Part A and Part B, where part A consists of information
of the employer & employee, like the PAN and TAN details, name and address, TDS
deducted & deposited, etc.

However, part B consists of details pertaining to other income, deductions allowed, salary
paid, tax payable etc. Form 16 is annually issued by the employer on or before 15th June of
the next year, where it immediately follows the financial year in which tax is deducted. Also,
in case you lose Form 16, your employer can issue a duplicate one.

Following are the components of Form 16:

 Refunds in any to the employee, or balance of taxes payable by the employee.

 Details of the employer like collection Account Number (TAN), name, PAN, Tax
deduction and etc.
 All details of the Tax Payment, like amount, Challan number, cheque number, Demand
Draft number etc.
 Personal details of employee, like name, Permanent Account Number (PAN) etc.
 Acknowledgement of number of the taxes paid by the employer.
 Taxes deducted as per sections 191A.
 Total income and tax deductions.
 Details like salary, net salary, Gross salary, perks, deductions, etc.
 TDS receipt paid
 Declaration of tax payments from the employer.
What is Form 16A or Part A of Form 16?

The employer generates and downloads this part of Form 16 through TRACES portal. Before
issuing this certificate, the employer will authenticate for the correctness of its contents.

Note: It is vital for you to get a separate Part A of Form 16 for the period of employment if
you have changed your job.

Following are the components of Part A of Form 16:

 PAN details of the employee

 PAN & TAN of the employer
 Employer Name and address
 Summary of tax deposited and deducted quarterly, certified by the employer.

What is Form 16B or Part B of Form 16?

Form 16B is an annexure to Part A. In case you happen to change your job in one financial
year, you will have to decide if you need Part B of the form from last employer or from both
the employers. Following are the components of part B of Form 16:

 Relief under section 89

 Detailed breakup of salary
 Deductions that are allowed under the income tax act (under chapter VIA)

What are the details required for Form 16 while filling your Income Tax Return?

 Tax Payable or Refund Due

 Taxable Salary
 Aggregate of Section 80C Deductions (Gross & Deductible Amount)
 Breakup of Section 80C Deductions
 TDS (Tax Deducted at Source)

Also, following is the additional information required while filing your Income Tax Return:

 PAN
 TDS Deducted by Employer
 Current Assessment Year
 Employer PAN
 Name and Address of Employer
 Taxpayer’s (your) Name and Address
 Employer TAN
CONCLUSION

Nowadays personal loans have been catered to range of people unlike years ago. As various
schemes of personal loans are disbursed without complex procedures, the bank and
financial companies must manage its working mechanism in such a way it earns a good
return, where there are no defaulters, to make the customers aware of the schemes and the
offers. The companies should position its brand, market analysis and the customer research.
All these processes can be done only through effective and efficient management. These are
the steps used by banks and finance companies in the loan processing introducing personal
loans according to the needs of their customer. It includes speed, accuracy and care
attending the delivery process.

Millions of people get in financial situations where they need some money right away.
Sometimes they need a loan for a medical emergency or for educational purposes. The
borrower should read all the fine print and understand the terms of repayments on the
loan. Some companies charges high interest rates and even penalties if it is paid back soon.
A secured loan is one that is secured by things like home or other items that might equal
the value of the loan. Some credit cards will gives a secured line of credit, this is a secured
loan giving a credit limit with something one already own as collateral for line of credit.
Secured loans are great idea if the one have bad credit and need to repair it.
BIBILOGRAPHY
https://www.apnaloan.com/

https://www.mahindrafinance.com/