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Education Loan for Studying Abroad

  • Studying abroad can be a life-changing decision, however, this doesn’t come easy.
  • Those who want to pursue higher studies abroad, but find it difficult to arrange for funds.
  • For them, Education Loan is the option to make arrangements for funding their education.

Eligibility criteria for Education loan

The applicant should

  • Attained the age of 18 else his/her parents will have to take the loan.
  • Have a good academic background.
  • Secure admission to a recognized foreign university/institution/college.
  • Select a technical or professional desired course for study abroad
    • as banks to give preference to job oriented courses.
  • He/she must be an Indian citizen.

Watch the Video: For the complete guide for studying abroad

 Things to remember 

  • Moratorium period:

    • This is the time period during which the borrower need not make any repayment to the bank.
    • This period varies from bank to bank.
      • Also, it could last up to some time after completion of the course.

  • Loan Margin:

    • Usually, banks do not provide the complete amount
      • i.e. 100 per cent money needed to fund education.
    • The majority of the public sector banks issue 70 to 90% of the total amount.
      • The remaining 10 to 30 % has to be arranged by the aspirant himself.

  • Effect of Exchange Rate:

Always calculate the amount which you will be receiving at the time of disbursement.

    • So, any change in the exchange rate can affect the amount you will be receiving.

To know before applying for Education Loan

  • Ascertain how much finance you need from the bank.
  • Finalize the course you plan to pursue and the university you would be studying in.
  • Identify the Co-applicant or Guarantor.
  • Check the documents required to be submitted.
  • Submit the application form duly filled in and complete in all respects.
  • Apply for the Education loan well in advance, to ensure timely disbursement.

The Loan Amount

  • There is no limit set by the banks for offering education loans to students abroad.
  • It depends on the bank to bank.
  • The majority of the banks offer loans up to INR 30 lakhs.
    • Also, if the loan amount is more than INR 20 lakhs then the interest rate also increases.
  • Generally, banks and NBFCs prefer to give loans for undergraduate and postgraduate courses.
    • Also, the majority of banks prefer to give education loans abroad for pursuing job oriented and professional courses.
  • If you want to take the loan with your immovable property as collateral, in that case,
    •  The bank’s representative will verify your property and prepare a report on whether it can be mortgaged or not.
    • Also, the bank’s representative will evaluate your property.
    • Based on this report, the loan amount will be approved.

 The education loan amount is provided to you by:

  • It is electronically transferred to the designated bank account.

What is Collateral?

  • A movable or immovable property that can be offered to the banks as security to receive a loan is called collateral.
  • Collateral makes sure that if you end up not paying for the student loan, the bank holds rights to seize the property.
  • Most of the Indian banks require collateral for the education loan.

Which is accepted as Collateral?

Different types of instruments are accepted as collateral. They include:

  • Bonds
  • FD
  • Shares
  • Mutual Fund Units
  • Gold
  • Life Insurance Policy
  • Debentures
  • Bank Deposits
  • House
  • Commercial Property
  • Non-Agriculture Land
  • Agricultural lands are not accepted as collateral

Education loan to study abroad without collateral

  • There are plenty of education loans available without collateral as for some it is difficult to have such securities.
  • Many popular finances of the country offer education loans without collateral.

Listed below are the important points you must keep in mind while seeking the same.

  • You may not pledge to any government bank for collateral if you are availing loan up to INR 4 Lakh
  • As per RBI, all the banks of the country have provision to grant education loans without collateral up to INR 7.5 Lakh when all the criteria are met.
  • Those seeking a loan of more than INR 7.5 lakh, can opt for private or NBFCs as they provide a loan of up to INR 50 lakh without collateral.

Factors to Compare while Selecting Education Loan for Studying Abroad:

Several lenders in the Indian market are there to provide Education Loans for Studying Abroad, including nationalized banks, private banks, and international lenders. But a student must know which one suits his/her requirements better. For that, they must do thorough research and comparative analysis of various lender institutes on the multiple factors.

Here are some factors that students should consider before choosing an education loan for studying abroad.

Processing Time:

The processing time is the time required for the sanctioning of the loan amount, and they differ for every lender.

Processing Fees:

The processing fee is the lender’s charge to approve the education loan. It is also different for every lender.

Borrowing Limits:

The borrowing limit for different lenders for secured education loans is different. Students must look for a suitable financial lender as per their cost project.

Rate of Interest:

Students must investigate the rate of interest (ROI) of different lenders before finalizing the bank. The ROI of lenders changes after some time interval.

Moratorium Period:

A moratorium refers to the delay or postponement of the requirement to make a kind of payment. A moratorium period delays repayment and allows the borrower a grace period before they can start repaying the loan via EMI.

Interest during Moratorium Period:

There shall be no interest on any amount during the loan moratorium from borrower. But some lenders serve simple interest during the moratorium period, and students have the option of paying both simple and partial interest.

Direct EMI:

Direct EMI is the option where the moratorium period is not applicable, and students have to pay EMI from the next month once the loan amount is handover.

Loan Repayment Term:

The loan repayment term of various lenders is between 10 to 15 years.

Pre-Visa/Post-Visa Disbursement:

It is necessary to check with the bank about pre/post visa disbursement before submitting the overseas education loan proposal because only selected banks to provide pre-visa disbursal. International lenders provide post visa disbursement after reaching the study abroad destination.

Pre-visa disbursement loans are given to students to secure their seats by making a fee deposit to the university/college before the visa. Once the student secures admission to the university, they can obtain their student visa using a Pre-Visa Disbursement loan.

Post-visa disbursement loan is given to the student upon getting the Visa approval. The student must provide the visa copy to the disbursement officer, and accordingly bank officer will disburse the loan.

Remittance:

Students should check the process of remittance of the loan amount with the bank whether they are going to transfer the funds to the student or to the university account. 

Click the links of the following Banks for Foreign study Loans.

Documents required 

  • Filled application form
  • Date of Birth proof: Any one of the following documents.
    • Birth Certificate
    • Passport
    • Voter card with DOB
    • College Passing Certificate
    • PAN Card
    • Driving license or Adhar Card
  • Photographs:
    • Passport size photographs of the applicant and the co-applicant.
  • Photo ID:
    • Of both applicant and the co-applicant.
    • It can be a PAN card or driving license or Voter ID card or Adhar Card or Passport.
  • Residence proof:
    • Resident proof of the applicant and the co-applicant
  • Academic documents:
  • Mark sheet and certificates of the applicant
  • Mark sheet (Score Report) of IELTS, PTE, TOFEL, GRE, etc. whichever is applicable

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  • Admission proof:
    • Admission letter shared by the university or college.
  • Bank statements:
    • Last six months bank statements of the co-applicant
  • Income proof:
    • Income proof of the co-applicant
  • In the case of collateral (immovable property), it can be flat, home, or non-agriculture land the following documents are required:
    • Property title deed
    • Building approved plan
    • NOC for a mortgage from a builder or society

Education Loan Interest Rates  

            Banks                     In India and In abroad          

  • Axis Bank                      13.70% and 13.70%
  • Canara Bank                  8.50% and 8.50%
  • Central Bank of India   8.50% and 8.50%
  • Corporation Bank         8.80% and 8.80%
  • Federal Bank                 10.05% and 10.05%
  • IDBI Bank                     6.90% and 8.40%
  • Indian Bank                   7.15% and 7.15%
  • Indian Overseas Bank   10.65% and 10.65%
  • Karnataka Bank             9.85% and 9.83%
  • Karur Vysya Bank          10.75% and 10.75%
  • OBC                                 7.05% and 10.65%
  • PNB                                 7.05% and 10.65%
  • SBI                                   7.00% and 8.80%
  • UCO Bank                       9.30% and 9.30%
  • Union Bank of India       8.40% and 8.05%
  • United Bank of India      10.65% and 10.65%
  • Bank of
    • Baroda                       7.70% and 8.35%
    • India                          9.05% and 9.05%
    • Maharashtra             8.55% and 8.55%

Kumar Direct is one of the pioneers of international education in India (Since 1995). Our experienced and well-qualified team can help you in every stage of your migration process, from counselling to departure, each and every process at one place.

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