The kind of curriculum students study these days within India make them want to learn the practical implementations more than the theoretical know-how. This is what attracts students to go abroad for their higher education where more focus is given on research and experimentation
rather than rote-learning and classroom lectures only. The total cost involved in studying abroad is the major concern for not just the students but their parents as well. Since scholarship opportunities are limited both within the university abroad as well as institutions within India, the
only possible route open to embarking on this journey is an education loan.
Seeing the trend of students going abroad, popular choices of countries for higher education are USA, Canada, Germany, Australia and many other developed countries. In the earlier days, it was difficult to secure a loan and even tedious in some matters. But in this technological age, because of
the internet, viability and competition, many financial institutions are available at this point which offers education loan to students. The major players in the market are Nationalized banks, Private banks, Non-banking financial companies (NBFCs), international funds as well as US Banks. The
requirements and conditions for all of them vary and the same has been listed below.
These institutions offer only collateral loans i.e. loan against property. Within India, these education loans are offered at a rate of interest between 9.5% to 12% approximately, which would be the cheapest for the financial institutions based within the country. Other than the student profile,
guarantor’s CIBIL score and IT returns as well as property valuation is taken into consideration for sanctioning the loan and finalizing the interest rate.
These institutions usually offer both collateral and non-collateral loans, the differences being the loan sanction amount and the rate of interest. Other than the rate of interest for collateral loans which is slightly higher compared to nationalized banks, the rest of the requirements is nearly the
same. The sanction amount in a non-collateral loan will highly depend on the student profile and the maximum is always fixed for a given institution. The rate of interest too in the latter will be higher than a collateral loan. The process is slightly faster compared to nationalized banks.
Non-Banking Financial Companies (NBFCs)
Within India, only HDFC Credila is an NBFC gives collateral loans. HDFC Credila, as well as other NBFCs, offer non-collateral loans. Though the requirements for these loans are similar to private banks, the rate of interest charged is slightly higher and ranges between 11% to 14%
These institutions are based out of India and offer only non-collateral loans. The loan sanction amount and the rate of interest are completely based on the student profile as well as the university and course admit received by the student. The plus point of these loans for students going to the US is that the currency exchange rate does not matter as the loan is sanctioned in dollars and has to be repaid in dollars.
For students going for higher education to the US, US Banks offer the cheapest rate of interest in the range of 3% to 6%. The co-signor on these loans should be a green card holder or a citizen of the US.
With so many options available in case of education loans, we hope that students are able to secure admits in their dream universities without giving much concern towards the total expenses. We have dedicated loan counsellors who can guide students and their parents with the right option for their loan requirements. For more information on loans, please visit the website www.eduloans.org and book an appointment with the loan expert.
Mr. Rahul Bhat
Imperial Overseas Educational Consultants.