Education Loan for Studies Abroad
Unlocking Global Education: A Comprehensive Guide to Securing Education Loans for Studying Abroad in India
Today’s curricula in India encourage students to focus more on learning – practical applications than the theoretical knowledge. This is what draws students to pursue higher education abroad, where there is a greater emphasis on research and experimentation, as opposed to rote memorization and monotonous classroom lectures. Parents and students alike are extremely concerned about the overall cost of studying abroad whether study in UK, Study in Australia or any other country. The only way to fund this voyage is through an education loan because there are few scholarship possibilities available at both the foreign university and Indian colleges. The sole option for starting this adventure is to take out an education loan.
Given the trend of students studying abroad, the United States, Canada, Germany, Australia, and many other industrialized nations are attractive destinations for higher education. Obtaining a loan in the past was challenging and maybe even laborious. But there are now numerous financial firms that provide education loans to students in this day and age thanks to the internet, viability, and competition. Nationalized banks, private banks, non-banking financial firms (NBFCs), international funds, and US banks are the main competitors in the industry.
In India, there are several banks and financial institutions that offer education loans to students who wish to pursue their studies abroad. These loans are specifically designed to help cover the expenses related to tuition fees, living expenses, travel, books, and other educational costs. Here are some key points to know about education loans for studying abroad in India:
Government-owned Banks – Education Loan for Studying Abroad
These organizations solely provide loans secured by collateral, or loans against property. These student
loans are available in India at an interest rate that is between 9.5% and 12%, roughly, making it the most
affordable option for the local financial institutions. In addition to the student profile, the CIBIL score, IT
returns, and property value of the guarantor are taken into account while granting the loan and
determining the interest rate.
Individual Banks – Education Loan for Studying Abroad
The loan sanction amount and the interest rate differ between collateral and non-collateral loans offered
by these banks. All other conditions are almost identical, with the exception of the somewhat higher rate
of interest for collateral loans when compared to nationalized banks. The maximum approval amount for
a non-collateral loan is always established for a certain institution, and it heavily depends on the student
profile. The latter will also have a higher interest rate than a loan with collateral. When compared to
nationalized banks, the procedure is a little bit faster.
NBFCs are non-banking financial institutions – Education Loan for Studying Abroad
Only one NBFC in India that offers collateral loans is HDFC Credila. Non-collateral loans are provided
by NBFCs like HDFC Credila and others. Despite having similar standards to private banks, these loans
have a somewhat higher interest rate that typically runs from 11% to 14%.
Foreign Resources – Education Loan for Studying Abroad
These organizations are situated in India and solely provide unsecured loans. The student's profile,
admission to the university and course, and the rate of interest are all taken into consideration when
determining the loan sanction amount and interest rate. The benefit of these loans for international
students studying in the US is that the loan must be repaid regardless of the currency exchange rate
because it is sanctioned in dollars.
Eligibility:
Indian citizenship or a confirmed admission offer from a recognized foreign university. Admission to a professional or technical course. A good academic record. A co-applicant, usually a parent or guardian, is required as a joint borrower or guarantor. The age of the applicant and co-applicant should be within the specified range set by the lender.
Loan Amount and Coverage:
Education loans for studying abroad usually cover the entire cost of education, including tuition fees,
living expenses, travel expenses, and other related costs. The loan amount typically varies depending on the course, institution, and country where the student plans to study. Some lenders may have a maximum loan limit, while others may consider the cost of education as the determining factor.
Interest Rates and Repayment:
Interest rates for education loans in India can be either fixed or floating, depending on the lender.
The interest rate can vary from bank to bank, so it is advisable to compare different options before
finalizing.
Repayment of the loan usually begins after a moratorium period, which is the course duration plus an
additional grace period. Some lenders may offer extended repayment periods for higher loan amounts.
Repayment can be made in equated monthly installments (EMIs) over the loan tenure.
Loan Application Process:
Research and shortlist banks or financial institutions that offer education loans for studying abroad.
Check the eligibility criteria, interest rates, repayment terms, and other loan conditions.
Gather the required documents, which may include an admission offer letter, academic records, identity
proof, residence proof, income proof of the co-applicant, etc. Fill out the loan application and submit it with the necessary documents. The bank will review your application, verify the details, and evaluate your eligibility. If approved, the loan amount will be disbursed directly to the educational institution or as per the payment schedule provided by the lender.
It is important to note that the specific terms and conditions of education loans may vary among different
banks and financial institutions. It is advisable to thoroughly research and compare the options available
to choose the one that best suits your needs. Additionally, always read the loan agreement carefully and
understand the repayment obligations before signing any documents.
Mr. Rahul Bhat
Sr Counselor
Imperial Overseas Educational Consultants.
FAQs about Education Loan for Studying Abroad
This loan is specifically designed to support students pursuing higher education overseas financially. It encompasses expenses for tuition fees, living, and other associated costs.
Students who have secured admission to a recognized foreign institution for higher studies are eligible. Requirements may vary among lenders.
The loan contains expenses such as tuition fees, housing, transportation, books, and other essential costs.
The loan amount varies depending on the country, course, and institution. Normally, it covers most expenses, but the lender might set limits.
Interest rates can differ among lenders and are influenced by factors like the loan amount, tenure, and applicant’s profile. Fixed or floating rates might be available.
Repayment typically begins after the completion of the course or a certain moratorium period. Please check with your lender for specific terms.
Criteria differ, yet often, a co-signer or collateral may be required, particularly for higher loan amounts. Certain lenders provide loans without collateral based on particular terms and conditions.
In many countries, borrowers can avail of tax benefits on the interest paid on education loans as per the prevailing tax laws. Seek advice from a tax consultant for specifics.
If facing financial hardships, some lenders offer options like loan restructuring, repayment holidays, or extending the tenure. It’s crucial to communicate with the lender as soon as possible.
Understanding how and when the loan amount will be disbursed is crucial. Different lenders might have specific procedures and criteria for releasing funds, which could be tied to the academic calendar or other requirements.
