Source: Parth Vijayvergiya
Studying abroad has a lot of benefits to offer that is from getting taught by a superior competent set of faculty members in better infrastructure to learning better about a new culture and adjustments related to it. But all of these also come along with a huge price tag. Naturally, the costs cannot be borne by an average middle-class family in India. So the best method to make way is to take a study loan. There are generally four kinds of loan vendors- Banks, Non-Banking Financial Institutions (NBFCs), Crowd-funded companies and foreign banks. The banks can provide relatively lower interest rates. NBFCs have relatively faster loan sanction process. Crowd-funded companies can provide loans to the student in the local currency of the country in which he will be studying.
Foreign banks generally have lower interest rates but need they do need co-signor from a foreign country. All of these have certain demerits as well. Like the banks have higher chances of rejection if documents are not in order. For the crowd-funded companies, the loan has to be repaid in the same currency. One merit of NBFCs is that they get no tax benefit under section 80E of income tax act (expect HDFC Cedilla).
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How to get an education loan in India to study abroad?
Generally, there is a pattern which general loan lenders provide. While applying for a loan to study abroad a co-applicant is a must which could be a parent, a sibling or a spouse. When the loans range between Rupees 4 – 7.5 lakhs, a third party guarantor is obligatory. But when the student loans range above Rupees 7.5 lakhs, collateral needs to be provided. The loan repayment begins 6 to 12 months after completion of the course. If a student goes abroad and is not able to be reached by the lender, the latter recovers the remainder from co-applicant. The education loan general covers Tuition fees, Charges for examination, library, laboratory, and hostel; Travel expenses for study abroad; Cost of purchasing books, equipment, instruments, and uniform; Caution money, refundable deposit, etc.; Study tours, exchange programs, and project work.
What is the Process to get a loan to study abroad?
This is the procedure to get an educational loan it will help you out:
1. Bank deals with the institution
If you are thinking to study abroad on the basis of scholarship and you have received the scholarship amount as well, one thing you need to know is that scholarships can afford your university fee but your tuition fees, living expenses and the charges of extracurricular activities are not supposed to be funded by the limited amount of scholarships. So, you should now try for the other options provided. The bank does not give you an educational loan in the form of cash but it will transfer the money to the account of the concerned university at the beginning of the semester.
2. Procedure to apply for the educational loan
You can apply for the loan whenever you receive your offer letter from the university. In the duration of getting an offer letter, you should go through the details of various banks including their method of providing loan and interest rate.
3. Check your Eligibility
You are expected to be eligible for an educational loan only if you apply for the long-term courses at the abroad institutions. The education loan is not given in case of the short-term courses at the abroad institutions.
4. Guaranteed person to pay your loan
If you are taking an educational loan, you will have to assure the bank that you would definitely be able to pay the debt back and for this, you need one person you could make sure that he will return the debt if somehow you fail. This person may be your father or any other family member who will be signing the bond.
5. Get your Documents ready for the loan
You will be needing the following documents given here as proofs:
- Address proof: Voter’s ID card, bank account statement, ration card, passport, Allotment letter issued by a government department, Aadhar card, telephone bill, water bill, electricity bill.
- Identity proof: Voter’s ID card, passport, driving license, a signed verification letter from public servant for your identity and residence.
- Signature proof: PAN card, banker’s signature verification, driving license and passport.
6. Select your Bank for providing the educational loan
You must apply for the educational loan in the best service provider bank. Here are a few of them:
- Education Loan for Abroad Studies Axis Bank- Axis Bank offers 20 lakhs and up to 20 lakhs on the interest rate of 13.7 to 15.7 percent per annum.
- State Bank of India is providing the loan service up to 30 lakhs with an annual interest rate of 13.75 percent for the amount between 4 to 7 lakhs and 11.7 percent above 7.5 lakhs.
- Canara Bank is providing the loan service up to 20 lakhs on the per annum rate of interest, 12 percent for the amount range between 4 to 7.5 lakhs and 9.5 percent above than 7.5 lakhs.
What are the requirements to get an education loan to study abroad?
The documents required in general to study abroad are- the Mark sheet for last qualifying examination for school and graduate studies in India, Two passport size photographs, Proof of admission to the course, Copy of letter confirming scholarship, Schedule of expenses for the course, Copy of Foreign Exchange permit ( if available), Income Tax assessment order not older than two years, Statement of borrowers bank account for last six months, a Brief statement of Borrowers Assets and Liabilities, and If not a customer of the lending bank provide proof of identity and residence.
Can one get an education loan in India to study abroad without collateral?
There are 4 India based NBFCs that provide education loan without collateral and some foreign NBFCs doing the same as well.
What are the things one needs to know about unsecured/ collateral loans?
- One need not pledge collateral to any Government bank if one is availing a loan up to Rupees 4 lakhs.
- All banks have provision to provide education loan without collateral up to Rupees 7.5 lakhs when certain criteria are met, in accordance with the guidelines set by RBI.
- If one wants to gain an education loan that is more than Rupees 7.5 lakhs, private and NBFCs provide loans up to INR 50 lakhs without security.
Few education loan common schemes which do not require collateral are of HDFC Credila Education Loan, Avanse Education Loan, SBI Loan for Vocational Education and Training, Punjab National Bank (PNB) Pratibha Education Loan and Axis Bank Education Loan.
How to get an education loan for abroad studies in India from ICICI?
ICICI allows the grant of student education loans for overseas education for courses ranging from Graduation – for job oriented professional/technical courses offered by reputed universities and Post-graduation – MCA, MBA, MS to the Courses conducted by CIMA – London, CPA in the USA etc. There is an advantage of the requirement of only nominal documentation along with an added percentage of no collaterals or securities for loan up to 7.5 lakhs. ICICI bank provides for no Processing Charges and furthermore No Foreclosure Penalty. There can be surety of Faster Processing and Easy Documentation. For overseas education loans up to Rs.4.00 lakhs, there is no need of margin. But for overseas education loans above Rs.4.00 lakhs, the margin of 15% is charged for studies outside India. The interest will be charged only on the amount used, which is another added advantage.
How to get an education loan for studying abroad from the Central Bank of India?
The student is first required to be an Indian National in order to apply for it. The student is required to have secured admission to a higher education course in recognized institutions Abroad through any suitable Entrance Test or Merit-Based Selection process after completion of HSC(10 plus 2 or equivalent).
Where there is no entrance test or merit-based selection process and admission is completely based on the marks scored in qualifying examinations, where the student is required to have scored minimum 50% marks in the qualifying examination. There is 10% relaxation for SC/ST categories.
The eligible expenses to be covered under Central Bank of India education loan include College/ school and hostel Fee, Fees payable as Examination/ Laboratory/ Library fee, Relevant Travel expenses including passage money required for studies overseas, Expenses towards Insurance premium applicable in case of student borrower, Other deposits such as Caution deposit or any other refundable deposit should be duly supported by the Institution receipts or bills, Cost towards the purchase of books/ uniforms and equipment’s or instruments, Other relevant expenses required for course completion such as study tours or project/thesis work and Scholarships and fee waiver.
How to get education loan in India for study abroad through SBI?
State Bank of India Global Ed-Vantage is an education loan wholly for those who desire to pursue full-time regular courses at overseas colleges or universities. The online application process is faster with SBI. The interest rate is attractively light. The general loan amount can range from Rupees 20 lakhs to Rupees 1.5 Crores. The repayment through EMI is available up to 15 years. The loan sanction can be done prior to i20 or Visa.
The margin is 10% which means there would be up to 90% cost of course entitled for financing, with a scholarship or assistantship to be included in the margin. The margin will be considered on a year-on-year basis and the payouts are made on a pro-rata basis. Simple interest of 10%-9.5% will be charged during Course Period along with the Moratorium Period. The moratorium period comprises the course duration along with an additional 6 months. The SBI accepts third-party collateral that is a third person who is not one’s kin can also be eligible for collateral security. This entire loan process can be effectively completed online with only 2-3 bank visits which are mandatory for submitting official papers.
The IBA model education loan scheme for study in India and abroad
The Indian Banks’ Association (IBA) has formulated a wide-ranging typical educational loan scheme for acceptance and implementation by all Banks aimed at providing financial support from the banking system to deserving/meritorious students for pursuing higher education in India and abroad.
The interest rates charged on the educational loan shall be as per the BPLR or Base Rate of the individual banks and as per the provisions for interest rates under the IBA Model Educational Loan Scheme. the interest payable by the student belonging to
EWS for availing of the Educational Loan for Technical Professional Courses in India for the period of moratorium i.e., Course Period plus one year or six months after getting a job, whichever is earlier, as prescribed under the Educational Loan Scheme for the Indian Banks’ Association, shall be borne by the Government of India.
What is the best education loan in India to study abroad?
Top education loans providers in India are State Bank of India, Axis Bank, HDFC Bank, HDFC Bank, Canara Bank, IDBI Bank, Bank of Baroda and Avanse Financial Services.
An analysis of some of the top banks has been done and presented in the table.
|Rate of interest
|State Bank of India
|The interest rate offered on education loans will be up to 2% on the current base rate of SBI.
|The loan margin requirement is 15% for SBI education loan borrowers.
|The interest rate for Axis Bank education loans ranges from 16.50% to up to 17.50%, with special rates for women applicants.
|A margin is not required for loan amounts below Rs. 4 lakhs, but 15% has to be brought in by the borrower for loans above Rs. 4 lakhs.
|The processing fees charged by HDFC Bank for education loans are up to 1.5% of the loan amount. Interest is at 10.25%
|Margin is only 10% which means 90% of the expenses are eligible for financing.
|Punjab National Bank
|PNB sanctions as per the requirement of the borrower, with a loan margin requirement of 15% or loans taken above Rs. 4 lakhs.
|The interest rate is at 10.5%.
|The loan margin requirement of 15% or loans taken above Rs. 4 lakhs.
|Bank of Baroda
|The borrowers have to pay only simple interest during the moratorium period and women applicants can get a concession of 0.50% on the interest rates. Bank of Baroda will charge a penal interest of 2% for delayed payments, if the loan amount is more than Rs. 4 lakhs.
|Loans come with a loan margin requirement of 15%
|Avanse Financial Services
|The interest rate is at 10.25%.
|No margin Required for Avanse Financial Services
Also, there are many other banks which are providing the best educational loan service and you can research them. Every bank has its own terms and conditions of the loan service including providing and paying back the loan amount. We must go through all the terms and conditions before being opting for a loan. We hope that this article has helped you by providing information about the loan procedure. You can share any further doubts in the comment section. Please mention your feedback here to let us know about your views.