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Education Loan Study abroad

Education Loan for Study Abroad – APPLICATION PROCESS

by Ankur Gupta

Education loan Study abroad is one of the many options which helps Indian students pursue higher education. Students who wish to study at the Victorian campuses of Bloomsbury, London or across the Charles River at the prestigious MIT or maybe at the heart of start-up country Israel; can find the financial means to do so with student loans. With various banking institutions providing vivid range of services applicants are able to cover all expenses of overseas education like tuition fees, living expenses, travel, and even student healthcare-insurance services.

Education Loan Abroad – Importance and Benefits

Why is it important to know about study abroad education loans?

Universities have gladly accepted diversity in their talent pool with Indian students and study-abroad-student-loans have aided in doing so. The aim of higher education abroad, for specialized learning, is now becoming a more credible reality for students of India. But not many students are completely aware of education funding options for study abroad. Students are often found to have missed the opportunities of their lifetime for want of regular financial limitations. Information about the education loans to study abroad, is required for Indians to realize their educational aspirations, undeterred and independently.

Education Loan Study Abroad – Introduction

What is an education loan for study abroad? How does study loan for abroad works?

Education loans are money or assets borrowed to pay for education or learning programs provided institutionally or through organizational research, in return of interest calculated and paid above the principal loan amount taken. Education loan for study abroad are generally provided to Non-resident Indians and Person of Indian Origin as well, provided that they fulfill certain conditions. Foreign education is generally more expensive than domestic education as it includes living expenses and other academic remittances. Thus, international student loans are provided based on various criteria which ensure that the student’s request for funds is valid and that they have financial viability for repaying the loan in time.

For more study abroad options, visit the website here.

Some peculiar features of education loan for abroad studies are:-

  • Requires a co-applicant and is only provided to an Indian citizen (NRIs/PIOs included)
  • Is only provided for higher education (undergraduate programs and above, colleges and degree programs only)
  • Needs a confirmation of admission (conditional or confirmed)
  • Can also pay for foreign entrance exams like SAT exams, LSATS, GRE, GMAT, IELTS, etc. and also act as ‘Proof of Funds Availability’ required for admissions to various institutions
  • Can be taken against varied options of collateral (not necessary or limited to securities, savings, property, etc.)

Common range of financial limits regarding study abroad education loans for Indian students are:

S. No. Education Loan for Study Abroad terms Education Loan limits
1. Loan Amount Min: ₹10,00,000 (10 Lakhs)

Max: ₹1,25,00,000 (1.25 Crores) or more

2. Interest Rate Min: 9.7% per annum

Max: 16.2% per annum

3. Loan duration/ Loan tenure Min: 5 years

Max: 25 years

4. Moratorium period 6 months after active employment

-or-

12 months after course completion

5. Processing Charges Min: NIL (zero)

Max: 15% of the total loan amount borrowed

Education Loan Study Abroad – Types and Categories

What are the types of education loans for study abroad? What is pre-admission student loan? Can I use education loan to prove the availability of funds required for admission?

Education loan for study abroad can be taken to provide a range of academic requirements, including refinancing and consolidated education loans. Foreign education loans are not limited to the conditions of domestic education loans. Thus, students are able to pick better services and continue their education with least financial load. Common types of international student loans are:

  • Bridge Loans:

    Education loans that pay for students’ pre-application expenses like examination, application, interview and student tours. Students just need to provide proofs of educational background and application to foreign institutions approved by the bank and the loan is provided for a reasonable rate of interest. Applicants, however, have to bind the requirement of their education loan if selected for admission with the same bank.

  • Pre-VISA Loans:

    Generally used as a proof of funds availability for foreign education loans. Before student visa application process of some countries, students need to prove that they have enough funds available to continue their studies and not become a liability for the host nation for education and accommodation. Pre-VISA education loans are thus provided on the basis of conditional offer letters from institutions to proceed with student VISA application process.

  • Pre-admission Loans:

    Education loan for study abroad which includes not only academic expenses but also, in-flight expenses, overseas travel expenses and cost of admission processes before the commencement of educational course like caution money and tuition deposits is called pre-admission loans. Only students pursuing education loan abroad can avail such services and domestic students do not have these options.

  • Refinancing Loans:

    Loans that are taken to repay the education loans taken prior are called refinancing loans. Applicants who have financial limitations and aren’t able to repay education loans in time can avail these loans to pay their original EMIs while they complete their education and arrange for the fund. Students don’t need to do much in this case apart from presenting a just cause for repayment lag and proof availability of funds for complete repayment. Students can also choose to refinance to extend their loan tenure.

  • Consolidated Loans:

    Loans covering all educational expenses including accommodation, deposits, insurance, books, travel, tuition, exam and educational equipment. Such loans are also called consolidated because they allow merging of loans from various banking institutions under one umbrella for a meagre processing charge.Study Abroad College Admissions Login

Education loan study abroad – Banks and Other Providers

Who provides education loan for study abroad? Is it safe or cost-effective to take education loan from consultants?

Study loan for abroad can be taken from financial institutions falling under the category of registered banks or non-banking financial institutions. There are education loan experts and education finance consultants as well which can help students to get customized education loan options.

Student Loan Lenders : Comprehensive comparison

Education Loan for Study Abroad from Registered Banks Education Loan for Study Abroad from NBFCs (Non-Banking Financial Institutions) Education Loan for Study Abroad from education loan experts and consultants
Benefits
  • Secure loans with lower interest rates
  • Subsidy and Tax benefits guaranteed
  • Flexible collateral requirements
  • Low processing fees and margin payments
  • Custom made loans for lowest interest rates
  • Choice of loans from variety of providers
Limitations
  • Limited Loan amount
  • A limited list of approved colleges/courses
  • High interest rates
  • Limited loan tenure
  • Limited tax and subsidy options
  • High turn-around time
  • Processing fees and service charges

Table: Education Loan for Study Abroad: Best banks providing education loan for abroad

Bank Name Study Abroad Education Loan Amount Interest Rates (based on latest MCLR rates)
State Bank of India (SBI) Up to ₹20,00,000 (20 Lakhs) 10.70%
HDFC Bank Up to ₹36,00,000 (36 Lakhs) 14.88%
ICICI Bank Up to ₹3,00,00,000 (3 Crore) 11.50%
Punjab National Bank (PNB) Up to ₹1,00,00,000 (1 Crore) 11.10%
Canara Bank Up to ₹36,00,000 (36 Lakhs) 10.70%
Axis Bank Up to ₹75,00,000 (75 lakhs) 13.70%

Education Loan Study Abroad – Eligibility

Who can avail student loan for study abroad? Is foreign education loan available for all international institutions?

Education loans for abroad studies are based on the eligibility of courses and institutions. Students wishing to pursue higher education abroad can choose from the numerous banking options to fund their education. Eligibility for foreign education loan is not as tedious as it is for domestic education loan. Applicants who already have a decent knowledge of foreign education application process and are preparing for such steps are eventually eligible for a student loan to study abroad.

Common eligibility parameters for study abroad education loan are:

  • A student should be an Indian national. Wards of PIOs and NRIs are included in this criteria
  • Applicants should have an acceptance letter from educational institution (either permanent or conditional)
  • Students should have passed the requisite international entrance exams and should have permits (VISA and work) in place
  • Should be able to exhibit financial viability for repayment of education loan for study abroad

Courses eligible for international student loans

Banks always prefer to provide education loan for study abroad, to students attending technical or professional courses which offer some credible weightage to post academic employability. This is because banks prefer the applicants to have a source of income after education to repay the loan. Almost all international universities/colleges/institutions provide job oriented courses only. Still, for the reference of applicants, all courses eligible for foreign education loan are mentioned below:

  1. Undergraduate degrees/diplomas and special courses
  2. Postgraduate degrees/diplomas and special courses
  3. PhDs and Doctoral Programmes
  4. Exchange programs (the degree to be offered by the foreign institution)

Some other courses which are eligible for education loans depending upon the banks’ individual policies and plausibility of job-oriented outcome:

  1. Computer Certificate Course
  2. Engineering Diploma
  3. Data Entry Operator Course
  4. Diploma in Agricultural Sciences
  5. Veterinary/Animal Husbandry Diploma
  6. Any job-oriented diploma or certificate course
  7. Applicants with Degree or Diplomas for aeronautics, pilot training, shipping held by recognized regulatory bodies for the purpose of employment in India or abroad

Education Loan Study Abroad – Collateral and Documents Required

What collateral can I use for getting international student loans?

Collateral are assets presented as a guarantee against the repayment of the loan. Applicants need to submit the conditional ownership of an asset that covers the education loan amount, to the bank; as collateral for loan amount sanctioned. This is not at all compulsory for all banks and neither for all education loan amounts.

The Government of India bars all registered banks and non-banking financial institutions from keeping any collateral for loans below ₹7,50,000 (7.5 lakhs). However, collateral is required for education loans of the higher amount. These are the kind of collateral that applicants can use to get education loan for studies abroad.

Education Loan for study abroad – collateral checklist

Loan Collateral Type Benefits/Conditions
Foreign Education Loan against Property
  • Can invite lesser rates of interest
  • Allows a higher education loan sum
  • Requires inspection and valuation charges to be paid
  • Needs NOC from society/regional development authority/RWA
Foreign Education Loan against Securities
  • Allows loan with relatively liquid collateral
  • Reasonably moderate interest rates
  • Are relatively easier to move in case of loan transfer/consolidation
Foreign Education Loan against Deposits
  • Least turn-around time, loan sanctioned in hours
  • Low interest rates (max: 3-4% above deposit interest rate)
  • Limitation of loan amount borrowed
  • Low/no processing charges
Foreign Education Loan against Third Party Guarantee
  • No collateral required
  • Low interest rates
  • Low education loan amount (maximum 7.5 Lakhs)
Foreign Education Loan without Collaterals
  • Currently only available at NBFCs and Education Loan experts
  • High loan amount (up to ₹50,00,000 – 50 Lakhs)
  • High interest rate
  • Low turn-around time (based on course commencement)
  • Restrictions of loan transfer or consolidation

Education Loan for abroad studies without security

In order to aid and provide aspiring students with a chance to pursue higher education abroad without any financial restrictions, NBFCs (Non-Banking Financial Institutions) have started to provide education loans without collateral. These loans, as mentioned above have comparatively high interest rate but additional features that compensate for this concern. Some key features of education loan for study abroad without security requirement are:

Applicants are required to have co-applicants co-sign the loan agreement

a. Co-applicants (first degree): parents and spouse

b. Co-applicants (second degree): siblings and parents-in-law

c. Co-sign: accept the liability of repayment if the applicants fail to do so

1. Processing fees of education loan for studies abroad without collateral can range between 1.00% to 4.5% and more for private loan agents

2. CIBIL score and annual continuous income proofs are mandatory

3. The education loan amount may vary based on the institution, course and bank norms

4. Such loans are also provided by international banks, but they charge interest rate in percentage dollars.

a. A higher interest rate paid in Indian rupees is generally cost-effective compared to the low-interest rate paid in dollars

b. Exchange rates may render loans without security more expensive than with security foreign education loans

Education Loan Study Abroad – Application

How to apply for international student loan? Is education loan for study abroad application process different from domestic education loans?

Students can avail the benefits of foreign education loan by applying directly with the banks, or through government channels of Vidyalakshmi Portal; and by contacting education loan experts like Buddy4Study EduLoans. The application process of education loan for abroad is no different than common practices of domestic education loan. Students just need to start planning their education loan in time, so that they can gather the required documents and apply for the foreign student loan at the right time.

Documents required for international student loans take a little more time, and thus the common notion of such loans being inconvenient is prevalent. But with regular government intervention and latest norms of the Indian Banking Association, the turn-around-time for all student loans has also reduced, among other beneficial upgrades.

Education loan study abroad – Documents Required

What are the kind of documents required for foreign education loan? What financial documents do I need for education loan for abroad? Are VISA documents related to education loan documents for study abroad?

Every education loan requires four basic categories of documents from loan applicants/co-applicants: (1) Identification-or-KYC documents, (2) Financial proofs, (3) Academic documents, and (4) Collateral documents. Students generally start preparing very early for their study abroad applications, and that includes applications for education loans as well. Ready-state documents for loan applications help them get the loan in time. With foreign education, there’s one more obligation of financial viability proofs for VISA application. Getting an education loan sanctioned with proper paperwork, helps students manage this VISA process as well.

Student loan for abroad studies – Documents checklist

S. No. Type of document Document details
1. Academic Documents
  • Admission Letter (confirmed or conditional)
  • Examination documents: SAT Exams, LSATS, GRE (Graduate Record Examination), GMAT, TOEFL, IELTS
  • Previous academic year Marksheets:
  • Class 10th (HSC/equivalent)
  • Class 12th (SSC/equivalent)
  • Graduation (marksheet and degree, if applicable)
  • Post-Graduation (marksheet and degree, if applicable)
  • Student Status Certificates (country-specific)
  • USA I-20 Certificate of Eligibility for Nonimmigrant Student Status
  • UK (England) CAS (Confirmation of Acceptance for Studies)
  • Australia GTE (Genuine Temporary Entrant) as per SVVF
  • Other student VISA and immigration letters
  • Scholarship or fellowships for foreign education records (if any)
2. Financial Documents
  • Bank Statements (min: 6 months, max: 36 months)
  • IT Returns copy: (min: last 2 years, max: last 5 years)
  • GST returns copy: (only in case of self-employed/business oriented applicants/co-applicants)
  • Min: last two quarters, max: last year
Salary Proof:

  • Income tax computation statement (attested by CA and employer)
  • Salary Slips (Min: last 3 months, max: last 9 months)
3. Collateral Documents Loan against property:

  • Property deed/lease agreement/allotment letter by Govt./Municipal Authority/NOC from society-builder
  • Property tax statements
Loan against security:

  • DE-mat account statement (min: 12 months, max: 36 months)
  • Insurance policy receipt and original policy certificate
Loan against deposits:

  • Original FD/RD/Gold Deposit/Bond certificate
  • Interest statement: (min: 6 months, max: 24 months)
Loan against third-party guarantee:

  • Certificate of third party guarantee (with signature and verified by appropriate authority)
4. Identification/KYC Documents
  • PAN card (at least Co-applicant mandatory)
  • Aadhaar Card/ Passport Copy/Driving License/ Voter’s ID
  • Residence proof: rent agreement/residential lease/electricity bill-phone bill/LPG bill
  • PIO (person-of-Indian origin)/NRI (non-residential Indian) Identification documents

Education Loan Study Abroad – Government and Private Subsidy

What is the education loan interest rate subsidy for study abroad? Is there any provision for loan forgiveness for study abroad education loans in India?

Indian students taking loans from international education loan consultants and education loan experts can avail the benefits of education loan forgiveness provided they are residing in the country of studies. Apart from this, there are many other government schemes promoting the idea of affordable foreign education for Indians. Some of these schemes are listed below.

Education Loan for Study Abroad: Government subsidy schemes

Interest Rate Subsidy Scheme Conditions Benefits
Dr. Ambedkar Central Scheme of Interest Subsidy on Education Loan for Overseas Studies (ACSIS)
  • Masters enrolled students only
  • Only meant for OBC (Other Backward Classes) or EBC (Economically Backward Class) families
  • Maximum Family income limits
    • EBC: ₹2 Lakhs per year
    • OBC: ₹6 Lakhs per year
  • Complete subsidy on education loan interest paid for the duration of course
  • Confirmed education loan for complete academic fees regarding international education
Padho Pardesh – Scheme of Interest Subsidy on Educational Loans for Overseas Studies
  • Masters enrolled students only
  • Only students from Minority Communities (like Parsi, Jain etc.) can avail this scheme
  • Maximum Family income limit:
    • ₹6 Lakhs per year
  • Complete subsidy on education loan interest paid for the duration of course
  • Confirmed education loan for complete academic fees regarding international education

Education Loan Study Abroad – Benefits

Scholarships and fellowships for foreign education have featured as only options for students to pursue higher education abroad. But with education loans now covering maximum expenses and global employment scenario enabling students to repay their loans easily, students have started to look beyond scholarships.

Common benefits of student loan for abroad are:

  • Complete financial freedom: maximum expenses covered, including living expenses and healthcare expenses
  • Additional features: consolidation of loans, outward-remittances, loan-insurance and student VISA assistance
  • Ease of repayment: longer loan tenures, part-payment options, no-margin money, no pre-payment charges
  • Greater options of loan eligibility: loan against deposits and securities, not limited to property
  • Education Loan subsidies: interest rate subsidy, loan forgiveness options, sponsorship
  • Tax and other benefits: covered by both banking norms (IBA) and government policies (Income Tax Act, section 80E)

Complete information about education loan norms, terms and conditions is the key to getting the best education loan for study abroad. With the above information, any student willing to attain international education can navigate through their academic and financial barriers.

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