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.
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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
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:
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.
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.
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.
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.
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.
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|
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:
- Undergraduate degrees/diplomas and special courses
- Postgraduate degrees/diplomas and special courses
- PhDs and Doctoral Programmes
- 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:
- Computer Certificate Course
- Engineering Diploma
- Data Entry Operator Course
- Diploma in Agricultural Sciences
- Veterinary/Animal Husbandry Diploma
- Any job-oriented diploma or certificate course
- 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||
|Foreign Education Loan against Securities||
|Foreign Education Loan against Deposits||
|Foreign Education Loan against Third Party Guarantee||
|Foreign Education Loan without Collaterals||
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|
|3.||Collateral Documents||Loan against property:
|Loan against security:
|Loan against deposits:
|Loan against third-party guarantee:
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)||
|Padho Pardesh – Scheme of Interest Subsidy on Educational Loans for Overseas Studies||
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.