Loan Voyage: The ABCs of an Education Loan to Study Abroad
Raj Abhisar Agarwal
Overview
A study abroad education loan is financial aid that supports students studying in foreign countries. It covers tuition, living expenses, and travel costs. Loans can be secured (with collateral) or unsecured. Interest rates vary, and repayment starts after studies with a grace period. A co-applicant or guarantor is usually required. Students must submit required documents along with the loan application.
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Overview
A study abroad education loan is financial aid that supports students studying in foreign countries. It covers tuition, living expenses, and travel costs. Loans can be secured (with collateral) or unsecured. Interest rates vary, and repayment starts after studies with a grace period. A co-applicant or guarantor is usually required. Students must submit required documents along with the loan application.
Raj Abhisar Agarwal
Introduction
If you’ve had dreams of studying abroad, you’re not a loan! But you might need one. Foreign education can be expensive, and relying on loans to finance your future is a wonderfully secure idea! So what is a student abroad education loan? A study abroad education loan refers to money individuals borrow to finance higher education-related expenses at global universities. It generally includes the cost of tuition, other academic fees, and living expenses that might occur while pursuing an academic degree.
These loans are rigid in support but flexible in nature. There are several types of education loans, and payments can be deferred depending on the lender. The basic types include private loans and federal loans sponsored by the government.
Securing an education loan to study abroad might sound like a tedious process, but it isn’t one! It turns your dreams into a magical yellow brick road without worrying about finances. Besides reducing the financial strain on family expenses, it also encourages you to learn about financial discipline and money management. And that’s how you make Indian parents twice as proud.
Answering the big questions: What is Education Loan?
Foreign education can be expensive, and living expenses are excluded. Since it is an investment in your future, the returns won’t be immediate either! So where do you get all the money you need from? The answer lies in loans. Study abroad education loans are issued to finance higher education courses and enable smoother transactions, encouraging hassle-free money management. They can be obtained through government or private-sector lending sources, although the latter typically charge higher rates despite following traditional lending methods.
A. In your interest: Benefits of Education Loan
Education loans are good for you!
Financial benefits –Reduces strain on family expenses and savings and eliminates the need to liquidate investments in fixed deposits, mutual funds, or bonds.
Freedom to pay post-education – EMIs, apart from using a repayment schedule while planning family finances, are an easily accessible method.
It covers a wide range of expenses besides tuition fees –Yet another benefit of an education loan is that it includes living and travel expenses, supplies, and other resources.
Repayment terms made easy – Yet another benefit of an education loan is that it includes living and travel expenses, supplies, and other resources.
Encouraging building financial prudence –Encourages independent financial habits by allowing study abroad applicants to repay loans on their own, creating environments to start building their credit history, and enabling cheaper loans in the future.
B. Reputation: Building Credit History Version
A good credit score increases the eligibility for education loans in India and the chances for it to be approved and reduces interest rates. To build a good credit score, you should actively work towards establishing a credit history. And credit histories can be an excellent tool in your financial toolkit for future loans and other rewards!
C. The Loan Ranger: Facilitating Financial Discipline
Get on the bandwagon of financial discipline and independence at an early stage! Apart from the many benefits of building a good credit score, it also creates an extra layer of protection for the financial profile, helping prevent identity theft and fraud. A more robust credit score indicates low risk for you as a candidate, showing lenders that you might be eligible for even free services or bigger loans. However, financial consultation and advice are recommended.
Study abroad education loans provide financial backing not only for tuition fees but also cover living and travel expenses, other study and resource material costs, and additionally cater to charges related to academic pursuits.
Multiple Choice Question: Types of Education Loans for Indian Students Applying Abroad
Now that we have learned what an education loan is and its benefits let us look at the different types of education loans available to an Indian student applying to study abroad.
Study Abroad Education Loan available in India.
A study abroad education loan is an international student loan that paves the way for easy and affordable means to fund one’s education. Supporting your dreams without worrying about family finances and ensuring independence through financial discipline with the ability to reap benefits makes the process worthy of consideration.
1. Secured Education Loan to Study Abroad
A secured education loan to study abroad refers to the kind of international loan covered by guarantee or collateral, implying its tangibility.
Benefits of Secured Education Loan to Study Abroad:
- The amount that the bank can loan is almost always equal, or up to 70%, of the value of the collateral guaranteed.
- Collateral need not belong to the person who requires the loan – applicants can bring in third-party collateral as long as all legal clauses are met.
- Processing fee charges and property evaluation are specific to the sources from which the loan is acquired, and most are accessible with a low-interest rate.
- Processing time is appropriate due to the need for timely proceedings of each step required to apply for an education loan to study abroad.
2. Unsecured Education Loan to Study Abroad
Unsecured abroad or non-secured education loan refers to the kind of international student loan where the borrower does not pledge anything tangible against the loan amount. Although the borrower might have more advantages with an unsecured loan, the benefits are much higher with secured education loans.
Benefits of Unsecured Education Loan to Study Abroad:
- Includes a broad range of courses and schools across several nations, with the interest rate range being 10.5% to 14%.
- Possibility of applying without a co-signature applicant.
- Have no grace period, and 100% cost of higher education is covered.
- It does not demand an early payment fee and has flexible repayment options.
- Smooth processing of loans as it is paperless and done online.
Study Abroad Education Loan: Everything you need to know
Let’s learn about study abroad education loans as a solution for students seeking financial support to pursue their academic dreams abroad. It covers loan eligibility criteria in India, the application process, documents required for education loans, and the banks that offer student loans. This allows you to empower yourself with the knowledge to navigate the world of education loans confidently and embark on your international educational adventure.
A. Education Loan Eligibility in India
- Must be a citizen of India
- Must be at least 18 years old; minors must be accompanied by a parent/guardian.
- School GPA to be at least 60% to ensure future employability
- Proof of finances and income details
- Details of the degree the applicant wishes to apply for
- Details of the country and institution the applicant wishes to use for
B. Education Loan Documents Required
- Application form for the loan
- Income proof of family (including income tax returns and property proof)
- Standardised test scores
- Academic transcripts
- KYC documents – Aadhaar Card
- Birth certificate
- Bank statements for the last six months
- PAN card
- Residential Proof (including utility bills, rental agreement, electricity bills over the previous three months, etc.)
- Acceptance letter from the international school/institute
Some additional documents are required if you are applying for an educational loan to study abroad without collateral:
- University acceptance form with tuition fees
- KYC of the co-applicant
- Address proof along with electricity bill
- Applicant’s savings account details
- Form 16 and salary slip (applicable if co-applicant is a salaried person
C. The Process
Online application for study abroad student loan is:
- To submit an online application from the desired source, attach the required paperwork, and submit it.
- After thoroughly checking the submitted paperwork, the lender will contact applicants and proceed with the loan application.
Offline application for a study abroad student loan is:
- Applicants can acquire a loan by visiting the local branch and submitting the required paperwork.
- A representative will provide extensive insight on the reviewed paperwork submitted, after which the applicant will be asked to fill out the application if they agree with the terms in person.
- The applicant can also contact the lender, express interest, and discuss terms before applying.
It is best to have all required paperwork up-to-date and organised for a smooth loan application process.
D. Whom to ask: Banks Offering Education Loans
Now that you know what to do, let’s look where to go! Prominent banks that offer study abroad education loans include –
1. HDFC Bank – The entire cost of education is covered, with no upper limit for collateral. Offers loans up to ₹45 lahks in case of unsecured loans. The interest rate calculated using the Simple Interest rate is based on a floating interest rate linked to HDFC Credila’s Benchmark Lending Rate (CBLR).
2. State Bank of India (SBI) – Offers a particular scheme, Global Ed-vantage, up to ₹1.5 crore with a fast online processing time of 10 days. Female students are generally offered a 0.5% lower interest rate, and the loan is approved for those with a CIBIL score of at least 650.
3. Punjab and Sind Bank – Provides a maximum of up to ₹20 lahks depending on the course, with a margin of ₹7.5 lakhs, and ‘nil’ if the loan is eligible for Credit Guarantee Fund Scheme (CGFSEL). The bank offers an interest rate range from 7.9% to 8.65%. Repayment for all categories is possible in equal monthly instalments (EMIs) for 15 years.
4. IDBI Bank – Interest rate ranges from 6.75% to 8.75% depending on the course, and offers a maximum of ₹20 lahks only through collateral.
5. ICICI Bank – Provides education loans up to ₹ three crore with interest rates starting from 11.5% onwards. The student loan EMI calculator is available on the bank website.
6.Kotak Mahindra Bank – Offers up to ₹20 lahks using the HDFC Credila scheme.
7. Federal Bank – Offers up to ₹20 lahks with a repayment period of up to 15 years. It uses Special Vidya Loan and Vidya Lakshmi Portal via the bank website to generate benefits for applicants.
