Education Loan for Studies Abroad

Nowadays, many students are aspiring to procure a degree or a certification in a particular field from universities abroad. This may be done to ensure that the knowledge procured from a particular course is of the best quality or the reason may also be that certain courses offered in the universities abroad are not provided by the Indian universities.

The parents of the students would have made a couple of investments which may cover the financial requirements of a course, but a certain amount of shortage can still prevail. Therefore, various public-sector banks and private sector banks are providing loans for students who want to study abroad. The loans are given at rates which are beneficial for the students and also even the duration for repayment of these loans are feasible.

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Repayment

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Expenses covered under the Education Loan

  • The tuition fee, laboratory fee, and library fees will be covered by the education loans.

  • The fees paid for the examination, hostel, university, and the institution.

  • Certain purchases such as books, equipment required for the course, uniform if required, and instruments.

  • The amount required for the purchase of a personal computer or a laptop will be covered if required.

  • Certain expenses such as the caution deposit, refundable deposit, or the building fund will be covered only if supported with the receipts/ invoices.

  • Most of the banks will also cover the insurance premium of the borrowing student.

  • Passage and travel expenses of the student.

  • Expenses of case studies, study tours, and project works will also be covered.

  • If the student wants to take up additional coaching classes then the loan won’t cover the expense.


Eligibility Criteria and Required Documents

  • The student applying should be an Indian citizen.

  • The student should have secured an admission into the university.

  • The student should have finished higher secondary school or an equivalent course.

  • The RBI hasn’t posed any restrictions on the upper age limit of the students, but, it may vary from one bank to another.

  • The following documents are required for availing of an education loan:

    • Marksheets ( Class 10 and Class 12 or of an equivalent course).

    • The documents and details of the concerned university.

    • Income documents (Salary slips and Income tax returns) of the co-applicant.


Interest Rates, Loan Financing, and Collateral Requirement

Interest Rates

  • The loans are charged with interest from 8%- 11%.

  • The banks mostly calculate the interest on loans from Marginal Cost of Funds based on Lending Rate (MLCR) and also have an additional spread to the interest rate.

  • There will be a concession of 0.50% on the loans given to girl students.

  • An additional 2% can be charged on the interest rate if there is a delay in repayment of the loan.

 Loan Financing

  • The bank may approve of a loan covering 100% of expenses.

  • There is no margin charged for loans below Rs.4 Lacs, but for loans above Rs.7.5 Lacs, a marginal rate of 15% is charged.

  • After the approval of the loan, the respective bank will disburse the amount of money availed directly to the institute/university.

 Collateral Requirement

  • The banks will not ask for a collateral for a loan up to Rs.4 Lacs.

  • A third-party guarantee with an assurance of future income will be required for loans from Rs.4 Lacs to Rs.7.5 Lacs.

  • For loans above Rs.7.5 Lacs, a 100% collateral is required and also an assurance of future income should be given. 


Repayment of Educational Loans

  • The repayment period will begin usually after the completion of the course.

  • The common amount of period given for repayment of loans is 5-years to 7-years, however, it can be extended further.

  • Certain banks give a relaxation period of 6 months to secure a job and then make a payment.

  • The loans have to be repaid by the student itself.

  • The loans should be paid under the equated monthly instalment (EMI) scheme, this is done so that the students are not financially burdened.


 Top Education Loan Providers in India to study abroad

 The following table consists of information regarding the top loan providers, amount of loan given, and the rate of interest:

Loan Provider

Loan Amount for Studies Abroad

Rate of Interest

1.State Bank of India

Rs.20 Lacs

  • 10.50% above Rs.7.5 Lakh

2. Allahabad Bank

Rs.50 Lacs

  • Up to Rs.4 Lacs-11.45%

  • Up to Rs.7.5 Lacs-11.45%

  • Above Rs.7.5 Lacs- 10.95%

3.Axis Bank

Rs.20 Lacs and above depending upon the requirements

  • Up to 4 lakhs- 15.2%

  • Up to 7.5 lakhs- 14.7%

  • Above 7.5 lakhs- 13.7%

4.HDFC

Up to Rs. 10 Lacs

  • Max-15.25%

  • Min- 9.50%

  • Avg-12.41%

5.Credila

No limit. Depends on requirement

 

  • 12.10%+ floating rate (depends on the risks points of the applicant)

6.IDBI Bank

Depends on requirement

  • Up to 10 lakhs-10.45%

  • Above 10 lakhs-11.45%

7.Indian Overseas Bank

Up to Rs.40 Lacs

  • Up to 4 lakhs- 11.50%

  • Up to 7.5 lakhs- 12.00%

  • Above 7.5 lakhs- 12.25%

8.Avanse Financial Services

No limit. Depends on requirement

 

  • 11.5%+ floating rate(depends on the risks points of the applicant)

9.Syndicate Bank

Rs.20 Lacs

  • 11.5%+ floating rate (depends on the risks points of the applicant) 

10.Canara Bank

Rs.20 Lacs and above depending upon the requirement

  • Up to 4 lakhs- 11.15%

  • Up to 7.5 lakhs- 11.65%

  • Above 7.5 lakhs- 11.15%



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