Simplifying education
loan for abroad studies!

Indian students are becoming more and more inclined to complete their studies overseas. While the US, UK, and Canada continue to be some of the top options, Australia and EU nations are not far behind in terms of educational prospects. Getting an education loan for abroad studies is one of the most preferred options to finance education during the time of the course. For students who aspire to study abroad, many banks and other lenders now provide overseas education loans. Different student loan programmes are available from these lenders, but picking the one that is best for you might be challenging. We at UniCreds bridge the gap & help you tackle this challenge of choosing the best education loan. Our experts guide you to pick the most suitable competitive education loan available today. 

Different Types of Education Loans to Study Abroad

There are two types of student loans for abroad studies in India on the basis of Collateral. Both types are explained in detail below:

Secured Education Loan: A secured education loan, often known as a loan with collateral, requires the applicant to provide either material or immaterial security. A pledge of security to the lender may take the form of real estate, a fixed deposit, a life insurance policy, etc. Since the bank needs to confirm all the paperwork pertaining to the pledged security, this type of loan acceptance takes longer. However, it has lower interest rates on international student loans, lengthier payback schedules, and no repayment throughout the course of school. Additionally, there is a larger likelihood that this education loan will be authorised, and parental income is not a factor in a loan acceptance.

Unsecured Education Loan: In the case of an unsecured education loan for foreign studies, the applicant is not required to put up any security. This is a loan for abroad education loan without collateral. This form of student loan is suitable for students who do not have any security to give. However, it should be noted that an unsecured education loan is more difficult to get approval for and has a higher rate of interest (compared to secured loans). Unsecured student loans also have a shorter repayment period and certain repayments must be made while the borrower is still in school. Additionally, for non collateral education loan for abroad, a minimum co-applicant income is required.

All about Collateral 

A valuable object is used as collateral to secure a loan. Lenders' risk is reduced by collateral. The lender has the right to sell the collateral if a borrower defaults on the loan in order to recover its losses. There are different types of instruments that are accepted as collaterals. Collateral can be any sort of liquid assets, such as bonds, shares, FDs, or any immovable property, such as a house, any business property, or just land. The fact that agricultural land is not recognised as collateral is a crucial consideration. Additionally accepted as collateral are shares, bonds, bank deposits, mutual fund shares, gold, debentures, bank deposits, life insurance policies, and government securities. 

Now students can also obtain abroad education loans without collateral. For loans up to INR 7.5 lacs, parents or guardians are added as co-borrowers, and a third-party guarantee is acquired. Property or any other asset must be pledged as security for loans that are more than INR 7.5 lacs.

Top Education Loan Providers in India for studies abroad

Check out these top government and private student loan providers in India:

Axis Bank

For technical, professional, or career-oriented courses, students may apply for a study abroad loan in Axis Bank. Hostel costs, tuition costs, book costs, and other costs are covered by the loan amount, which starts at Rs 50,000 with competitive interest rates. With Axis Bank, the entire loan application process is simple.

Key Points

• There is no margin on student loans up to Rs. 4,000,000
• 15% interest rate on education loans up to Rs. 4,00,000 on bank loan for study abroad
• Your proposed education loan can be released two days after it has been approved
• Once the loan is authorised, one can also reimburse the previous instalments made toward the course that were refinanced

Bank of Baroda

Student loans for college are authorised under the Baroda Scholar programme for students who have been admitted to professional and technical programmes like MBA, MCA, MS, etc. The loan cap is Rs. 80 lakhs for institutions that are specifically listed and Rs. 60 lakhs for institutions that are not.

Key Points

• Processing fees: For loans beyond Rs. 7.5 lakhs, 1% (maximum Rs. 10,000)
• There are no processing charges for transactions up to Rs 7.50 lakh
• Loans up to Rs. 4 lakhs have no margin
• No cost debit card
• There won't be any fees for the paperwork
• No security required for up to Rs. 7.50 lakh

Top NBFCs for Study Abroad Education Loans

Numerous NBFCs, in addition to banks, provide education loan for abroad studies. NBFC frequently have fewer requirements for education loan for abroad eligibility.

Avanse

Established in 2013, Avanse is a new-age education loan firm that strives to create seamless loans for those Indian students wishing to study abroad. The specifics of Avanse's student loans are as follows:

HDFC Credila

The goal of HDFC Credila, India's first specifically designed education loan, is to help students realise their dreams of pursuing higher education overseas. Credila's loan approval is available even before receiving official admission.

Auxilo 

Auxilo is a new player in the school loan market, but it has already established itself by providing education loan for abroad studies to numerous students. The primary characteristics of an Auxilo education loan are:

InCred

All prospective students may apply for study abroad loan through the NBFC InCred. The following information relates to their loans for studying abroad:

How to Choose the Best Overseas Education Loan?

Numerous banks and commercial institutions in India provide education loans for abroad studies both domestically and overseas. However, each lender has a unique collection of products and services available. Banks differ significantly in terms of interest rates, processing fees, moratoria, prepayment policies, tax advantages, repayment lengths, and other factors. Therefore, it is important to examine options before choosing one that suits your demands.

• Interest Rate

When choosing a bank for a study abroad loan, the interest rate is still the most crucial factor to take into account because even a minor difference can result in huge financial savings. Learn the distinctions between fixed and floating interest rates, evaluate the interest rates provided by different banks and financial institutions, and select the most economical choice.

• Tax Benefits

Section 80E of the Income Tax Act of India, 1961 permits tax deductions on the interest portion of student loans obtained from scheduled Indian banks and gazetted financial organisations. Tax deductions are available for a total of 8 consecutive years, starting with the year the loan is taken and continuing for 7 years after that, or until the interest portion of the loan is fully repaid, whichever comes first.

• Costs Covered

The amount of the education loan for abroad studies issued relies on a number of variables, including the co-credit applicant's history, academic background, and reputation of the college or university. Some banks only cover a portion of the cost of schooling, but other banks pay the full cost. Ask your lender for a student loan & what expenses are covered by the loan. These expenses include tuition, lab and equipment fees, library and test fees, personal expenses, and airfare in the case of international education.

• Moratorium Extension

There is a predetermined time during the loan term when the borrower is excused from repayment obligations. A major benefit of loans with a moratorium term is that you don't have to worry about making payments while you're studying abroad.

• Prepayment Terms

The less interest accrues on your principal amount as the loan is repaid, the more money you will save. Ask your lender if there will be a prepayment penalty. As a result, after you land a job, you can come up with a plan to pay back the loan as quickly as you can.

• Loan Processing Time

It's important to meet the deadlines while applying to universities abroad. The loan sanction letter is a crucial document that must be shown as proof of financial resources when applying for a visa and for a university. Asking several lenders about their loan processing times will help you organise your entire application procedure appropriately.

• Effect of Exchange Rate

Always estimates the amount you will get at the time of distribution because any fluctuations in the exchange rate could have an impact on it.

Indian Government Education Loan Schemes For Abroad Studies:

The Indian Government has multiple education loan schemes that students can avail for their studies abroad. We are mentioning a few of them below.

1. Gujarat Government Education Loan for Studying Abroad: The Gujarat government provides education loans to students who want to pursue their studies abroad. The loan covers tuition fees, travel expenses, and other related expenses. Students can apply for the loan through the Gujarat State Education Loan Portal.
2. Vidya Lakshmi Education Loan: The Vidya Lakshmi Education Loan is a government-operated loan scheme that allows students to apply for education loans through a single online platform. The scheme covers loans from multiple banks and offers a simple, hassle-free application process.
3. Education Loan Scheme of the NBCFDC: The National Backward Classes Finance and Development Corporation (NBCFDC) provides education loans to students belonging to backward classes. The scheme covers tuition fees, travel expenses, and other related expenses.
4. Padho Pardesh Scheme: The Padho Pardesh Scheme is a government-operated loan scheme that provides financial assistance to students who want to study abroad. The scheme covers tuition fees, travel expenses, and other related expenses. Students can apply for the loan through the Padho Pardesh Scheme online portal.
5. Dr Ambedkar Central Sector Scheme: The Dr Ambedkar Central Sector Scheme is a government-operated loan scheme that provides financial assistance to students from economically weaker sections of society. The loan covers tuition fees, travel expenses, and other related expenses. The government subsidies the interest rate on loans.

Students who wish to apply for these education loan schemes must carefully review the terms and conditions of each scheme and choose the one that best fits their needs.

Abroad Education Loan Eligibility

It is essential that students check if they are eligible to apply for an education loan for abroad studies. Although each bank or financial institution will have particular criteria or eligibility for education loans; we have some general terms and conditions that are common among them all. The following is a list of the typical terms and conditions that any bank will usually adhere to when providing an education loan.

• The candidate must be an Indian national
• If the applicant is under 18 years old, then her or his parents will have to take out the loan
• The candidate must have a strong academic record
• The candidate must have been accepted to a reputable overseas university, institution, or college
• The applicant's chosen course must be technical or professional because banks prefer courses that are job-oriented

Note: Please be aware that each bank may have its own qualifying requirements, which must be followed when applying to that specific bank

Documents Required For Secured Education Loans

Documents needed for education loans for abroad studies differ depending on the lender and the type of loan being requested. The applicant must be fully informed of the documentation needed to apply for a study loan abroad before applying for education loan. The standard paperwork that almost all lenders demand is listed below:

Essentials

• Filled application form 
• Photographs: Passport-size photographs of the applicant and the co-applicant. 

Identity Related Documents

KYC Documentation

• Aadhar Card
• PAN Card
• Driving License

Address Proof

• Aadhar Card
• Valid Passport
• Valid water/electricity/ LPG Bill
• Voter’s ID card
• Current House Lease Agreement

Academic Record Documents of the Applicant

• Proof of Admission
• 10th Result
• 12th Result
• Undergraduate Result Semester Wise (If required)
• Entrance Exam Result - Abroad institutes (GRE, GMAT, TOEFL, etc.) 
• Entrance Exam Result- Domestic institutes (CAT, CET, GMAT, CMAT, JEE, NEET, GRE, etc.)\

Financial Documents of the Co-Applicant

For Salaried Co-Applicant

• Last 3 months’ salary slips
• Bank account statement for the previous six months
• Copy of Form 16 for the last two to three years or a copy of IT Returns for the last two to three fiscal years, acknowledged by the Income Tax Department (salary account)

For Self-employed Co-Applicant

• Business address proof (If Applicable) 
• TDS Certificate (Form 16A, if applicable) 
• Last 3 years ITR Certificate of qualification (for C.A./ Doctor and other professionals) 
• Bank Account statement for the last 6 months

Collateral Related Documents (If applicable)

• Title deed & Sales Deed 
• Allotment letter 
• Registration receipt 
• Tax copy or electricity bill 
• Chain deed of 30 years 
• Government-approved building plan  
• OC and Completion Certificate (if the property is constructed)

How to Apply for Abroad Education Loans?

It is usually good to apply for an education loan for abroad studies a little early because the entire loan process—from loan application to approval and disbursement—takes time. Before understanding the whole application process; here are a few things that a student must do prior to officially applying. 

• Check to see if the course you plan to enrol in is accepted by the banks
• Determine how much of a loan you will need and how much you can arrange on your own
• Choose the student loan that best suits your needs by comparing those offered by various banks for studying abroad

Take the following actions to apply for a student loan through UniCreds:

Step 1: Check your loan eligibility online

Step 2: Seek professional loan advice to weigh your options

Step 3: Choose a lender and submit an online application

Step 4: Get the personalised education loan paperwork checklist

Step 5: Submit the necessary documentation for your student loans online 

Step 6: Get the property and other legal evaluations completed

Step 7: After the lender approves your application for an education loan, obtain the loan sanction letter

How Student Loan Repayment Works

If you have taken out an education loan, it's important to have a plan in place for its repayment. The first step is to secure a job and inform the bank of your employment status. Before the end of the moratorium period, send your account details to the bank so they can set up an auto debit system. This ensures timely payment of your EMIs, which is crucial to avoid penalties and late fees. 

It's important to pay your education loan EMIs on time to maintain a good credit score. Some lenders allow you to pay the interest on the loan during the course, which reduces the financial burden when paying the actual loan amount. You can also opt for paying simple interest instead of compound interest, which saves money in the long run.

If you need help managing EMIs on a low-paying job, you can request the bank to increase the loan repayment tenure. This will reduce the EMI amount and give you more time to pay off the loan. Another option is to try and get your EMIs reduced to a suitable amount that fits your budget.

What Are The Rights & Responsibilities of A Student As A Borrower

As a student borrower, you have both rights and responsibilities. Here are some of the general rights and responsibilities of a student borrower:

Rights:

1. The right to receive clear and concise information about your loan, including the terms and conditions, interest rates, fees, and repayment options.
2. The right to access your loan records and receive regular statements that show the amount you owe and the payment history.
3. The right to choose the repayment plan that best suits your needs.
4. The right to receive a grace period before repayment begins.
5. The right to receive loan counselling to help you understand your rights and responsibilities as a borrower.

Responsibilities:

1. The responsibility to repay the loan on time and in full, including any interest and fees.
2. The responsibility is to notify your lender or loan servicer of any changes in your contact information, such as your address or phone number.
3. The responsibility is to inform your lender or loan servicer if you encounter financial difficulties that may affect your ability to make payments.
4. The responsibility to choose a repayment plan that you can afford.
5. The responsibility to attend entrance and exit loan counselling to learn about your rights and responsibilities as a borrower.

Understanding your rights and responsibilities as a student borrower is essential to manage your loans effectively and avoiding any potential problems. If you have any questions or concerns about your student loans, contacting your lender or loan servicer is always a good idea for guidance.

How to Get an Education Loan With a Low CIBIL Score?

In India, CIBIL is a credit information company that evaluates an individual's credit history and debt to provide credit reports and scores. A CIBIL score ranging from 1 to 999 determines a person's creditworthiness, and a poor score can hinder the chances of getting a loan. However, those with bad credit can still explore options such as offering collateral, applying for a loan with a co-signer, or considering alternative lending sources. It's crucial to analyze these options' terms and interest rates to ensure that they are sustainable and feasible for one's financial situation. If you have poor credit but need a loan in India, options are available. 

• NBFCs: Some NBFCs may approve loans with credit scores as low as 360, but interest rates will be higher than average.
• Collateral: Providing valid collateral can reduce interest rates, such as gold or property, although life insurance policies typically do not offer much of a discount.
• Gold Loans/Loans against property: Securing a loan against gold or real estate can increase the chances of approval and potentially lower interest rates.
• P2P lending: Peer-to-peer lending websites offer loans up to Rs.5 lakh with interest rates between 12% and 24%, without requiring collateral.
• Loan protector policies: Some banks consider loan protector or life insurance policies for securing loans.

Remember to analyse these options' terms and interest rates to find the best fit for your financial needs.

What Is The Importance Of Insurance In The Education Loan Process

It is a known fact that most lenders only allow the parents of the loan applicant as co-applicants for study abroad loans, whether secured or unsecured. However, purchasing loan insurance can provide relief to co-applicants from the burden of repaying the entire education loan amount along with interest in case of unforeseen events. 

This can be especially helpful for government bank education loan borrowers, as even retired parents can be designated as co-applicants. In the event of a tragedy that results in a terminal illness for the student, the insurance company will pay the entire education loan amount, relieving the co-applicants of this financial obligation.

Know More About Abroad Education Loan

• Documents Required for Education Loans to Study Abroad
• Get An Education Loan Without Collateral?
• Role of co-applicant or co-borrower in an education loan
• Incredible Advantages Of An Education Loan
• Top Education Loan Providers In India For Abroad Study