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 loan 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.

What is the maximum amount limit for education loans to study abroad?

Students may apply for study loans for abroad studies worth up to INR 1 crore or more under secured education loans. Students may apply for education loan up to INR 40 lakhs in overseas education loans without collateral. Depending on the profile, nation, course, and other factors of the applicant and co-applicant, this loan amount limit may fluctuate or increase.

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:

State Bank of India

SBI provides funding for postgraduate degree programmes as well as professional and technical graduates who are looking for work in nations like Italy, the United States, the United Kingdom, Ireland, Russia, Austria, Finland, Norway, Denmark, Poland, Spain, Germany, New Zealand, Singapore, Canada, etc. These courses include but are not limited to, MBA, MCA, MS, diploma programmes at reputable colleges, etc. The loan provided by SBI pays for tuition, books and equipment costs, exam fees, lab and library fees, caution deposits, travel costs, and more.

Key Points

• Up to Rs. 1.50 crore in loans, with a minimum loan amount of Rs. 7.50 lacs
• Favourable education loan interest rate for abroad study
• Online application process that is fast
• Can be paid for up to one year using EMI
• Tax benefit: Under 80(E)

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

Canara Bank

University tuition, travel expenses, test fees, lab fees, library fees, book/equipment fees, and other relevant expenditures are all covered by the Canara Bank education loan. For loans over Rs. 7.5 lakhs, a co-borrower is required, and 100% collateral security is required.

Key Points

• The maximum loan amount is determined by need
• A 15% loan margin is required for loans over Rs. 4 lakh
• Duration of student loan repayment: The maximum payback duration is 15 years
• No security is needed for loans under Rs. 4 lakh. There must be physical collateral security for loans over Rs. 4 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:

Which is the cheapest Education Loan in India to Study Abroad?

If your university is on BOB's exclusive list of universities, the Bank of Baroda offers the cheapest education loan for studying abroad. You may be eligible for an education loan at a rate of interest of 6.75% if your institution is among the elite AA or A list of institutions, and you may be eligible for an education loan of up to INR 7.5 lakhs at a rate of interest of 7.85% if your university is among List B. Education loans over INR 7.5 lakhs are provided to institutions on List B at an interest rate of 7.6%.

How to Choose the Best student loan for study abroad?

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.

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 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