Get Abroad Education Loan At Affordable Interest Rates

Definitive Guide to Education Loan For Abroad Studies in 2024

Namrata Sukhtankar
November 4, 2020
Share
10 min read
1,617
Last Updated: June 7, 2024

Table of Contents

Pursuing higher education abroad is a dream for many, offering a gateway to global opportunities and a rich cultural experience. However, the financial burden associated with studying abroad can be overwhelming. In such scenarios, education loan for abroad studies become invaluable, providing the necessary financial support to turn dreams into reality. This blog explains the education loans for studying abroad, covering eligibility, types, and the application process, and also explores the best banks and non-banking financial institutions (NBFCs) that cater to this important financial need.

Key Takeaways:

Importance Of Education Loan For Study Abroad

Studying in another country is a big investment that usually needs a lot of money. Education loans for studying abroad are really important because they help fill the money gap between what it costs to study and what the student and their family can afford. These loans give a way for students who dream of studying at top-notch global institutions to make it happen.

Key Features of Education Loan for Abroad Studies

Overseas Education Loan Amount: Education loans for overseas studies are tailored to meet students’ financial requirements, covering essential expenses like tuition fees, living costs, and additional academic-related costs. The sanctioned loan amount may vary based on the financial institution and the specific course of study chosen by the student.

Abroad Education Loan Interest Rate: Typically, the education loan for abroad studies interest rate fluctuate between approximately 8% to 15% or even higher, depending on the lending institution’s policies, prevailing market conditions, and the borrower’s profile.

Repayment Terms: The repayment terms associated with education loans for studying abroad differ among various financial institutions. Students and their guardians should carefully review these terms, considering factors like tenure, EMI structure, and grace periods available before commencing repayments.

Eligibility Criteria: Each lending institution establishes its eligibility criteria for sanctioning education loans for overseas studies. These criteria may encompass academic performance, co-applicants financial stability, course reputation, and other relevant parameters. Some of the best education loan for abroad are offered based on eligibility.

Collateral Requirement: Depending on the loan amount and the lending institution’s policies, students may need to provide collateral or guarantees. This requirement aims to secure the loan and ensure repayment, though specific terms may vary among providers.

Prominent Lending Institutions: Some best education loan for abroad studies are given by lending institutions. Several best bank for education loan for abroad studies offer tailored loans for international studies. Notable names in this sector include State Bank of India (SBI), Bank of Baroda, Axis Bank, Union Bank, Avanse, and HDFC Credila.

Types Of Lenders Offering Education Loan For Abroad Studies

Various lenders, including best bank to get education loan for abroad studies, NBFCs, government schemes, cooperative banks, specialized providers, foreign banks, and educational institutions, offer education loans tailored for abroad studies. Students can explore these options, compare terms, and choose the most suitable financing solution based on their academic aspirations, financial requirements, and preferences.

Banks: Several prominent banks in India, including public sector banks like State Bank of India (SBI), Bank of Baroda, Punjab National Bank, and private sector banks such as HDFC Bank, ICICI Bank, and Axis Bank, offer education loans tailored for students aspiring to study abroad. These banks provide competitive interest rates, flexible repayment options, and personalized services to meet students’ financial needs. Indian bank education loan for abroad studies also come with schemes.

Non-Banking Financial Companies (NBFCs): NBFCs like Avanse Financial Services, InCred, and Auxilo Finserve specialize in providing education loans for overseas studies. These institutions offer customized loan solutions, quick approval processes, and additional benefits like doorstep services, making them a preferred choice for many students.

Government Schemes: The Government of India, through initiatives like the ‘Global Education Loan’ scheme, collaborates with financial institutions to facilitate affordable education loans for students pursuing higher studies abroad. These schemes aim to promote international education among Indian students by offering subsidized interest rates, flexible terms, and extended repayment periods.

Cooperative Banks: Cooperative banks also play a significant role in offering education loans for studying abroad. These banks provide financial assistance to students at competitive interest rates, accommodating repayment terms, and simplifying documentation processes.

Specialized Education Loan Providers: Some institutions specialize exclusively in providing education loans for overseas studies, focusing on delivering tailored loan products, expert guidance, and comprehensive support services to students. These specialized providers often collaborate with international universities, educational consultants, and other stakeholders to facilitate seamless funding solutions for aspiring students.

Foreign Banks: Apart from domestic lenders, several foreign banks operating in India, such as Citibank, Standard Chartered, and HSBC, offer education loans for studying abroad. These banks leverage their global presence, expertise, and networks to provide students with competitive loan options, currency advantages, and international banking services.

Educational Institutions: In some cases, universities, colleges, and educational institutions abroad collaborate with financial institutions to offer education loan schemes specifically for their international students. These partnerships aim to simplify the loan application process, provide financial assistance, and support students throughout their academic journey overseas.

Best Banks For Education Loan For Abroad Studies In India

Picking the best bank for an education loan for studying abroad is a big decision because it can greatly affect how affordable and successful your academic journey will be. In this section, we’ll look into the top banks that are great at helping with money for studying overseas. We’ll check out their loan limits and interest rates for a quick handy comparison.

Comparison of interest rates and loan limit of best banks for education loans for abroad studies in India.

Sometimes, these banks are covered under education loan interest subsidy. However, these are rare cases only. There are also a few NBFCs that offer study abroad student loans based on their creditworthiness and academic performance. These NBFCs are private lending institutions that tie up with premier universities and provide doorstep loans to deserving students. Some of the NBFCs that give study loan for abroad are listed below:

Types Of Education Loan For Abroad Studies In India

Understanding the various types of education loans available in India allows students and their families to explore suitable financing options tailored to their academic pursuits, financial capabilities, and specific requirements.

Secured Education Loans: These loans require collateral or security against the loan amount borrowed. Collateral can be in the form of property, fixed deposits, or other assets. Secured loans typically offer lower interest rates due to the reduced risk for the lender.
Undergraduate Education Loans: Specifically designed for students pursuing bachelor’s degree programs, these loans cover tuition fees, examination fees, and other related expenses for undergraduate courses within India or abroad.
Postgraduate Education Loans: Aimed at students pursuing master’s, doctoral, or other postgraduate programs, these loans provide financial assistance for tuition fees, research expenses, living costs, and other academic-related expenditures.
Study Abroad Loans: These loans cater to students planning to pursue higher education in foreign countries. They cover expenses such as tuition fees, accommodation, travel, and other academic-related costs associated with studying overseas.
Vocational Education Loans: Tailored for individuals undertaking vocational or skill development courses, these loans support programs that equip students with specific skills and training, enabling them to pursue specialized careers.
Loan for Skill Development: These loans focus on skill enhancement and training programs that align with industry requirements, promoting employability and career advancement opportunities for individuals.
Girl Child Education Loans: Some financial institutions offer specialized education loans targeting girl students, providing them with financial support to pursue their academic aspirations and bridging gender disparities in education.
Loans for Specialized Courses: These loans cater to niche areas such as aviation, maritime studies, fine arts, and other specialized fields, offering financial assistance to students pursuing courses that require unique expertise and training.

Study Abroad Education Loan Collateral Requirements

One key decision you’ll face while choosing overseas education is whether to opt for a secured loan. Opting for a secured loan has a big impact on how you’ll pay your EMIs and what your interest rates will be. Let’s break down the differences.

Education Loan For Abroad With Collateral

This loan requires you to pledge an asset (house, property, fixed deposit, etc.) as security for the loan. If you fail to repay the loan, the lender can seize the collateral.

Pros:

Due to the reduced risk for the banks, secured loans usually come with lower interest rates compared to unsecured loans.
Banks might be willing to offer larger loan amounts with collateral as security.
Having collateral can strengthen your loan application and lead to quicker approval.

Cons:

If you default on the loan, you risk losing the pledged asset.
The type of collateral accepted might be restricted, and additional paperwork is involved.

Education Loan For Abroad Studies Eligibility Criteria

The basic eligibility criteria for applying for an education loan for abroad studies can vary slightly between different lenders and loan products. It’s crucial to compare loan options from different banks and institutions to find the one that best suits your needs and circumstances. You must also carefully read the terms and conditions of each loan before applying. The eligibility criteria for study abroad education loan generally tend to include the following:

Most lenders in India require the borrower and/or co-borrower to be Indian citizens. Some might consider residents with valid work permits and income proof under criteria for education loan for abroad studies
Typically, the minimum age is 18 years, though some lenders might set it higher for specific courses or countries
While the specific requirement varies, most lenders look for consistently good academic performance in previous examinations, like 10th, 12th, and graduation (if applicable). Entrance exam scores like GMAT, GRE, TOEFL, or IELTS might also be considered.
Most lenders require a co-borrower or education loan guarantor with a regular income and creditworthiness, often a parent or guardian
Co-borrower(s) need to provide income proof through salary slips, tax returns, or other documents. In some cases, property collateral might be required
Lenders assess the overall financial situation of the borrower and co-borrower to determine education loan repayment capacity
You must have secured admission to a recognised university or institution abroad with a valid offer letter
Not meeting the eligibility criteria could result in education loan rejection reasons

Application Process For Education Loan For Abroad Studies

The application process for education loan for abroad studies varies depending on the bank or NBFCs you choose to borrow from. However, most of the banks follow almost the same application process. Given below is the step-by-step education loan application process-

Step 1: Explore education loan offerings from various banks, NBFCs, and government schemes like MELS. Compare interest rates, eligibility criteria, processing fees, and repayment terms.

Step 2: Check if you meet the eligibility criteria like age, course, and institute. Most require an admission letter and a co-borrower with a good credit score.

Step 3: Determine the required loan amount covering tuition, living expenses, and other costs. Banks have maximum loan limits for different courses and institutes.

Step 4: Collect documents required for education loan below –

Step 5: Apply for the loan:

Online: Most lenders offer online applications through their websites or portals like Vidya Lakshmi. Fill out the form with accurate details and upload scanned copies of documents.
Offline: Visit the lender’s branch with all documents and complete the education loan application form with the assistance of a loan officer.

Step 6: The lender verifies your documents, assesses your creditworthiness, and checks the course details and the institute’s reputation. This process usually takes 1-2 weeks, and you might be called for an interview or asked for additional documents.

Step 7: Once approved, you’ll receive a loan agreement outlining the loan terms, interest rate, repayment schedule, and disbursal process. Sign the agreement and complete any formalities as required.

Repayment Process Of Education Loans

Repaying your education loans after your study abroad journey has a certain process in place. You need to understand a few terms and the exact roadmap to repaying your education loan. Here are a few repayment of education loan tips and key stages you should The repayment process for education loans in India typically involves a few key stages:

1. Moratorium period:

Moratorium period in education loan is a grace period after your studies are complete before you start making regular EMI payments. The duration varies depending on the lender and loan scheme, but it’s usually around 6 months to 1 year. This allows you time to find a job and stabilise your finances.

2. Commencement of repayment:

Your EMI payments will begin after the moratorium period ends. The exact date can be based on your course completion date or when you secure employment, whichever comes earlier.

3. EMI payments:

You’ll make fixed monthly instalments (EMIs) toward your loan principal and accrued interest. The EMI amount is calculated based on the loan amount, interest rate, and repayment tenure. Consistent and timely EMI payments are crucial to avoid late fees and penalties.

4. Repayment options:

Most lenders offer various repayment options to suit your financial situation. Some common options include:

Standard EMI: Fixed monthly payments throughout the tenure.
Graduated EMI: Payments start low and gradually increase over time.
Flexible EMI: Adjust your EMI amount based on your changing income.

5. Loan tenure:

The typical repayment tenure for education loans in India ranges from 5 to 15 years. Choosing a suitable tenure depends on your loan amount, EMI affordability, and career prospects.

FAQs

Q.1 What is an education loan?

Ans: An education loan is a type of financial assistance provided by banks or financial institutions to students or their parents/guardians to cover the expenses of education, including tuition fees, books, accommodation, and other related costs.

Q.2 Who is eligible to apply for an education loan?

Ans: Eligibility criteria may vary among lenders, but generally, students who have secured admission to recognised educational institutions, both in India and abroad, can apply for an education loan. The loan application may require a co-applicant, such as a parent or guardian, depending on the lender’s policies.

Q.3 What expenses are covered by an education loan?

Ans: Education loans typically cover expenses such as tuition fees, examination fees, library charges, hostel fees, and purchase of books, equipment, and other necessary educational materials. Some loans may also include coverage for travel expenses, study tours, or project work.

Q.4 Do education loans require collateral?

Ans: It depends on the loan amount and the policies of the lender. Generally, loans up to a certain amount may be offered without collateral, but larger loan amounts may require collateral in the form of property, fixed deposits, or other assets.

Q.5 What is the repayment period for an education loan?

Ans: Repayment periods can vary but are typically between 5 to 15 years, depending on the loan amount and terms agreed upon between the borrower and the lender. Some lenders may offer a moratorium period, allowing a grace period before the repayment begins.

Q.6 What is the maximum loan amount I can borrow for an education loan?

Ans: Some banks or NBFCs fund 100% of your education, however, the loan amount depends upon your credit score, academic score, university, and fees.

Q7. How to apply for education loan for abroad studies?

Ans: To apply for an education loan for abroad studies, research loan providers, understand eligibility criteria, prepare necessary documents, determine the loan amount, choose the right loan type, select a repayment plan, and submit your application online or offline.