A Guide On Abroad Education Loan Eligibility

For many of us, studying abroad is a long-awaited dream come true. However, it’s a decision that requires careful planning and consideration. Not only do we need to excel academically, but we also have to manage our finances wisely. Thankfully, the availability of education loans has made this dream more attainable than ever before. Moreover, banks have recognised the aspirations of students seeking foreign education and now offer dedicated loans for studying abroad. With the average cost of studying abroad ranging from 15 to 20 lakhs per year, fulfilling the abroad education loan eligibility has become essential for aspiring individuals.

Overseas education loans are generally categorised as collateral and non-collateral. Many Indian banks offer these loans to deserving candidates at lower interest rates and with flexible terms and conditions. Acquiring the loan is not overly difficult, but it is vital to meet the education loan eligibility criteria when applying for it. These are the basic abroad education loan eligibility criteria which you need to meet: 

• Indian citizenship is mandatory for the student.
• The loan applicant should be at least 18 years old; otherwise, their parents can apply for the loan.
• A strong academic background is required.
• The candidate must have secured admission to a recognised foreign university, institution, or college.

Study Abroad Loan Eligibility For Collateral/Secured Loans

Secured overseas education loans require collateral, typically in the form of property. To be eligible for applying for a secured education loan, you must meet the specified abroad education loan eligibility criteria. 

• The property must be registered under the Municipal Corporation, Improvement Trust property, or Nagar Parishad.
• Properties paying tax to Gram Panchayat or Nagar Panchayat for agricultural land or farmhouses do not have abroad education loan eligibility as per RBI norms.
• Property documents, including layout plans and building plans, should be approved by the relevant departments.
• A continuous chain of documents spanning 30 years is required.
• Banks typically consider only 80-85% of the property value for loan calculations, based on market value.
• Parents must have a CIBIL score above 700 and a positive credit history for secured education loans.

Study Abroad Loan Eligibility For Non-Collateral/Unsecured Loans

When it comes to unsecured overseas education loans they do not require collateral. Instead, eligibility for this type of loan is typically assessed based on the loan applicant’s and co-applicants’ Income Tax Return (ITR) and CIBIL scores. Let’s explore the abroad education loan eligibility for this loan type.

• The parent’s annual income should exceed 6 lakhs without any liabilities.
• If the parent has a business, they need to provide their Income Tax Return, balance sheets, profit and loss statements, and business registration certificates.
• Udyog Aadhar registration is mandatory for parents with unregistered businesses.
• The parent’s CIBIL score must be above 700 with a good credit history.
• For farming parents without filed ITR, students can still secure an unsecured education loan of 50-60 lakhs based on GRE scores (300+), without the need for a parent’s ITR.
• Admission to the top 150-200 universities under the QS World Ranking enables students to obtain unsecured overseas education loans of 20-40 lakhs INR from nationalised banks, based on the average income of parents.

Now, that we have delved into the types of loans and their respective eligibility criteria. It is now essential to see the documentation involved in securing these loans. Here is the complete information on the documents required: 

For Student Applicants:

• Proof of Identity: PAN card or Aadhar card.
• Proof of Residence or Address: Recent copy of Telephone Bill or Electricity Bill.
• Your Passport.
• Academic Records: 10th and 12th results.
• Graduation Result: Semester-wise records if applicable.
• Entrance Exam Result: GMAT, GRE, TOEFL, or IELTS.
• Offer letter or admission letter from the university or institution.
• Conditional admission letters may be considered in some cases.
• Schedule of Expenses or Statement of Study Cost.
• 2 Passport-size Photographs.
• The last 1-year’s Account Statement is a previous loan from other banks or lenders.

For Co-applicant:

• Proof of Identity (any one): PAN card, Passport, Driver’s License, or Voter ID card.
• Proof of Residence or Address (anyone): Recent copy of Telephone Bill, Electricity Bill, or Aadhaar Card.
• 2 Passport-size Photographs.
• Last 1-year Account Statement if there was any previous loan from other Banks or Lenders.

Salaried Co-applicants’:

• 3 Months’ Salary Slip or Salary Certificate.
• Copy of Form 16 for the last 2 years and IT Returns for the last 2 financial years, acknowledged by the IT Department.
• Last 6 months Bank Account Statement (Salary Account).
• Pension Passbook of the last 12 months and Pension Order (for Pensioner Parents).

Self-Employed Co-applicant Or Guarantor:

• Business registration proof.
• 2 years of IT returns.
• Last 2 year’s Income Calculation, Balance Sheet, and Profit and Loss A/c.
• Bank Account Statement for the last 6 months. 

Which Banks Offer Education Loans In India To Study Abroad? 

If you are successfully able to meet the above abroad education loan eligibility, you can apply for a loan at any of these top Indian banks. 

1. Punjab National Bank

You can easily obtain the maximum loan amount you need with the PNB Udaan Scheme and hassle-free. 

Repayment: Within 15 years

2. Axis Bank

Due to its streamlined process, this bank is a popular choice among students for education loans. The minimum loan amount is Rs. 50,000, while the maximum loan amount is Rs. 20 lakhs. Female applicants can benefit from special interest rates.

Repayment: Within 5-15 years

3. Bank Of Baroda

The bank provides the Baroda Scholar scheme, offering loans with a maximum amount of 20 lakhs.

Repayment: This is up to 10 years for loan amounts under Rs. 7.5 lakhs and up to 15 years for loan amounts exceeding Rs. 7.5 lakhs.

4. HDFC Bank

You can obtain a loan amount of up to Rs. 30 lakhs, with no upper limit when certain collaterals are provided.

Repayment: Within 15 years

Is It Possible To Get A Study Abroad Loan Without Collateral?

Frequently, students with exceptional academic backgrounds may lack stable collateral to offer to banks for loans. Nonetheless, certain private banks and NBFCs (Non-Banking Finance Companies) offer education loans up to Rs. 40 lakhs or more without requiring collateral. However, the interest rates for such loans tend to be higher in these scenarios.

FAQs

1. What happens to an education loan if the visa is rejected?

In case of a visa rejection due to insufficient funds, you can reapply once you have arranged for the required funds. Likewise, if the rejection was a result of incomplete or inaccurate documentation, it is important to thoroughly review the abroad education loan eligibility requirements and provide all the necessary documents when reapplying.

2. Can I get 20 lakhs education loan without collateral to study abroad?

As per RBI regulations, the maximum loan amount for domestic study programmes is Rs. 10 lakhs. For international study programmes, it is Rs. 20 lakhs. Loans up to Rs. 4 lakhs do not require collateral security based on the established guidelines.

3. Can I get an education loan without my parents?

Your primary co-applicant, ideally your parents or an immediate family member, is the individual who applies for the loan alongside you and shares the responsibility of repaying it within the specified timeframe. Having a primary co-applicant is a mandatory requirement in the education loan process.