how to get education loan to study abroad

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To apply for an education loan abroad, it is advisable to start the procedure early to avoid any delays. Given below is a generalized outline of the steps to apply for education loans abroad:

  • Finalize the type of loan you wish to borrow
  • Confirm the eligibility and documentation requirements (some may have specialized requirements)
  • Visit the official website and fill out the application form
  • Upload all the necessary documents
  • Wait for the review and loan approval

The loan amount is disbursed in installments as per the requirements of the educational institution you have got admission in.

TYPES OF EDUCATION LOANS FOR ABROAD STUDIES

Student Loans are offered by Public Sector Banks, Private Sector Banks and NBFCs. Out of the three, the public banks which require collateral security are considered as secured loans while the loans from Private Banks and NBFCs are considered as unsecured loans. Here is a list:

  • PUBLIC BANKS- State Bank of India, Union Bank of India
  • PRIVATE BANKS- Axis Bank, HDFC Bank, ICICI Bank
  • NBFCs- HDFC Credila, MPower Financing, Prodigy Finance
Secured LoansUnsecured Loans
Collateral lending without co applicantCollateral lending without co-applicant
Higher Loan amountsLess than public banks
Lesser ROIHigher ROI
Longer tenureShorter tenure
Low Processing FeesHigh Processing Fees
8-10% margin  money0- 10% margin money

EDUCATION LOAN DETAILS

Lender NameLoan AmountInterest RatesCollateral Required
State Bank of India$9,000- $120,00011.15%Yes
Union Bank of IndiaUp to $120,0009.8%- 10.8Not up to $48,000
Axis Bank$9,00011%- 13.5%No
ICICI BankUp to $240,0009.8%- 12%No
HDFC CredilaStarting from $9,00010.15%Yes
MPower Finance$2,001 to $100,00012.74%No
Prodigy FinanceUp to 110,00012%- 13.9%No

DOCUMENTS REQUIRED

  • Passport
  • Personal Identification proof
  • Passport-size photographs
  • Proof of admission by the University
  • Previous academic records and transcripts
  • Standardized Test Scores
  • A duly filled Loan Application Form
  • Documentation verifying your place of residence
  • Documentation verifying your age
  • Necessary bank documents
  • A statement detailing the Cost of Attendance and other expenses
  • Collateral proofs (if needed)
  • Other necessary documents

STUDENT LOAN FOR STUDYING ABROAD: ESSENTIAL DETAILS

  • COLLATERAL REQUIREMENTS- Collaterals are intellectual, immovable and tangible properties which are pledged as a security for the repayment of loan. For some of the loan applications, the collateral security from a third party, which excludes your parents, is also acceptable. The value of collateral could vary, depending on the choice of loan program.
  • CO- APPLICANT-  If you lack collateral and are seeking an unsecured loan option,you may need a co- applicant with no existing liabilities. They may increase the chances of loan approval and probably at a lower rate.
  • MARGIN MONEY– In simple terms, margin money is the money you need to put in from your side or the down payment made by you against the loan. The lenders pay around 80% of the loan amount and the rest remains margin. It is also a kind of collateral which is deposited as a guarantee of loan repayment.
  • LOAN TENURE– The loan tenure is the total duration of time between the disbursal of your loan amount and time of your final repayment of loan. The loan tenure varies for different lenders as well as the types of loan borrowed. It could be higher for secured loans but lower for unsecured loans.
  • MORATORIUM PERIOD– A Moratorium period, is a period fixed by your lender during which you do not have to start with your loan repayment. This is generally between six months to one year as per the government guidelines and may vary around this tenure depending on the lender and the choice of loan.
  • INTEREST RATES– Education Loan interest rates are decided by the lender on the amount of loan offered to you and could be either fixed or floating.
  • REPAYMENT PLANS– The loan repayment plans will be influenced by the moratorium period and the tenure of the loan. Depending on your loan plan, the repayment period could vary between 7- 15 years.

FACTORS TO KEEP IN MIND BEFORE APPLYING FOR AN EDUCATION LOAN

  • Finalize your university and course of study
  • Calculate an estimated amount you would require
  • Make a list of all the documents required for the application 
  • Identify a co-signer (if needed)
  • Your loan application should be made 5-6 months ahead of your course commencement date
  • Estimate the disbursal amount- the amount you’ll receive from your lender
  • Make sure all of your required expenses besides tuition are covered by your loan scheme

EXPENSES COVERED IN EDUCATION LOAN

A suitable Education loan is one which covers all of your expenses (academic costs + living expenses) while staying abroad. These aspects include:

  • Admission fees
  • Cost of Attendance
  • Food and accommodation fees
  • Charges for books and other supplies
  • Expenses for travel and study tours
  • Health Insurance
  • Other miscellaneous expenses

ELIGIBILITY CRITERIA

A loan applicant should possess the following eligibility criteria:

  • Proof of Nationality/ citizenship
  • A confirmed seat at one of the abroad universities 
  • Applicant should have an excellent academic record
  • Choice of course with promising career prospects
  • Must be at least 16 years of age 

CONCLUSION

In conclusion, securing an education loan demands your careful planning, research and documentation. It is vital to explore different financing options with a clear study plan to determine your best fit and with strategic planning, you can secure necessary fundings for yourself to study abroad.