Education overseas is the dream of most students, but with growing cost for education, expenses of living, and others, the possibility of doing this seems far-fetched for most students. An education loan for abroad studies has thus turned into an attractive and efficient solution for both the student and the parents when seeking funds for overseas education that exhaust the parent’s savings. This all-inclusive guide will discuss everything you need to know about education loans for abroad studies-from eligibility criteria and documentation to repayment options and tips for choosing the best loan.
Importance of Education Loan for Abroad Studies
There are numerous benefits to studying abroad, including access to quality education, cultural exposure, and better career prospects. The cost of tuition fees, accommodation, travel, and daily expenses can be overwhelming, though. Education loans enable students to fulfill their aspirations as it provides financial support to meet all the costs associated with studying abroad.
Some key benefits of education loans for abroad studies include:
Access to Quality Education: Financial constraints are now overcome to access the finest education institutions in the globe.
Reduced financial burdens: Parents do not liquidate their savings or have to sell their assets in raising funds for education.
Low rates of interest: All Banks and financial institutions offer Education loan at competitive interest rates
Convenient Repayment Plans: Students can begin their repayments after completing a course and getting a job.
Tax Benefits: Under section 80E of Income Tax Act, the loan borrowers can claim tax deductions upon paying interest on education loan.
Types of Education Loans for Study Abroad
There are mainly two types of education loans available for overseas study:
Secured Education Loans:
Such loans require security, including property, fixed deposits, or other assets.
Secured loans usually attract lower interest rates along with higher amounts of the loan.
Unsecured Education Loans:
These are the education loans that don’t ask for any form of security; however, interest rates could be higher along with tougher eligibility criteria.
The loan amount is usually capped based on the student’s profile and future earning potential.
Eligibility Criteria for Education Loans for Overseas Studies
Before applying for an education loan, it is highly important to ensure that all the eligibility criteria are satisfied. Though the criteria may change lender to lender, here is the general eligibility criteria which follows a pattern:
Nationality: The applicant should be a citizen of India.
Age Limit: The age eligibility is usually between 18 to 35 years only.
Admission to Authorized Institutions:
A confirmed admission letter from a recognized foreign university or institution is strictly necessary.
Academic Performance:
There are usually consistent academic records to prove that the student can complete the course.
Co-Applicant:
A co-applicant, usually a parent, spouse, or sibling, with a steady income is usually required to guarantee.
Course Eligibility:
The course should be a full-time, part-time, or vocational program that should be recognized by the lender.
Key Expenses Covered by Education Loans for Abroad Studies
An education loan for abroad studies usually covers all these expenses such as:
Tuition Fees: Covers the cost of the academic course.
Living Expenses: Accommodation, meals, and other daily expenses.
Travel Costs: Flight tickets and other transportations.
Books and Study Materials: Cost for textbooks, laptops, etc.
Health Insurance: Most universities require health insurance for international students.
Examination and Visa fees: Such expenses may involve entrance examinations such as TOEFL, IELTS, GMAT, and applications for visa.
How to Apply For an Education Loan for Overseas Studies
Applying for the education loan may seem somewhat of a process, and it does get simpler if divided into a step-by-step plan:
Research and Compare:
Understand and compare education loans from different banks and financial institutions offering various interest rates, tenure duration, and flexibility in repayment patterns.
Check Eligibility:
Calculate the total amount of funds needed to cover tuition, as well as living, travelling, and other expenses.
Documentation Preparation:
All necessary papers, such as:
Admit letter
Academic documents
Passport and visa from the country of destination
Proof income of co-applicant
Collateral documents if available
Loan Application Submission:
Submit to the lender, all requisite documents along with the completed application form.
Loan Processing and Disbursal
The lender is supposed to verify the documents and grant the amount directly to the university or credited to the account of the candidate.
Documents Required for Education Loans for Overseas Studies
To ensure seamless loan disbursement, the following documentation is required:
Identity and Address Proof:
Aadhar Card, Passport, Voter ID or Driving License.
Academic Documents
Mark sheets, degree certificates, admission letters from university.
Income Proof
Salary slips, ITRs of co-applicant / guarantor, or his bank statement.
Collateral Documents
For secured loans,
Property Papers, Fixed Deposit receipts, collateral proof, etc.
Passport and Visa:
Copy of passport and student visa.
Bank Statements:
Recent bank statements of both applicant and co-applicant.
Best Banks and Financial Institutions for Foreign Studies Education Loans
Some Indian banks and NBFCs give education loans to the foreign studies aspirants. The lenders include the following ones listed below:
State Bank of India (SBI)
Interest Rate: 9.3% – 10.2%
Maximum Loan Amount: Up to INR 1.5 crores
Repayment Tenure: Up to 15 years
HDFC Bank
Interest Rate: 9.5% – 13%
Maximum Loan Amount: Depends on the eligibility criteria.
Repayment Tenure: Up to 15 years
Axis Bank
Interest Rate: 10.5% – 13%
Maximum Loan Amount: INR 75 lakh
Repayment Tenure: Up to 15 years
ICICI Bank
Interest Rate: 10% – 12%
Flexible loan amount based on student profile.
Avanse Financial Services (NBFC)
Customizable education loan solutions with quick processing.
Tips to Select the Best Education Loan for Abroad Studies
Selecting the right education loan is the key to avoiding stress related to money later. Here are some tips to be considered:
Compare Interest Rates:
Find the lenders offering competitive interest rates.
Check Loan Tenure:
The longer the repayment tenures, the lighter the burden of the monthly EMI.
Check Processing Fees:
Some banks charge a processing fee; ensure that you have factored that in.
Check Moratorium Period:
Choose a lender that allows a moratorium period for start repayment after course completion.
Review Loan Margin:
Banks may also demand a percentage of the total loan amount to be contributed by the borrower.
Customer Support:
Ensure that the lender has an efficient customer support system in case any help is needed.
Repayment of Education Loans for Abroad Studies
The repayment process for education loans typically begins after the moratorium period, which is the course duration plus an additional 6 to 12 months. Students can repay the loan through:
- EMIs (Equated Monthly Installments)
- Part-payments to reduce loan burden
- Full prepayment to save on interest costs
Most lenders offer flexible repayment options to ease financial pressure on students.
Conclusion
An education loan for abroad studies acts as a stepping stone for students aspiring to achieve their academic and career goals in top international universities. By understanding the types of loans, eligibility criteria, the process of application, and the repayment options, one can make informed decisions. Research should be done carefully, compare various loan options, and select a lender that suits your specific needs. With the appropriate education loan, the study abroad would never be in a bad light due to financial limitations.