Education Loan for Study Abroad

Studying Abroad has become a dream for many aspiring Indian students. Internationally, the most popular study destinations are Canada, United Kingdom (UK), USA, Australia, New Zealand, Germany, Ireland, France and Singapore etc. The cost of studying abroad varies from country to country, university to university and from course to course. Students who wish to fulfill their dream of studying abroad but have less financial support from their families and self can avail education loan. An education loan for study abroad can help you in pursuing the course of your choice in the best overseas university. A person between 18 and 35 years of age can avail an education loan for study abroad for various graduate and undergraduate courses such as management, business, medicine, science, art, hotel management and many more. Reserve Bank of India (RBI) has included education loans for study abroad as part of the priority sector lending of banks, the public sector banks are at the forefront of such loans.

WHY TAKE AN EDUCATION LOAN FOR STUDY ABROAD?

  • They are easily available for a wide range of courses at low interest rate.
  • An education loan covers all the necessary expenses including the tuition fees, living expenses, books, travel expenses and more.
  • Moratorium period ranging from 6 months to 1 year is given to the student so that he/she gets enough time to repay the amount.
  • Three repayment options are given by the bank to the student where the student can either start paying the simple interest or partial simple interest during the course or the payment starts after the moratorium period in which the Compound Interest is charged on the sum of Principal amount and Simple Interest.

TYPES OF EDUCATION LOAN FOR STUDY ABROAD

There are predominantly two types of education loans –

  • SECURED (WITH COLLATERAL)
  • UNSECURED (WITHOUT COLLATERAL).

The major difference between these educations loans are the assets involved. In a secured loan, lenders keep their immovable property or assets as a guarantee against the loan. As the loan is given against the borrower’s assets, therefore it has low-interest rates and flexible repayment terms. Whereas, in an unsecured loan one can get the loan approved without any collateral, which makes the interest rates relatively high compared to collateralized loan.

ELIGIBILTY CRITERIA FOR STUDY ABROAD EDUCATION LOAN

  • He or she should be an Indian applicant.
  • The University/College must be a recognized one.
  • Confirmed Admission Letter from the University/College.
  • The student should have a good academic record.
  • Regular income of the parents.

BANKS PROVIDING EDUCATION LOAN FOR STUDY ABROAD

  • ALLAHABAD BANK
  • ANDHRA BANK
  • AXIS BANK
  • AVANSE FINANCIAL SERVICES
  • BANK OF BARODA
  • BANK OF INDIA
  • BANK OF MAHARASHTRA
  • CANARA BANK
  • CENTRAL BANK OF INDIA
  • CITY UNION BANK
  • CORPORATION BANK
  • DENA BANK
  • DHANALAKSHMI BANK
  • FEDERAL BANK
  • HDFC BANK
  • IDBI BANK
  • INDIAN BANK
  • INDIAN OVERSEAS BANK

  • JAMMU AND KASHMIR BANK
  • KARNATAKA BANK
  • KARUR VYSYA BANK
  • LAKSHMI VILAS BANK
  • ORIENTAL BANK
  • PUNJAB AND SIND BANK
  • PUNJAB NATIONAL BANK
  • SBI EDUCATION LOAN
  • SARASWAT EDUCATION
  • SOUTH INDIAN BANK EDUCATION
  • STATE BANK OF BIKANER AND JAIPUR
  • SBH EDUCATION
  • STATE BANK OF MYSORE
  • STATE BANK OF PATIALA
  • STATE BANK OF TRAVAN CORE
  • UNION BANK OF INDIA
  • UNITED BANK OF INDIA
  • VIJAYA BANK

WHAT IS THE PROCEDURE FOR GETTING AN EDUCATION LOAN FOR STUDYING ABROAD?

The whole process of loan approval is time taking, so it is always advisable to apply for the loan a little early in the following ways:-

  • Check the course in which you are going to study is recognized by the banks or not.
  • Figure out how much loan amount you require and how much you are going to arrange on your own.
  • Finalize the bank you want to borrow loan from and the loan amount, fill the loan application form and approach your bank.
  • As soon as your loan is approved, the bank will issue a loan document that includes various elements of the loan.
  • After signing the loan document, the bank will disburse the amount in installments or as asked by the university.

DOCUMENTS REQUIRED FOR AVAILING AN EDUCATION LOAN FOR STUDY ABROAD

  • Personal Identification- It can be either Aadhaar card, Driving license, Voter Id or Passport and two passport-size photographs)
  • Academic Documents (10TH, 12THMarksheet,Graduation mark sheet, , Exam score card (GRE, GMAT, IELTS, etc)
  • Admission letter from college/University
  • Residence Proof- Telephone/Gas/Water/Electricity Bill/Driving License/Aadhar card/Passport (any one of these will do)
  • Income Proof

PRIMARY APPLICANT

  • Pan card
  • 6 months bank account statement


SALARIED CO-APPLICANT

  • 6 months Salary A/C statement
  • ITR of last two years/Form 16
  • Income proof (Salary slip)
  • Company ID/Offer Letter


SELF EMPLOYED CO-APPLICANT

  • Last 2 ITRs
  • Savings A/C Statement (Last 6 months)
  • Current A/C Statement (Last 6 months)
  • Immovable collateral documents- Brief statement of assets and liabilities.

DOCUMENTS REQUIRED FOR FIRST DISBURSEMENT

  • Demand letter from college or university
  • Loan agreement signed by applicant, co-applicants
  • Sanction letter signed by applicant, co-applicants
  • Disbursement request form signed by applicant, co-applicants
  • Receipts of margin money paid to the college / university along with bank statement reflecting the transaction
  • Documents for collateral security (if applicable)
  • Form A2 signed by applicant or co-applicants in case of overseas institute

DOCUMENTS REQUIRED FOR SUBSEQUENT DISBURSEMENT

  • Demand letter from college or university
  • Disbursement request form signed by applicant, co-applicants
  • Receipts of margin money paid to the college / university along with bank statement reflecting the transaction
  • Exam progress report, mark sheet, bona fide certificate (Any one)
  • Form A2 signed by applicant or co-applicants in case of overseas institute

EDUCATION LOAN CRITERIA

Interest Rate8.40% onwards
Minimum Tenure (excluding grace period)5 years
Moratorium Period (after course completion) 1 year
Minimum Loan amountRs. 50,000
Maximum Loan without collateralRs. 4, 00,000
Maximum Tenure15 years

LOAN AMOUNT

Generally, banks offer a maximum of Rs. 20 lacs education loan for studying abroad. Usually, no collateral is required for education loan taken up to Rs.4 lacs, but when the loan amount exceeds Rs. 4 lacs, borrowers are required to pledge collateral and a third party guarantee to secure the loan.

INTEREST RATE FOR STUDY ABROAD EDUCATION LOAN AS CHARGED BY VARIOUS BANKS

State Bank of India 8.30% p.a. to 10.70% p.a
Bank of Baroda 8.50% p.a. to 11.05% p.a.
United Bank of India 10.75% p.a. to 10.80% p.a.
Central Bank of India 9.80% p.a. to 10.30% p.a.
Bank of Maharashtra 10.15 p.a. to 10.65% p.a.
Canara Bank 8.50% p.a. to 11.50% p.a.
Dena Bank 8.25% p.a. to 10.25% p.a.
Indian Overseas Bank 8.60% p.a. to 11.40% p.a.
Punjab National Bank 8.25 p.a. – 10.75% p.a.
Avanse Financial Services 12.75% p.a.
Credilla 11.75% – 12.50% p.a.
Axis Bank 10.5% – 12.5% (Till 31 March 2018)
HDFC Bank 11.97% p.a.
IDBI Bank 8.40% p.a. – 10% p.a.
ICICI Bank 11.00% p.a. and above

THE IBA MODEL EDUCATION LOAN SCHEME FOR STUDY ABROAD

The Indian Banks’ Association (IBA) has formulated a wide-ranging typical educational loan scheme for acceptance and implementation by all Banks aimed at providing financial support from the banking system to deserving/meritorious students for pursuing higher education in India and abroad.

The interest rates charged on the educational loan shall be as per the BPLR or Base Rate of the individual banks and as per the provisions for interest rates under the IBA Model Educational Loan Scheme. The interest payable by the student belonging to EWS for availing of the Educational Loan for Technical Professional Courses in India for the period of moratorium i.e., Course Period plus one year or six months after getting a job, whichever is earlier, as prescribed under the Educational Loan Scheme for the Indian Banks’ Association, shall be borne by the Government of India.

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