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Ultimate Guide to Know “How to Get an Education Loan"?

This blog is written with the purpose to provide you complete detail about education loan interest rate or the complete process. So, read this piece of knowledge to get the details.

As a student, it may be a common question foryou, "How to get education loan?" But you do not need to worry because Gradding.com is the best study abroad platform where you can solve all your study abroad queries. This blog will tell you about getting an education or student loan.

Studying abroad can be the best decision, but it is complex. Most students associate studying abroad with the prospect of fresh life experiences in a strange place. However, this ambition may need to be within reach for students from low-income homes. Those who desire to get education loan at 0 interest or pursue higher education overseas but find it difficult to secure finance now have the option of paying for their education. We will address numerous additional aspects of student loans, such as Indian banks granting student loans or the role of a guarantor, in addition to the procedure of applying for a loan, eligibility, and the paperwork required for it.

Benefits of Education Loan

Sometimes, you may think "How to get an education loan?” the family's money and resources might not be enough to pay for the student's education. For a student loan in such circumstances, banks or other financial institutions must be contacted (NBFC). A student loan can cover all or a portion of your educational costs. A student who obtains a study abroad education loan is ensured that they will have enough money to finish their degree programme without financial difficulties.

Many people view loans as bad debt. This phrase implies that you are getting loan for something whose value will decline. Since it is an investment in the borrower, an education loan differs from other types of loans. You will eventually get more money rather than you borrowed.

Education Loan Eligibility

Checking your education loan eligibility to qualify for an education loan must be your priority. The standard terms and conditions typically followed by any bank when granting an education loan are mentioned below. Please be aware that each bank may have its qualifying requirements when applying to that specific bank.

  • The applicant must be an Indian citizen.
  • The parents must take out the loan if the applicant is under 18.
  • The applicant needs to have excellent academic history.
  • The applicant must get admission to a respectable college, university.
  • The selected course must be technical or professional because banks prefer employment-oriented courses.
  • Underwriting norms are the guidelines lenders establish to ensure that only risk-free loans are available. They are also significant since they are used to decide how much money the company is willing to loan and at what interest rate, as well as whether or not to offer a person a study loan for an overseas course of study.

Documents Required for Applying An Education Loan

Before you know about the education loan process, the applicant must fully know the documentation required to apply for a study loan in another country. To apply for an education loan for overseas education, you must have the following documents:

  • Application form completed
  • Passport-size pictures of the applicant and co-applicant are required.
  • Photo ID: The applicant's and co-applicant's photo ID. It could be a PAN card, a driver's licence, a voter ID card, an Aadhar card, or a passport.
  • Proof of residency: Proof of residence for both the applicant and the co-applicant
  • Academic documents: The applicant's mark sheet and certificates
  • Mark sheet (Score Report) of GRE, TOEFL, IELTS, and other relevant exams (Besides the GRE score, the entire academic standing and professional experience are key considerations when applying for a loan.)
  • Admission proof: A letter of acceptance from the institution or college.
  • Account statements: Bank statements from the co-applicants last six months
  • Proof of income: Income evidence of the co-applicant (A foreign education loan can be secured based on various factors, including your co-applicants financial position, location, and assets).
  • The following documents are necessary in the event of collateral, which can be a flat, a house, or non-agricultural land:
  • The title deed to the property
  • Building plans have been approved.
  • NOC from a builder or society for a mortgage
  • Certificates and mark sheets

Technical Documentation

In addition to the documents above, applicants must have a few extra technical documents to apply for a student loan.

  • Title deed, with all pages attached.
  • Copy of the permissions and approved layout plan, when applicable
  • Income tax form
  • NOC AND ALLOTMENT LETTER FOR BDA ALLOTMENT
  • Certificate of Non-Encumbrance
  • Possession Certificate (if the flat is purchased from a builder)
  • Education loan letter
  • Newest tax invoice for properties
  • Copy of the Deeds of Prior Sales
  • Confirmation of conversion
  • (Case-specific) Urban clearance certificate

Legal Documentation

In addition to standard and technical documentation, applicants must have a list of legal documents to obtain an education loan.

  • The minimum age for a sale/gift/partition deed in favour of the consumer is 13 years.
  • Khata Certificate and extract under the current owner's name
  • Certificate of encumbrance - Minimum of 13 years, reflecting all sales transactions
  • The most recent property tax receipt

NOTE: These requirements may differ depending on the bank's policies.

How to Get Education Loan for Abroad Studies?

The loan process take some time, from loan application to approval or disbursement. However, it is always better to apply for a loan a little quick. To apply for a student loan and to know about education loan interest rate, you can follow these steps:

  • Check to see if the banks recognise the course you must take.
  • Determine how much loan you need and how much you will arrange independently.
  • Compare the student loans several banks offer to study abroad and chose the one that best meets your requirements.
  • Fill out loan application form and visit your bank after deciding the bank and a loan amount.
  • The bank will give loan paperwork outlining the loan terms when your loan is accepted.
  • Following the signature of loan agreement, the bank will disburse the funds in instalments.

Top Banks Providing Education Loans for Studying Abroad

HDFC Bank

HDFC Bank is one of the best private banks in the world that provides education loans abroad. The bank provides a maximum loan amount of INR 20 lakhs. To avoid the last-minute scramble, the bank offers study loans abroad even before the scholar has been accepted to the university.

ICICI Bank

The bank gives loan up to Rs 1 crore for overseas courses, with education loan interest rate of 9.50% per annum. As exceptional collateral, new property, FDs, and cross-collateralisation with existing mortgage loans are permitted. Without collateral, the education loan maximum at ICICI is Rs 20 lakhs for UG courses and Rs 40 lakhs for PG programmes.

State Bank of India

SBI provides an education loan with a loan margin of 15% up to 30 lakhs for studying abroad. The loan amount is subject to an interest rate of up to 2% based on SBI's current base rate. Furthermore, the loan repayment period can range from one to fifteen years.

Axis Bank

Axis Bank provides study loans in other countries at low-interest rates. If the loan amount exceeds 4 lakhs, the borrower must arrange a margin of education loan interest rate of 15%. The bank provides a maximum of INR 20 lakhs and covers various fees such as tuition, housing, and books.

Punjab National Bank

PNB Udaan is a student education loan programme offered by the Punjab National Bank to students studying abroad. Foreign education loans are available from the bank for students pursuing graduate, postgraduate, job-oriented professional, and technical courses. For loans over INR 4 lakhs, the borrower must show a lending margin of 15%. In addition, the bank offers base rate as interest rate on loans accepted for study at the world's best 200 universities.

NBFCs Providing an Education Loan to Study Abroad

Student loans are available from non-banking financial companies/institutions (NBFCs) and nationalised banks. Students can pay their tuition costs in full at non-banking institutions. Borrowers must submit collateral as security to banks if the loan exceeds INR 7.5 Lacs. Students seeking school loans for overseas study can now obtain a loan from an NBFC. Among the NBFC choices are:

Credila: Credila is a subsidiary of the well-known HDFC bank that offers loans to Indian students who want to study abroad. The loans have a competitive floating interest rate and can be repaid in 10 years.

Avanse: Part of the DHFL group, it is one of India's most popular non-banking financial companies. Avanse student loans pay up to 100% of tuition and other expenses. Aside from that, the interest rates are variable, and the processing charge might range from 1% to 2% of the loan amount.

International Student Loan Program (ISLP): This scheme is developed for international students who desire to study in the United States. Students can borrow as little as $1500 through this plan and prolong the repayment time by up to 25 years. The funding provided through this programme covers tuition and other expenditures.

Global Student Loan Corporation (GSLC): The GSLC provides loans to international students to pursue higher education in the United States without needing a co-signer.

Education Loan Schemes Offered for Studying Abroad

SBI Student Loan Scheme:

This scheme is open to Indian students accepted to any institute in India or abroad. A maximum of INR 20 lacs can be borrowed at a nominal interest rate, with repayment required within 15 years. Borrowers must provide collateral as security, if the loan amount exceeds INR 7.5 Lacs. The repayment period begins one year after the course is completed.

SBI Global ED-VANTAGE Scheme: 

This loan is available to Indian scholars who want to study full-time abroad. Students can borrow up to 1.5 crore, and repay it within 15 years. Borrowers must offer collateral to secure this loan and begin paying six months after completing the course.

HDFC Bank Education Loan for Foreign Education:

Indian students who want to study abroad can use this financing programme. The maximum amount available under this scheme is INR 20 lacs at a modest interest rate. It also provides tax benefits to the borrower and can be approved before admission.

Oriental Bank of Commerce Education Loan for Study in India and Abroad:

This loan scheme is available to students who want to further their education in India or abroad. If the student intends to continue his studies in the United States, the loan amount will be determined by the fee structure of the institute to which he has applied. The scheme's main selling point is that it does not impose a prepayment penalty on borrowers and provides insurance coverage. The margin of loans taken for studying overseas is 15% for loan amounts exceeding INR 4 Lacs.

How to Get Education Loan from Government?

The University Grants Commission has launched the 'Vidya Lakshami' education loan portal, which was created in collaboration with the Department of Higher Education (Ministry of Human Resource Development), the Department of Financial Services (Ministry of Finance), and the Indian Banks Association (IBA). Students can get loans of up to Rs 15 lakh to study abroad. There is no need for collateral or margin up to Rs 4 lakh. Furthermore, the interest rate cannot exceed the Prime Lending Rates (PLR). In the case of loans above Rs 4 lakh, the interest rate cannot exceed PLP plus 1%. The repayment duration remains between 5-7 years. After the studies are done, a one-year grace period can be granted.

Points to Remember While Getting an Education Loan

Moratorium period: This is when the borrower is not required to pay the bank. This period varies by bank and may last for some time after completing the course.

Loan Margin: Typically, banks do not provide the entire amount, i.e. 100 per cent of the funds required to pay for schooling. Most public sector banks lend 90% of the total amount, with the remaining 10% arranged by the candidate.

Exchange Rate Influence: Always calculate the amount you will get at the time of disbursement, as any change in the exchange rate can alter this amount.

Important Questions Related to Collateral

What is meant by collateral?

Collateral is any tangible asset, whether mobile or immovable, that can be provided to a bank as security for a loan. To lower the risk associated with repaying the credit, most Indian banks need collateral as security. Discover all there is to know about collateral.

What kinds of instruments may I use as collateral?

Collateral can be any liquid assets, such as bonds, FDs, shares, or any immovable property, such as a house, business property, or just land. The fact that agricultural land is not recognised as collateral is a crucial consideration. Additionally accepted as collateral are shares, bonds, bank deposits, mutual fund shares, gold, debentures, bank deposits, life insurance policies, and government securities.

How can I apply for an education loan without the security of studying abroad?

The availability of education loans has been a huge help for many who wish to pursue high-quality education but struggle to raise the necessary cash. Now, students are eligible for unsecured loans up to INR 4 lacs. Parents or guardians are made joint borrowers for loans up to INR 7.5 lacs, and a third-party guarantee is obtained. Property or any other asset must be pledged as security for loans over INR 7.5 lacs.

How much money can you borrow against your collateral?

If you wish to take out a loan with your immovable property as collateral, a bank representative will inspect it and create a report on whether or not it may be mortgaged.

In addition, a bank representative will assess your property. The loan amount will be granted based on this report.

What is the role of a guarantor in the case of an education loan?

Becoming a guarantee for a loan is a major responsibility because the guarantor will be legally obligated to pay if the student fails to make his payments. The bank may request a third-party guarantee if the loan amount exceeds INR 4 lacs. If the borrower cannot repay the loan amount, regardless of the circumstances, the guarantor is obligated to refund the entire amount to the banks.

Winding Up

Lastly, it is better to say that, getting that it is easy to know about education loan interest rate or the whole process. An education loan is not a burden that sets you back, but it is a boon that can help you in studying abroad. You do not need to think much before you get a student or education loan because there are many benefits to this process. In the above-mentioned pointers, we already discussed the benefits and major factors of an education loan to clear your query about "How to get education loan?" So, now that you know the gist of getting loans, you must apply for this loan process so that you can turn your dreams into reality in the blink of an eye. We hope that you enjoyed our blog, and for more interesting blogs, you can visit Gradding.com on a daily basis. At last, we wish you all the best for your future and hope you get the chance to study at your dream college.

Frequently Asked Questions

1. Who is eligible for education loan?

Any Indian resident can apply for a loan. The loan applicant minimum age must be 18, and the maximum age should be 35. Through entrance exams, students must have gained admission to a higher education course at a reputable institution, either in India or overseas.

2. What Are the Basic Requirements for Overseas Education Loan?

To be eligible for an overseas education loan, you must meet the following requirements:

  • You must be an Indian citizen.
  • A parent or guardian must accompany the child.
  • An acceptance letter from a reputed university abroad is required.
  • The borrower's financial status must be stable in order for the loan to be disbursed.

3. Is an education loan interest-free?

No, an education loan is not interest-free. Although, student loans with no interest are available in India through scholarships or subsidies. You can avoid the impact of interest on your college loan by taking advantage of 0% interest scholarships or government subsidy initiatives.

4. Which is better, a student loan or an education loan?

When compared to a personal student loan, it has lower education loan interest rates. If you qualify for a government-subsidised loan, your interest rates will be considerably lower. Education loans typically have a lengthier repayment period of up to 20 years.

5. Which courses do banks provide education loans for when studying abroad?

In general, banks and non-bank financial institutions prefer to lend money for undergraduate and postgraduate studies. Furthermore, the majority of banks prefer to provide school loans for students attending job-related and professional courses abroad.

6. What is the most you can borrow for studying abroad?

You may think about how much time it takes to get an education loan. But you must believe that if your docs are trustworthy and clear from your side, then you can get a loan in a short time.As a result, banks have no limit on giving education loans to students who desire to study overseas. It varies from bank to bank. The bulk of institutions provide loans ranging from INR 20-30 lakh. In addition, if the loan amount exceeds INR 20 lakhs, the interest rate rises.

7. How to get education loan for abroad studies without collateral?

Students can get an education loan without collateral up to four lacs. Parents or guardians are made joint borrowers for loans up to INR 7.5 lacs, and a third-party guarantee is obtained. Property or another asset is required as security for loans over INR 7.5 lacs.

8. Can I get the total amount of studying abroad as an education loan?

Private Banks or Non-Banking Finance Companies (NBFCs) can cover the full study abroad cost. However, public banks or government banks shall ask the student to cover 10-15% of the cost by self-financing. The rest would be with an education loan.

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