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Know How to Get an Education Loan for Abroad Studies?
In recent years, the trend of studying abroad has gained a lot of popularity. Due to this, many students are opting for education loan for abroad studies. But why? These loans can help them cover a crucial part of their expenses. Despite this, what are its other benefits? How to get education loan for abroad studies? These are some of the common queries of students who want to pursue higher education overseas. In this blog, you will learn about these monetary aids in detail.
Table of Contents
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- 1. What Is the Minimum Age Criteria for Applying for Study Abroad Education Loans?
- 2. How Do I Receive My Education Loan for Abroad Studies?
- 3. For Which Courses Banks Offer Education Loans for Foreign Studies?
- 4. How Long Is the Moratorium Period for Education Loans for Studying Abroad?
- 5. How to Get Education Loan for Abroad Studies Without Collateral?
- 6. What Are the Different Types of Interest Rates on Education Loans?
What is Education Loan for Abroad Studies?
Education loan for abroad studies are financial aid that helps students achieve their goal of studying at an overseas institute. These loans assist the scholars by paying for their airfare, accommodation, and tuition fees for their higher studies abroad. The loans are only applicable as long as these pupils meet the conditions for the loan.
But why do you need a foreign education loan? What are the benefits of studying abroad?
Benefits of Abroad Education Loans
In this section, you will learn the crucial benefits obtained from an abroad education loan in detail.
1. Reduce Financial Burden
These loans offer higher amounts compared to personal loans. An education loan is sufficient for a pupil to cover tuition fees, cost of living and other crucial expenses. Thus, it eases the financial load of the students while studying abroad.
2. Lower Interest Rates
The education loan interest rate is usually lower compared to personal loans. Thus, this makes it one of the cost-effective ways to sponsor your studies. The monthly payments become cheaper due to lower interest rates. Hence, it results in extending the rebate term.
3. Flexible Loan Tenures
Study loan for abroad offers more flexibility in terms of loan options. You can opt for any tenure period from 7 to 10 or 15 to 20 years. Thus, this makes it easier to make EMI more effortless. While personal loans often have a short period for repayment. Most of these are around 5 years old, which can result in high EMIs.
4. Offer Hiatus Period
Education loans offer a hiatus period during which you do not have to make any rebates. You may either need to pay simple interest while studying or can extend the study duration by six months after graduation. However, personal loans usually need quick EMI payments, which can be tough for scholars as well as their families.
5. No Need to Dissolve Valuable Assets
By opting for an education loan, the banks use your assets such as Fixed Deposits (FDs), government bonds and many more as collateral. They offer you a loan supported by these assets. As a result, the study abroad loans you get will not hinder your long-term financial goals.
Categories of Study Abroad Loans
As you learn about the various benefits of an international education loan, you must also know the number of categories of these loans that students can apply for. Here are the brief details about the two categories of education loan for abroad studies.
1. Secured Education Loans
The loans that ask for an asset as a security are called secured loans. The asset can be a property, FD, land, and so on. The asset, also called collateral, acts as a security deposit for the lender if the student fails to repay the loan.
2. Unsecured Education Loans
These are the loans that do not need you to vow an asset as a deposit. The utmost amount offered to a student in an unsecured loan by the nationalised banks is INR 7.5 lakh. This fund is not enough to pay the full cost of education in a nation overseas.
In the table below, you will learn the difference between the benefits of these educational loan categories for abroad studies.
| Secured Education Loans | Unsecured Education Loans |
|---|---|
| Lower Interest Rate | Higher Rates of Interest |
| No or Less Processing Fee | Higher Processing Fee |
| Longer Repayment Time | Shorter Repayment Time |
| No Repayment During the Study Period | Partial Payments during the Study Period |
What Are the Types of Education Loan Lenders for Study Abroad?
Since you learned about the categories of education loan for foreign studies, you must know about the types of loan lenders for study abroad. There are 5 main types of loan lenders. These are:
1. Public Banks
These are the traditional monetary aiding firms that offer student loans for studying abroad. These banks are under the control of the public bodies of the nation or the state
It is also referred to as the nationalized banks. Some of these banks are the State Bank of India, the Bank of Baroda, and the Punjab National Bank.
2. Private Banks
These traditional financial aid firms offer loans to students to pursue higher studies overseas. These banks are under the control of a person, a general partner(s) or a privately owned firm. A few of these banks are the IDFC Bank, the ICICI Bank, and the Axis Bank.
3. Government Schemes
These are the scholarships and grants offered by the government of India to students who want to study abroad. These schemes cover a major part of the costs in the foreign country, including tuition fees, the cost of living, and other crucial expenses.
4. NBFCs
Non-Banking Financial Companies are famous by the name of NBFCs. These are the monetary firms that offer several finance services, the same as those offered by banks. But NBFCS operate without a banking license. HDFC Credila, InCred and many more are examples of these NBFCs.
5. International Lenders
They are the financial entities based outside your nation that are specialized in giving academic grants to students who want to study abroad. These firms offer loans with the lowest interest rates to scholars from growing countries. The World Bank and International Monetary Fund (IMF) are a few examples of these agencies.
In the table below, you will learn about the various aspects of these lenders in detail.
| Education Loan Lenders | Crucial Aspects |
|---|---|
| Public Banks |
|
| Private Banks |
|
| Government Schemes |
|
| NBFCs |
|
| International Lenders |
|
Eligibility Criteria for Study Abroad Loans
Always check for education loan eligibility before applying for a specific study loan for abroad. Also, please make sure to look at the needs of the lenders who will allow you a loan. The standard terms and conditions, usually obeyed by any of the lenders while lending student loans for studying abroad are as follows:
- The applicant must be an Indian citizen.
- Parents must take out the loan if the applicant is under 18.
- Applicant ought to have a perfect academic record
- The nominee must get access to a reputed college or university
- The picked courses must be technical or skilled because banks prefer employment-oriented courses.
- Underwriting bars are the policies lenders establish to ensure that only risk-free loans are available.
Suggested Read: Know More About Education Loan for Study Abroad
What Are Essential Documents for Abroad Study Loan Process?
Since you came across the eligibility criteria for education loan for abroad studies. You must also know the crucial documents that are a must to apply for an international education loan. In this section, you will learn about these documents in detail.
Documents Needed for Applicant
The following table shows the complete details of the documents required for student loan for foreign studies.
| Document Type | Document Required |
|---|---|
| Date of Birth |
|
| Residential Proof (if owned) |
|
| Residential Proof (for rented property) |
|
| Photograph |
|
| Photo ID |
|
| Signature |
|
| Academic Documents |
|
| Income Proof Salaried | Documents to establish 3 years of work experience wherever applicable and available |
| Bank Statements | Last six months’ bank statements |
| Admission Proof |
|
Documents Needed for Co-Applicant
The following table shows the complete details of the documents required for education loan for abroad studies.
| Document Type | Document Required |
|---|---|
| Date of Birth |
|
| Residential Proof (if owned) |
|
| Residential Proof (for rented property) |
|
| Photograph |
|
| Photo ID |
|
| Signature |
|
| Relationship Proof with Applicant |
|
| Academic Documents | Registration certificates for Professionals (CA, Doctor) |
| Income Proof Salaried |
|
| Office Address |
|
Since you know about various documents needed for loan application, then you must also learn the abroad study loan process.
How to Get a Study Abroad Loan?
As you move further, you must know how to apply for an international study loan. This takes some time, from its application to approval or rejection. However, it is much better to apply for a loan a little early. But how to get education loan for abroad studies? Here are the following steps for its application:
- Check your eligibility
- Have an acceptance letter from a university
- Determine how much loan you need and how much you will arrange independently.
- See if the banks acknowledge the course you must take.
- Compare the student loans from several banks that offer to study abroad and choose the one that best meets your requirements.
- List a co-applicant (if any)
- Provide proof of your co-applicant's relationship with you
- Prepare required documents
- Fill out the loan application form and visit your bank after deciding on the specific bank and loan amount.
- The bank will provide the loan paperwork outlining the loan terms when your loan is accepted.
Following the signature of the loan agreement, the bank will disburse the funds in installments.
Want to Apply for Foreign Education Loans?
Gradding.com will help you in your process of applying for an education loan to study abroad. So what are you waiting for? Get a Free Session Now!As you learn about the application process for the abroad education loan, you must also know the top 5 loan providers in India for overseas studies.
Top 5 Education Loan Providers in India 2024
In this section, you will learn about the 5-best loan lenders for study loan for abroad in India in detail. This detail will include the various loans for overseas studies, education loan interest rate and other data.
1. HDFC Credila
HDFC Credila is an unsecured financial aid of the famous HDFC bank that offers study loan for abroad to Indian students. The loans have a competitive floating interest rate. Also, it is the most famous NFBC in India for abroad education loan. The following table shows further details about this loan provider.
| Features | Values |
|---|---|
| Loan Amount | INR 20 - 75 Lakh |
| Interest Rate | 11.25 - 13% |
| Hiatus or Moratorium Period | Course Duration + 1 Year |
| Repayment During the Moratorium Period | Simple Interest Partial Simple Interest |
| Processing Fee | 0.5 - 1.5% of the Loan Amount + GST |
| Loan Tenure | 12 - 15 Years |
| Minimum Co-applicant Income | INR 30,000 - 60,000 |
2. State Bank of India (SBI)
State Bank of India is the best bank for education loan for abroad studies. This bank is a public bank in India. They provide funds at the lowest education loan interest rate for abroad study to Indian students.
The name of the secured loan offered by this bank is Global Ed-Vantage. The table below shows crucial details about this loan for studying overseas.
| Features | Values |
|---|---|
| Loan Amount | INR 20 - 75 Lakh |
| Interest Rate | 11.25 - 13% |
| Hiatus or Moratorium Period | Course Duration + 1 Year |
| Repayment During the Moratorium Period | Simple Interest Partial Simple Interest |
| Processing Fee | 0.5 - 1.5% of the Loan Amount + GST |
| Loan Tenure | 12 - 15 Years |
| Minimum Co-applicant Income | INR 30,000 - 60,000 |
3. ICICI Bank
ICICI Bank is a leading private-sector bank in India. It offers secured and unsecured education loans to students studying abroad. This bank offers various loans based on the target university and selected course.
The ICICI Bank has classified the colleges and universities into 4 classes. These include A1, A2, A3, and A4. The table below shows the details of the education loans offered by ICICI Bank.
| Features | Values |
|---|---|
| Loan Amount |
|
| Interest Rate |
|
| Hiatus or Moratorium Period | Course Duration + 6 Months |
| Margin Money |
|
| Processing Fee | 0.5 - 1% + GST |
| Repayment During Course Period + 6 Months Grace Period | Simple Interest |
| Loan Tenure | Up to 10 Years |
| Co-applicant Minimum Income | INR 60,000 per Month |
| Co-applicant Age | 35 Years |
| Tax Benefit | Yes |
4. Punjab National Bank(PNB)
PNB Udaan is one of the public bank loans for students studying abroad offered by the Punjab National Bank. Foreign education loans are open from the bank for scholars pursuing graduate, PG, job-oriented professional, and technical courses.
| Features | Values |
|---|---|
| Loan Amount |
|
| Maximum Age of Applicant | 35 Years (If Unemployed) 45 Years (If Employed) |
| Interest Rate | Up to 11.25% |
| Hiatus or Moratorium Period | Course Duration + 1 Year |
| Margin | 15% |
| Processing Fee | 1% of the Loan Amount (Minimum INR 10,000) |
| Repayment During Moratorium Period |
|
| Loan Tenure | Up to 15 Years |
5. IDFC First Bank
IDFC First Bank offers secured as well as unsecured education loans to support your study abroad journey. However, the abroad education loan of this bank is different from other private banks. This is because they focus more on your academic results rather than on any co-applicant.
The table below shows the details of the loan offered by IDFC First Bank.
| Features | Values |
|---|---|
| Loan Amount | Up to INR 50 Lakh |
| Maximum Age of Applicant |
|
| Interest Rate |
|
| Hiatus or Moratorium Period | Course Duration + 12 Months |
| Insurance | Credit Life Insurance |
| Processing Fee | 1 - 1.25% |
| Repayment During Moratorium Period |
|
| Loan Tenure | Up to 12 Years |
| Co-applicant Minimum Income | INR 35,000 per month |
| Co-applicant Age | 32 Years |
| Tax Benefit/td> | Yes |
| Loan Approval Basis GRE / GMAT | Yes |
Also, if you want to opt for any of these study loan providers for your study abroad journey, then you can apply on their official websites. Moreover, you can calculate your repayments for the loan with the help of an education loan calculator available on their website. Hence, you can choose the best student loan for studying abroad.
Suggested Read: Best UK Banks for Study Abroad Aspirants
In conclusion, this blog has equipped you with the essential knowledge for applying for an education loan for foreign studies . Armed with these details, you can confidently select the best study abroad loan for students in India. For further reassurance and guidance, consider applying to Gradding.com. Their expertise can assist you in selecting the perfect funding for your journey of studying in a foreign land.
Frequently Asked Questions (FAQs)
1. What Is the Minimum Age Criteria for Applying for Study Abroad Education Loans?
The minimum age criteria for applying for study abroad education loans is 18 years old. Thus, an applicant should not be younger than 18 years old when applying for an education loan to study abroad.
2. How Do I Receive My Education Loan for Abroad Studies?
Education loans for foreign studies are directly sent to the university where you are going to study as per the request letter. Moreover, loans for other costs are paid in instalments during your course of studying abroad.
3. For Which Courses Banks Offer Education Loans for Foreign Studies?
The banks and NBFC firms choose to lend funds for UG and PG studies. Moreover, most of the banks prefer to offer school loans for students attending job-related and professional courses abroad.
4. How Long Is the Moratorium Period for Education Loans for Studying Abroad?
The moratorium or hiatus period starts from the course completion date and extends for a specific period. Thus, allowing the student to focus on finding work and settling into their career. This duration is usually about 6 - 12 months based on the lender.
5. How to Get Education Loan for Abroad Studies Without Collateral?
Students can get a study abroad loan without collateral up to INR 4 lakh. Yet, some private banks and lenders offer loans for studies abroad without collateral in certain situations.
6. What Are the Different Types of Interest Rates on Education Loans?
These loans usually offer two types of interest rates - fixed and floating. In fixed interest rates, the rate is stable throughout the loan tenure, giving stability in refunding amounts. Meanwhile, the rate of floating interest rates varies based on market conditions.
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