Education Loans for Study Abroad

  • Team MasterPrep
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  • Aug 20, 2022 10:19 AM

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Going overseas for studies can open several opportunities for the students moving out for study. You can easily gain access to several programs and courses of study at globally recognized and internationally accredited universities and colleges.

Going overseas for studies can open several opportunities for the students. You can easily gain access to several programs and courses of study at globally recognized and internationally accredited universities and colleges. Now, securing an education loan that will help you pay for your education abroad has become easier and can help you achieve your dreams as an international education will prosper your career and job prospects.

What is a Study Abroad Education Loan?

Once you have decided to study abroad, you not only have to pay for your tuition fee but the costs of living and textbooks will also need to be taken care of. That’s where education loans for studying abroad come into the scene. This is so because to secure a visa for your dream destination country you must ensure you have enough financial assets to support your education abroad. You should have enough funds to pay for your fee, textbooks, and living expenses so that you can pay attention to your studies well. This is when you will apply for loans to fund your education overseas where these loans are termed as study abroad or overseas education loans.

What is the maximum limit for Education Loans to Study Abroad?

In education loans with collateral, students can avail education loans up to INR 1.5 Crores. In foreign education loans without collateral, students can get loans up to a maximum of INR 45 lakhs. The loan amount can vary depending upon the applicant’s and co-applicant’s country, course, profile etcetera.

IELTS Score for Study Abroad Universities
 

Which is preferable: a loan with or without collateral?

There are two sorts of education loans: secured loans, which require security, and unsecured loans, which require no collateral. Before selecting the one that is best for you, you must comprehend the differences between the two.

Secured Student Loan

Requires the borrower to provide any collateral, such as real estate, a savings account, an insurance policy, etc., in exchange for the loan.

  1. A lower interest rate.
  2. There is a good possibility of approval.
  3. A longer payback schedule
  4. A larger loan amount is available.
  5. No repayment while you are studying.
  6. The permission does not require parental income.

Unsecured Student Loans

1. No collateral is required from the borrower to obtain this loan.

2. A higher interest rate, often 1.5% to 4% more than the loan's security deposit.

3. Is a riskier prospect for the bank, making it harder to get a loan without security from the bank?

4. Somewhat shorter Repayment time.

5. Some repayment while you're studying.

6. The approval requires parental income.

Eligibility requirements for borrowing money for education

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

  • The candidate must be an Indian national.
  • The applicant must be at least 18 years old to avoid having to take out a loan from his or her parents.
  • The candidate must have a strong academic record.
  • The candidate must have been accepted into a reputable overseas university, institution, or college.
  • The intended course which the applicant is considering applying for must be a job-oriented one as banks prefer such courses.

Leading Indian Providers of Education Loans for International Study

HDFC Bank

One of the biggest private banks providing loans for international education is HDFC Bank. The bank only offers loans up to a maximum of INR 20 lakhs. Even before the student has been admitted to the university, the bank offers study loans overseas to avoid the last-minute rush.

State Bank of India

With a lending margin of 15%, SBI will lend up to INR 30 lakhs as an education loan for international studies. On the current SBI base rate, an interest rate of up to 2% is applied to the loan amount. The loan repayment period might also range from 1 year to 15 years.

Axis Bank

Study loans abroad are available from Axis Bank at low-interest rates. If the loan amount is greater than INR 4 lakhs, the borrower must establish a margin of 15%. The bank covers a variety of expenses, including tuition, lodging, and books, up to a limit of INR 20 lakhs.

Punjab National Bank

The Punjab National Bank's PNB Udaan education loan program is available to students traveling to study abroad. For students pursuing graduate, post-graduate, professional, and technical degrees as well as job-oriented courses, the bank provides loans for international education. For loans over INR 4 lakhs, the applicant must provide a 15% loan margin. Additionally, the bank charges the base rate as interest on loans taken out to pursue an education abroad.

Education Loan for Study Abroad from NBFCs (Non-banking financial companies)

In addition to the nationalized banks, non-banking financial entities also offer student loans (NBFCs). Students can get their tuition costs in full from nonbanking institutions. Banks require collateral from borrowers as security because loans typically exceed INR 7.5 lakhs. Now, students looking for loans for study abroad programs have the option of obtaining a loan from an NBFC. Options provided by NBFCs include:

  • Credila: A division of the renowned HDFC bank, Credila offers loans to Indian students who want to pursue higher education overseas. The loans can be returned in full within 10 years and are offered at a competitive floating interest rate.
  • Avanse: It is one of the most well-known non-banking financial organizations in India and is a member of the DHFL group. Avanse student loans cover various costs in addition to tuition up to 100%. Additionally, the processing fee may be up to 1 to 2 percent of the loan amount and the interest rates are variable.
     

The International Student Loan Program (ISLP):

it was created specifically for foreign students who wish to pursue academic studies in the US. Students can borrow as little as $1500 with this program and prolong the payback time by up to 25 years. Tuition and other costs are covered by the loan provided under this program.

  • Global Student Loan Corporation (GSLC): Without the need for a co-signer, GSLC provides loans to international students who wish to pursue higher education in the US.

Things to keep in mind while applying for a student loan for international studies

  • Moratorium period: During this time, the borrower is not required to make any payments to the bank. This time frame varies from bank to bank and may continue for some time after the course is over.
  • Loan Margin: Typically, banks don't give the full amount or 100% of the money required to pay for the education. 90% of the sum is issued by the majority of public sector banks; the remaining 10% must be secured by the applicant personally.
  • Exchange Rate Effect: Be sure to account for any changes in exchange rates when determining the amount you will receive at the time of payout.

So fellas! Before you take the plunge and apply for study abroad loans, do go through this blog by Masterprep.