Indian students are willing to study abroad; however, the financial obstacles prevent them from pursuing their dreams. If you also are looking for loans to study abroad, we have some helpful information. This article covers all required aspects of education loans for study abroad and introduces some banks, their schemes, interest rates, and loan amount.
In this guide:
- Step 1: Eligibility Criteria for the Loan
- Step 2: Required Documents of Loans for Study Abroad
- Step 3: The Step-by-Step Process
- Top Indian Banks Offering Education Loans for Study Abroad
- Schemes of Loans for Study Abroad in Indian Banks
- 7 Things to Remember When Taking Education Loans for Study Abroad
Step 1: Eligibility Criteria for the Loan
If you need a loan, the first step is to check whether you are eligible to apply for education loans for study abroad or not.
The following are usual criteria which Indian banks have for checking the eligibility of the applicants:
- The applicant must be an official citizen of India;
- They must have an excellent academic background;
- They should be at least 18, or the parents will have to take the loan;
- The applicant must have secured admission to recognized foreign universities;
- The course must be a professional or technical one because banks give preference to job-oriented classes.
Step 2: Required Documents of Loans for Study Abroad
In the second step, the applicant must know the required documents to apply for a study loan. The followings are necessary for applying for an education loan:
- Filling the application form,
- Photos in passport size of the applicant and the co-applicant,
- Identification document of the applicant and the co-applicant. It may be a PAN card, driving license, or Passport,
- Resident proof for the applicant and the co-applicant,
- Educational documents from home school or university,
- Score report and the certificates of the applicant,
- Score report of TOEFL, IELTS, GRE, GMAT, etc. whichever is applicable,
- Admission letter from the university or college,
- Bank statement of last six months for the co-applicant,
- Documents proving income of the co-applicant.
In the case of collateral, it can be a house or non-agriculture land; the following documents are required:
- Building plan,
- Property deed,
- NOC for a mortgage.
Apart from the documents mentioned above, aspirants also need other technical documents to avail of a student loan, which includes:
- Title deed and all the pages should be attached,
- Copy of approved layout plan and permissions case-specific,
- Revenue document, Khata or Patta,
- BDA allotment or non-allotment letter,
- Non-Encumbrance certificate,
- Possession Certificate,
- Latest Property tax receipt,
- Copy of Prior sale deeds,
- Conversion certificate,
- Urban clearance certificate.
Moreover, aspirants should have legal documents for getting an education loan:
- Sale, partition deed in favor of the customer, It should be a minimum of 13 years,
- Khata Certificate and its extract in the name of the current owner,
- Encumbrance certificate, Minimum 13 years reflecting all sale transactions,
- Latest Property tax receipt.
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Step 3: The Step-by-Step Process
The entire loan process is time-consuming, from loan application to approval and disbursement, so it is always suggested to apply for a loan early. You may follow these steps:
- Firstly, check the banks recognize the course in which you are going to study or not.
- Secondly, see how much money you need and how much you can arrange on your own.
- Then compare the student loan provided by different banks for studying abroad and go for the one which suits your needs.
- After finalizing the loan amount, fill out the loan application form and go to the bank.
- As soon as your loan is approved, the bank will issue a document that includes various loan elements.
- After signing the loan documents, the bank will disburse the amount in installments or as asked by the university.
Top Indian Banks Offering Education Loans for Study Abroad
This section includes some of the best institutions in India offering education loans for study abroad to Indian students.
Axis bank offers study loans abroad at rival interest rates. A margin of 15% has to be provided by the borrower if the loan surpasses INR 4 lakhs. The bank gives a maximum of INR 20 lakhs and covers costs like tuition and accommodation.
HDFC Bank is one of the private banks offering education loans for study abroad to Indian students. The maximum loan of the bank is INR 20 lakhs.
This private bank offers study loans abroad even before the student has secured admission at the university.
Punjab National Bank Udaan is the education loan scheme offered by the Punjab National Bank to students studying abroad.
The bank offers education loans for study abroad to pursue graduate, postgraduate, job-oriented professional, and technical courses.
The borrower needs to give a loan margin of 15% for above INR 4 lakhs. They also offer the base rate as the interest rate on loans taken for pursuing an education at the top world universities.
State Bank of India
State Bank of India provides a maximum amount of INR 30 lakhs as education loans for study abroad with a loan margin of 15%.
The SBI charges up to a 2% interest rate on the base rate of SBI. Further, the loan repayment tenure can be one year to even 15 years.
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Education Loans for Study Abroad from NBFS
NBFCs (Non-banking financial companies and institutions) offer loans too. NoBFCs offers complete tuition fees to the students.
Borrowers need to provide collateral security to the banks as the loan amount is generally more than INR 7.5 Lakhs.
Students looking for education loans for abroad studies can now have the option to secure a loan from NBFCs.
Schemes of Loans for Study Abroad in Indian Banks
There are different schemes which Indian banks offer, and you should know about their requirements and criteria before applying for them.
This section includes some of the methods of Indian banks for international students.
HDFC Bank Education Loans for Study Abroad
This scheme can be availed by students who wish to pursue studies abroad. The maximum loan available in this scheme is INR 20 lakhs at a nominal rate of interest.
It also gives tax benefits to the borrower, and it can be sanctioned before admission.
Oriental Bank of Commerce Education Loan
This scheme is for students who wish to pursue higher studies in India or abroad. If the student wants to go to the US, the loan will depend on the destination institute fee.
The point of this program is that it does not take a prepayment penalty from the borrowers and gives insurance coverage. The margin for the loan surpassing INR 4 Lakhs is 15% on the loans for studying abroad.
SBI Student Loan Scheme
This scheme can be availed by students who have secured admission to any institute in India or abroad.
The applicant may get a maximum of INR 20 lakhs at an interest rate, and it has to be repaid within about 15 years.
If the loan is more than INR 7.5 Lakhs, borrowers should furnish collateral as security. The repayment starts after one year of graduation.
SBI Global ED-VANTAGE Scheme
This loan is for students who wish to seek a full-time program abroad. Students may get a loan of up to INR 1.5 crore and repay it within 15 years.
The borrowers should provide collateral to secure this loan and start repayment six months after graduation.
7 Things to Remember When Taking Education Loans for Study Abroad
When applying for education loans for study abroad as a student from India, there are some critical points to follow to accomplish your goal.
These are seven things shared by Indian students who already got their loans:
1. Moratorium Period
It is when the borrower need not make any repayment to the bank. This period varies from bank to bank and could last up to some time after completing the course.
2. The Margin of Loans for Study Abroad
Usually, banks do not provide the total amount needed to fund education. Most public banks issue 90% of the total amount, and the remaining 10% has to be arranged by the applicant.
3. Effect of Exchange Rate
Always calculate the amount you will receive at the time of disbursement, as any change in the rate may affect the applicant’s amount.
4. Collateral Rules of Loans for Study Abroad
Whether movable or immovable, any property can be offered to a bank as a security for a loan is collateral. Most Indian banks demand collateral as security to reduce the risk involved in paying off the credit.
Any liquid assets like bonds, FD, shares, or immovable property like the house, commercial property, or just land can be classified as collateral.
One crucial point to remember is that banks don’t accept agricultural land as collateral.
Bonds, deposits, shares, mutual fund units, gold, debentures, bank deposits, life insurance policy, and government securities, are accepted as collateral.
5. Guarantor Responsibilities
Becoming a loan guarantor is a great responsibility as the guarantor will have a legal obligation to pay if the borrower doesn’t. If the loan amount surpasses INR 4 lakhs, the bank may ask for a guarantee from a third party.
If the borrower cannot repay the loan amount irrespective of the circumstances, in that case, the guarantor holds the liability to reimburse the entire amount to banks.
6. Read the Agreement Carefully
It is one of the most important aspects to look after while taking a loan. It’s always best to go through the terms and conditions of the loan carefully and then move ahead with it.
We stress it upon one factor, as you should always be transparent with all the requirements mentioned in the loan agreement. If you have any uncertainties, consult the experts apart from the bank representative.
7. The Maximum Loan Amount
The banks set no limit for offering education loans to students abroad. It depends on the bank to bank.
The majority of the banks provide loans maximum up to INR 20 to 30 lakhs. Also, if the loan is more than INR 20 lakhs, then the interest rate increases respectively.
Studying abroad can be a huge decision, however, for everyone. Those who want to pursue studies abroad, but finding it difficult to arrange for funds, have the option to get education loans for study abroad or even in India.
This article has all the information, including eligibility criteria, required documents, and the process of getting a loan for Indian students planning to study abroad.
We also gathered some top banks of India to get education loans for study abroad if you need more information.