Attending a grad school can be the best decision for your career, but finding ways to pay for school can be challenging. Your initial consideration would obviously be the programs and the location of the university, but there’s no way you can ignore the cost of education at the university. Naturally you would think your parents could pay for your education, like they may have done all these years. But for those who don’t have that option there is always an option of an education loan for study abroad!
There are many different ways in which you can fund your education abroad, so keep reading, as this article will introduce you to various aspects of a student loan for study abroad!
What is an Education Loan for Study Abroad?
A student loan for abroad is a loan product designed specifically to help students pay for post-secondary education and the associated fees - tuition, books and supplies, and living expenses, to study abroad. It may differ from other types of loans in that the interest rate may be substantially lower and the repayment schedule may be deferred while the student is still at the school.
Why is an Education Loan for Abroad Beneficial?
Sometimes the family income and savings may not be enough to fund the student’s education. In such cases a student loan has to be taken from banks or non-banking financial companies (NBFC). A student loan can be used to sponsor the educational cost completely or partially. Therefore, an education loan for study abroad ensures that the university education gets completed without any sort of financial hindrances.
The general perception is that loans are a bad debt. It means that you are taking a loan for something whose value will drop over time. It is not the same as an overseas education loan since it is an investment in yourself. You are investing in your own university education which will help you get a job. Through which you can earn much more than the loan amount.
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Types of Education Loans
There are two types of study loan for abroad that can be useful when looking for an education loan to study abroad:
In this particular loan for foreign studies, the borrower promises some of his/ her assets as collateral. When someone takes a secure loan he has to mortgage his property to the bank or financial company.also, the property mortgaged by the borrower cannot be agricultural land.
Unsecured loans are monetary loans that are not secured against the borrower's assets. These may be available from financial institutions under many different guises or marketing packages. There are a number of conditions that have to be fulfilled in order to get an unsecured loan.
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This video showcases Rishabh Goel from Prodigy Finance throwing light upon some of the most essential loan terms such as collateral, margin money, grace period, etc
Eligibility Criteria and Documents Required to Apply for a Study Loan for Abroad
Let us now move on to certain conditions that are required in order to meet the education loan for abroad eligibility:
GRE score is an important factor in getting a student loan for abroad. Along with the GRE score, the overall academic performance along with the work experience also matter while getting a loan. Not to forget that the most crucial factor to meet an education loan for abroad eligibility is Indian citizenship.
The co-borrower’s profile also plays an important role in getting a student loan for study abroad. The financial background, location and owned assets are some important factors to get hold of a foreign education loan.
The ranking of the university in which you have taken admission also matters. Better the ranking of the university, better chances of getting a loan. Top universities across the globe also offer better jobs which increases the security on the foreign education loan.
Underwriting norms are the guidelines established by loan vendors to ensure that safe and secure loans are issued. They are issued to decide if a study loan for abroad should be issued to a person or not, how much loan the company is willing to issue and at what interest rate the study loan for abroad should be issued.
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Let us now look at the documents required for abroad education loan:
- A completely filled application form
- Academic transcripts
- Passport photographs
- KYC documents
- Residence proof
- Bank statements
- Income proof
- Collateral documents
- Birth certificate
- Acceptance letter from a recognized university
Application Process to Apply for a Student Loan Abroad
Let us now discuss the application process to apply for an education loan for foriegn studies:
- Choose a loan for foreign studies, which is the most suitable for you
- Check all information including moratorium period, repayment tenure, education loan for abroad studies by Indian government interest rate, etc
- Visit the official website for the education loan you’ve chosen
- Fill in the application form
- Scan and upload the required documents
- Wait for the decision
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Top Education Loan Providers in India for Studying Abroad
The top education loan providers in India can be categorised into four of the below mentioned categories:
- Public and Private Banks: Public and private banks in India provide bth secured as well unsecured loans. The rate of interest on loans given by banks is usually less than the rate of interest given by non banking financial companies. Banks provide loans upto an amount of 80-90% of mortgage value. Some prominent banks that offer loan for Indian students to study abroad include public banks like SBI, Bank of Baroda, and private banks like Axis Bank, ICICI Bank, HDFC, etc.
- Non-Banking Financial Companies: Non banking financial companies provide secured as well as unsecured loans. The loan amount for unsecured loans given by non banking financial companies is usually greater than the amount given by banks. Non banking financial companies provide loans upto an amount of 100-120 % of mortgage value. Some NBFCs include Incred, and Auxilo.
- Crowd-Funded Companies: There are some companies which specialise in student financing. These companies provide loans to students going to selected universities only, so as to ensure security. They provide loans in the local currency of the country in which the student will be studying. The loan has to be repaid in the same currency.
Student loan refinancing is a way of paying off your old loan and obtaining a new loan with different repayment terms and at a new interest rate (hopefully lesser interest rate).
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Things to Remember while Applying for an Overseas Education Loan
In order to apply for a student loan for study abroad, there are some essential things that you must keep in mind like:
- Moratorium Period: Moratorium period refers to the period wherein a borrower is not supposed to repay the loan. The moratorium period varies from one bank to another, and can even last even after the degree program is completed.
- Loan Margin: Loan margin refers to the percentage margin of a loan which the borrower repays on their own, and is not paid by the bank.
- Effect of Exchange Rate: Exchange rates can easily hamper the amount corresponding to a study loan for abroad. Therefore, it is important to calculate the amount at the time of disbursement.
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Getting hold of an education loan for abroad studies is not at all difficult these days, provided you have all the required documents, and are aware about the type of loan for foriegn studies that is best suited for you. As an international student, one of the key factors is being admitted to a reputed university, which further increases the chances of getting the best loan for foreign studies!
You can even avail Yocket’s loan assistance program, to help you throughout the loan procedure. The Yocket loan assistant will even connect you to the most appropriate loan provider!
Frequently Asked Questions about Education Loans to Study Abroad
Ques. What are some top lenders to apply for an education loan for abroad?
Ans. Some of the best lenders to apply for a student loan for abroad are:
- Public banks like SBI, Bank of Baroda
- Private banks like ICICI Bank, HDFC Bank
- NBFCs like Incred, Auxilo
- Foreign lenders like Leap finance, Prodigy finance
Ques. What are some reasons for rejection for a study abroad loan for foreign studies?
Ans. Some reasons for rejection of an education loan for foreign studies are:
- Applying for a UG program, as a PG program is of a short duration
- Age of the applicant or co-applicant
- FOIR or fixed obligation to income ratio (When co-applicant’s EMIs are higher than affordability)
Ques. What is the best bank for education loan for abroad studies?
Ans. There is no particular best bank for abroad education loan. There are on the other hand some prominent banks like:
- SBI Bank
- HDFC Bank
- ICICI Bank
- Bank of Baroda
Ques. What is the best education loan for abroad studies?
Ans. One of the best education loan for abroad studies is the HDFC Credila Education Loan.
Ques. What is the maximum foriegn education loan amount I can get?
Ans. The maximum loan amount depends on the bank you choose. Broadly, the range varies from 20 Lakhs to 30 Lakhs.
Ques. What is collateral?
Ans. A collateral is an asset which can be used by borrowers to pledge against the loan amount as security. Collateral can be any asset like property, fixed deposit, agricultural land, gold, etc.