Benjamin Franklin once quoted - "An investment in knowledge pays the best interest." Studying abroad is an important decision and bearing the education costs is quite a challenge. One of the many ways to overcome this challenge is the educational loan. Study abroad scholarships and part time jobs help you to support your living overseas however they might not be sufficient to fund your entire expenses. Therefore, you are mostly required to apply for education loan. Here are some basics about how and when of the educational loan process. If you need more information, then our counsellors are always ready to guide and assist you.
What does an Educational Loan cover?
It mostly covers your tuition fees, living and accomodation expenses,cost of books,cost of commuting etc.
Banks and financial institutions have their own set of criteria's defined for loan limit, the rate of interest, the duration and method of repayment.
Education loans are offered in particular slabs:
a) Up to Rs.4 lakhs
b) From Rs. 4 lakhs up to Rs. 7.5 lakhs
c) Above Rs. 7.5 lakhs
The maximum loan amount ranges from Rs.20 lakhs to Rs.1.5 crore
The rate of interest varies between 11.5 % to 14.25 %.
What is the Loan Amount one can get?
As an applicant, you must be an Indian citizen.
A co-applicant (also known as co-borrower) is must, and it can be anyone amongst your parents, siblings, legal guardian or a relative.
Program eligibility - Banks have their list of approved programs and Universities, and they do not usually finance distance education, correspondence and certification courses. More reputed the University and program are, more are the chances of loan getting sanctioned.
Loan up to Rs. 4 lakhs - No collateral security.
Loan between Rs. 4 lakhs and Rs. 7.5 lakhs - Security in the form of satisfactory third party guarantee.
Loan above Rs. 7.5 lakhs -
(a) Collateral security of clear title immovable property.
(b) Co-obligation of parents/guardians/third Party along with assignment of future income of the student for payment of installments.
What is the eligibility to avail the loan?
When to apply for Education Loan?
You can apply for education loan on receipt of offer letter from the University. However, it is a good practice to start arranging the required documentation beforehand.
Banks and financial firms offer good schemes of education loan for higher studies abroad at competitive rates of interest. Public sector banks in India have lower rates of interest as compared to the private ones. However, public sector banks often requires stringent documentation process and criteria to be fulfilled. Our education counselor can help you shortlist the banks to be approached depending on your financial structure, whether the bank provides loan for the course you are opting for and if yes, then up to what extent, the margin and security requirements, the rate of interest, the proximity of bank to your residence etc. Our counsellors also connect you to the relevant people at such banks.
Whom to apply?
1. Education Loan application form duly filled in.
2. Proof of admission i.e. Offer letter specifying course name, duration, fees, living and accommodation expenses from the University.
3. Mark sheets of last qualifying exams.
4. Identity Proof
5. Proof of Residence
6. Copy of Passport
7. Copy of Score Card - IELTS/TOEFL/PTE (Any one). Copy of Exam Score - SAT/ACT/GRE/GMAT( Any one if applicable)
8. Copy of receipt of part tution fees paid as a deposit to the University.
What are the documents required?
I.Academic and Other Documents
1. Statement of bank accounts for the last six months.
2. Income tax returns for last three years.
3. A brief statement of assets and liabilities.
4. Details of Collateral Security.
II.Financial Documents of Applicant and Co-Applicant
When and how is the loan disbursed?
Education loan disbursement means actual release of funds. The disbursement is done after loan has been sanctioned. Banks do give their share in many cases before the student receives his visa, whenever student is required to pay a part of tuititon fee to the University for release of the final offer letter. Thereafter, once the student receives his visa, banks release the education loan in installments semester wise.
Tenure of education loan generally ranges from five to fifteen years. In general the interest has to be paid regularly as and when due to the banks. In some cases, banks even allow interest to be paid along with principal amount. By and large, repayment starts one year after the course completion or six months after the student is employed - whichever is earlier.