Education Loan for Abroad Studies: Low Interest With Fast Approval | Step-by-Step Process
Education loan for abroad studies is vital for many students who dream of studying at the world’s best-ranked universities. It provides them with the opportunity to explore themselves in global markets, good research facilities, and career growth. However, it’s quite difficult to arrange the funding required for studies. An education loan is an essential resource that helps these students to turn their dreams into reality.
During the past few years, there has been a considerable increase in the number of students pursuing higher education abroad. And therefore, the requirement for education loans is also increasing, and it is very important to know the pros and cons of education loans, the process, documents, and other important factors that are to be considered while taking a loan.
We are going to cover all the things that you need to know if you are a study abroad aspirant who wants to fund their education through a Loan.
Why Students Choose to Take an Education Loan for Studying Abroad??
- High Tuition fees
- Increased cost of living
- Tax Benefits
- Quick and easy Visa approval
- Increases credit score / CIBIL Score
What Are The Types of Education Loans?
There are 2 types of Education Loans –
1- Secured Education Loan –
The Loans that are granted by taking some assets or property as collateral security are known as “Collateral Loans” or “Secured Loans”. In this type, the banks have the right to sell the collateral assets if repayments are not made on time. Collateral security can be any assets like Property, Land, deposits, or shares etc. However, loans against Gold/ Silver are not acceptable by the Universities or the Embassy.
2- Unsecured Education Loan –
The loans that do not require any kind of security, which are granted without any Collateral assets, are known as “Unsecured Loans” or “Non-Collateral Loans”. Unsecured Loans are acceptable only to a few destinations. Countries like Australia or New Zealand require a “Secured loan” only, and that too “against property”. Therefore, it is always advisable to take a secured loan against a property, which is acceptable by all the universities and embassies.
What Are the Eligibility Criteria For an Education Loan to Study Abroad?
- The applicant should be an Indian citizen
- Applicant’s age should be between 18 and 35 years
- The applicant should have a good academic record
- The applicant must have applied to a course that results in academic as well as career progression, as banks prefer giving loans to courses that have good possibilities of employment
- Applicant must have obtained a letter of offer from the University
- There has to be a co-applicant, generally a parent or guardian, or spouse/in-laws. Co-applicant’s annual income should be stable and decent enough, and they must have a proper CIBIL score
- Banks will ask for collateral security, such as property or deposits, etc.
What Are The Documents Required For an Education Loan To Study Abroad?
Here is the checklist of applicant’s documents –
- All Academic Documents
- Offer Letter from the University
- Valid Passport
- Passport-sized photographs
- Financial Matrix containing the total expenditure of studies
- IELTS score card
- Address Proof
- PAN card
- Employment documents (if working) – Appointment letter, salary statement, salary slips
- ITR/Form 16 (If Working)
Here is the checklist of co-applicant’s documents –
- Valid Passport
- ID proof and Address Proof
- 2 passport-size photographs
- ITR/ Form 16
- Employment Documents (Appointment letter, salary statement, salary slips)
- Bank account statement for the last 6 months -Salary Account.
What Are The Step-by-Step Process of Applying Education Loan?
The application process generally involves the following steps:
- Selection of a Bank / Financial Institution – Do some research on education loan providers, their application process, terms and conditions, loan repayment terms, rate of interest, benefits, etc, and select the one that is most suitable for you
- Documentation – Gather all the necessary documents which are required for the loan application
- Application – Make a loan application with all the supporting documents and a completed and signed application form.
- Verification and assessment – The Loan provider will review the application, check the eligibility, make an assessment and valuation of collateral property & its papers, physical verification, and then give provisional sanction
- Loan Approval – In this stage bank will approve the loan and issue the sanction letter with terms & conditions.
- Disbursement – In this stage, the applicant has to pay the processing fees and then accept the terms, submit the payment demand letter/ invoice to the bank, and then the bank will disburse the amount to the University.
Who Are The Best Education Loan Providers in India for Studying Abroad
Below are some top Banks that provide education loans for abroad studies –
1. State Bank of India –
SBI Global ED-Vantage is a tailored education loan scheme for study abroad aspirants with a competitive interest rate. SBI offers a moratorium period of 6 months after the course completion. The loan is acceptable by almost all leading study destinations.
2. Bank of Baroda –
Bank of Baroda offers Baroda Scholar Loan for master’s abroad. Repayment tenure is up to 15 years. Affordable rate of interest.
3. Axis Bank –
It covers up to 100% cost of studies that includes tuition fee, books, accommodation, traveling, etc, with flexible repayment options and competitive rate of interest.
4. Punjab National Bank –
PNB Udaan is a special education loan offered by PNB for students with good academic records. PNB loan covers tuition fees, travel expenses, library fees, book or equipment fees, and all other related expenses.
5. Union Bank –
UBI offers an education loan up to 1 crore. It covers tuition plus living costs and other expenses, and for a loan up to 40 Lakhs, no collateral is required. It also offers a moratorium period for repayment. UBI is flexible in disbursing the tuition and living costs before the visa.
6. Credila Financial Services-
This is a non-banking financial institution that provides education loans up to 100% of tuition plus living expenses with flexible terms and quick approvals.
Which Banks Are Offering The Best Interest Rate For an Overseas Education Loan?
Below mentioned table helps you to understand the rates and processing fees offered by some leading banks.
| Instituition Name | Rate of Interest | Processing Fees |
|---|---|---|
|
Bank of Baroda Education Loan |
7.90% to 12.90% |
Zero processing fees on collateral-free education loan |
|
SBI Education Loan |
11.15% |
INR 10,000 |
|
Credila Financial Services Education Loan |
9.75% |
No Processing Fees |
|
ICICI Bank Education Loan |
Current REPO Rate + 3.75 |
Upto 2% + GST |
|
AXIS Bank Education Loan |
13.70% |
2% + GST |
|
Canara Bank Education Loan |
15% |
0.5% of Total Amount |
What Types of Common Mistakes Happen While Applying for an Education Loan, and How to Avoid Them?
1- Lack of research –
Many students apply for a loan without doing proper research on all the providers. They do not check the criteria, terms & conditions, repayment terms. They do not check if the type of financial institution they are applying, is acceptable by the university or embassy.
How to avoid this –
First, check if the bank is falling under the acceptable financial institutions list. Check all the factors like rate of interest, documents required, process, repayment terms, etc. Compare them and then select the best one.
2- Ignoring eligibility criteria –
Students do not check the eligibility criteria of Banks as well as universities. It is important to know the co-applicant’s income requirements, security or collateral requirements, academic performance, university ranking, etc.
How to avoid this – Check the Bank’s eligibility checklist properly. Go through all the requirements.
3- Incomplete Documentation –
Submission of incomplete or incorrect documents is the most common mistake
How to avoid this – Open the document checklist provided by the bank, arrange all the documents sequence-wise as per the checklist, so that you won’t miss out on any. Double-check every document before submitting.
4- Secured / Unsecured loan and security –
Many times, it happens that students go for an unsecured loan from an institution, but universities do not accept unsecured loans, and the funds get rejected.
Sometimes it happens that banks provide secured loans against deposits or LIC or other investments. But universities or embassies do not accept such a type of security; they want a loan against property. So, funds get rejected, or Visa may be rejected.
How to avoid this – Check the Visa requirements, the university’s acceptable banks and acceptable sources of funds, the criteria of the loan, and then go for the loan application.
5- Applying too late –
This is the most common mistake, which leads to mistakes in documents, delays in sanction, disbursement, and visa process, further.
How to avoid this- Start the loan process immediately after receiving the first offer.
6- Underestimating Total Expenses –
Many times, applicants forget to consider the additional costs attached to studies like health insurance, books, transportation,n etc., and the changing exchange rates.
How to avoid this – Prepare a proper financial matrix that covers all the costs associated with your journey, and while considering total expenditure, always consider changing currency rates.
Tips to Improve Your Chances of Getting an Education Loan Approval
- Look at multiple providers, research and compare, and then select the right institution that correctly matches your preferences and eligibility
- Provide true and proper documentation in, timely manner.
- Read and understand the terms and conditions properly to avoid any 11th-hour surprises at the time of repayment
- Your co-applicant should have strong financial capacity.
- Admission to a top or reputed university increases the chances of getting a loan sanctioned quickly.
How Does Education Street Help You Get an Education Loan to Study Abroad?
Get the best Education loan for financing your studies and fulfill your study abroad dream, with Education Street.
At Education Street, our loan experts will guide you in selecting the right financial institution on the basis of your eligibility, preferences, and assist in the entire process, right from documentation till disbursement.
A Student Secures an Education Loan – A Real Success Story
Student Name: Swetha Sirmalla
Student City: Mumbai, Maharashtra
Bank Name: Bank of Baroda
Challenges She Faced:
Swetha had received an offer letter from the University of Adelaide, Australia, for her Master’s in Data Science. Australia is quite strict when it comes to GS requirements and the source of finances. The process is quite tedious and time-consuming.
She struggled to arrange funds in proper ways and was confused about finding the right education loan option.
Her biggest challenges were:
- Lack of clarity about secured vs. unsecured loans
- Difficulty in finding a lender offering competitive interest rates
- Time constraints – her visa deadline was approaching quickly as
- Limited knowledge about the required documentation and eligibility
Education Street Team Helped Swetha In The Following Ways-
Our finance team at Education Street stepped in to simplify the entire process.
- We analyzed Swetha’s academic profile, university, and family financials.
- Conducted a meeting with parents and did proper financial counseling, prepared the Financial Matrix, and explained to them how much funding they need to arrange and what are the acceptable means of financing are, as per the rules of DHA and the University.
- Explained the mandatory requirement of a “Secured Loan”, collateral property to be kept as security with the bank
- We compared multiple loan schemes from top banks like SBI, Union Bank, IDBI, and Bank of Baroda. We connected them with all the mentioned loan providers.
- When they finalized to go for Bank of Baroda, our team guided her in preparing all necessary documents and connecting directly with the Bank’s education loan department.
- Our counselor personally followed up to ensure her loan sanction letter was issued within 7 working days and explained manager regarding pre-visa disbursement requirement of DHA.
The Result:
Our Team’s timely support helped Swetha obtain a secured education loan of ₹45 lakhs from the Bank of Baroda at a competitive rate of interest, without delay. The University approved the funds within a day, as the process fully complied with the terms and regulations of both the University and the DHA.
After approval, we requested the bank to make a pre-visa disbursement. We submitted her visa, and it was approved within a week! She successfully began her studies at the University of Adelaide, Australia, without any financial stress.
Why Students Choose Education Street?
- Students get proper financial counseling from our experts
- We connect students with leading banks and financial Institutions
- Whether you have collateral or not, we help you find the right loan as per your eligibility and needs
- Our team helps with hassle-free documentation and process
- Our team coordinates directly with the bank to help you get quick sanctioning of loans
- We help you access loans with competitive interest rates and student-friendly repayment options
- We help students with Assistance/guidance in pre-visa disbursement
So, if you are dreaming about studying abroad, plan your finances early, get proper guidance from our experts, and connect with the best loan provider.
To know more about the Study abroad process, selection of countries, proper courses, and most importantly, funding your education and the Loan Process, connect with the Education Street Team now, and turn your dream into reality.