Study abroad education is the dream of every and any Indian student, but due to the sky-high cost of study, living, and travel, it exceeds the limits of their pocket. Study abroad education loans are one of the best methods of funding overseas studies without burdening families with massive front-end investments. This is the step-by-step procedure on how to get a study abroad education loan.
Step 1: Education Loan Types
You must know the kind of education loan before applying for it:
Secured Loans: They are collateral-backed like property, fixed deposits, or insurance policies. They are low-interest and high-loan amount.
Unsecured Loans: They are not collateral-backed but high-interest and are generally given on the basis of marks scored and the financial status of the co-applicant.
Step 2: Check Eligibility Criteria
There are some specific eligibility conditions that must be satisfied by the students and the parents or guardians as co-applicants, which lenders do have. The common demands are:
The student must be an Indian resident.
Admission in a university or institution known abroad.
Genuine academic history.
The co-applicant should have a constant source of income (in unsecured loans case).
Age bar may also vary with the lender.
Step 3: Pick the Correct Lender
All the Indian banks and financial institutions may not offer education loans for studying abroad. The most suitable lenders are:
Public Sector Banks (such as State Bank of India, Bank of Baroda)
Private Banks (such as ICICI Bank, HDFC Bank, Axis Bank)
Non-Banking Financial Companies (NBFCs) (such as Credila, Avanse, InCred)
International Lenders (such as Prodigy Finance, MPOWER Financing)
Compare interest rate, processing fee, repayment period, and loan amount before selecting the lender.
Step 4: Loan Amount and Coverage
The amount of loan differs institution-wise, course-wise, and country-wise. Education loans generally cover:
Fees payable as tuition
Day-to-day expenses
Travel expenses
Mediclaim coverage
Books and study material
Other miscellaneous items
The lenders disburse 80-100% of the fund based on the credit rating of the borrower and the availability of collateral.
Step 5: Documents Required
To avail an education loan, you need to submit the following documents:
Personal Documents: Passport, Aadhar card, PAN card
Academic Documents: Mark sheets, university admission letter
Financial Documents: Proof of the income of the co-applicant, bank statements, tax returns
Collateral Documents (if any): Documents of property, fixed deposit receipts
Step 6: Take Loan
Once the lender is chosen and documents are collected, apply for the loan both online or offline. The process typically includes:
Filling in the application form with personal and educational details.
Forwarding the supporting documents.
Loan sanction wait time, which would be weeks to days depending on the lender.
Completing any other verification process if required.
Step 7: Loan Sanction and Approval
Once your loan application is approved by the lender, they will issue a loan sanction letter containing the following details:
Sanctioned loan amount
Interest rate
Tenor of repayment
Moratorium period (grace period to repay the loan)
Other conditions and terms
Sanction letter is normally required for visa approval in some countries.
Step 8: Disbursement of Funds
Amounts are paid directly to the university or, in some cases, to the student’s bank account in batches depending on university completion terms.
Step 9: Repayment Terms and Moratorium Period
Repayment usually begins upon course completion with a moratorium (6-12 months after graduation or 6 months after placement). Repayment of the loan is made through:
EMI payments
Partial prepayments to lighten the interest load
Full prepayment (Foreclosure fees by some lenders)
Step 10: Education Loan Tax Relief
Tax deduction on interest payment of the education loan can be claimed by the borrowers under Section 80E of the Income Tax Act for a cumulative duration of 8 years.
Conclusion
Education loans provide Indian students with an opportunity to study abroad by providing them with the necessary funds. With these simple steps, you can choose the most appropriate loan, apply hassle-free, and enjoy tension-free repayment. Planning and budgeting can assist you in making the correct financial choices for a brighter tomorrow!
Read More: UK’s Special Visa Route Opens Doors for Indian Students to Study and Live
Leave a Reply