The phenomenon of studying abroad is very popular in today’s age and time. Lakhs of students visit foreign countries to pursue their higher studies because of the quality of education and exposure to new lifestyle and culture. Living in foreign countries not only expands your knowledge but also broadens your overall views about the world we live in. Students are enthusiastic to experience the foreign culture along with their opportunity to live and explore the parts of the country.
Living in a foreign country is an enriching experience. The educational stay is not only limited to obtaining knowledge related to the field of interest but also is an experience which develops an individual’s overall personality. International education is a beneficial experience and is popularly favoured by students in scope of growth, knowledge and development.
It is a fact that studying abroad is very expensive and because of financial resistance many students reconsider studying abroad. Even with the help of scholarship schemes, some students cannot afford studying abroad. Tuition fees, accommodation expenses, food expenses, travel expenses and other daily and university expenditure are some of the financial aspects of living abroad.
Banks in India are support to students who want to pursue higher studies abroad in financial aspects by sanctioning their student loans. Education loan in India for study abroad are offered by many reliable banks. Most of the banks in India sanction only 90% of the student loan for studying abroad. Rest of the 10% is expected to be organized by the applicant. Following are the expenses the student loan covers:
Banks usually sanction all the basic and university requirements under education loans which give students the opportunity to experience living and studying abroad ethically.
Many banks offer education loan for foreign studies, however choosing the right funder is very important. Opt for a bank that considers your priorities and is providing student loan that you can repay according to your terms, following points should be considered before approaching or choosing the bank:
Interest rate: Unfortunately, none of the banks in India offer education loan at 0% interest rate. Low interest education loan start from 8.45% up to 24% interest. One must check and also compare the interest rate of the loan of other banks and conclude which bank is convenient for you.
Moratorium period: Banks provide students with moratorium period which basically means that during the loan term, the applicant is given a period of time where they do not need to repay the loan amount or can also be defined as a waiting period before the applicant has to pay their loan amount through EMI. They usually range from 6 months to 1 year until the applicant finds a resource to repay the loan.
Terms: Every bank that provides student loans has terms that discuss the bank policy, restrictions, repayment policy of the loan among other necessary rules. It is mandatory to go through the bank terms in order to be aware of the payment plan and expense provided by the bank.
EMIs: Applicant must be aware of the EMI plan he/she is considering to follow after the loan is sanctioned. Check if at all you can consider paying your EMI in advance or whilst studying.
Pre-payment penalty: Prepayment penalty or part payment penalty is the fee that bank charges, if in case the applicant pays their loan off early. Ensure to ask your bank about the prepayment charges.
After thoroughly obtaining information about the bank, choose the bank that provides you with satisfactory and convenient service. It is important to be wholly aware of the bank therefore don’t rush through the process, learn and be explicit about the education loan.
Collaterals: Banks usually provide education loans based on the assurance of collateral. Collateral is a subordinate repayment security plan which basically is used as a guaranty for the loan. Applicant has to provide their owned property or something that is valued in the economy for collateral as an assurance of paying back the loan. If in case he/she fails to repay the student loan, the bank has the right to confiscate the collateral provided under the collateral agreement terms.
Education loan for abroad without collateral is provided in rare scenarios:
For instance if the student has great potential academically and the bank is sure that the applicant will repay the amount, only then the bank provides them education loan without collateral.
Education loan without security is offered by some banks in India. And is of course only provided if the student has a strong academic potential.
Post completing your education abroad, you must focus on repaying the student loan. There are three types of repayment plan that individuals can consider after completing higher education:
Standard Payment plan: Payment plans are fixed ensuring your loan is paid off in 10 years. (depending on the amount borrowed)
Extended Payment plan: Payment plans are initially fixed, once you have standard income the repayment plan eventually increases every 2 years.
Income driven payment plan: Payment plans depend on your income.
Graduated Payment plan: Payment plans are lower at first but eventually increase in 2 years of time ensuring your loan is paid off in 10 years.
Student loans are not provided to anyone or everyone, like any other bank education or student loans has an eligibility section. Only if you qualify in the eligibility criteria banks provide you with the loan. Students can apply loan for fulltime, part time courses at a recognised university. Ensure you are eligible for the education loan to study abroad.
The eligibility for applying a student loan is as follows:
It is important to have all the documents organized during the application process for studying abroad. Documents that are required whilst applying for the student loan are as follows:
Proof of identity
Proof of address/Residency proof
Proof of identity
In case the co-applicant is a salaried employee
In case the co-applicant is self-employed
The applicant and the co-applicant must have all the documents ready for the student loan application and also ensure that the documents are self-attested.
Most of the banks have provided education loan apply online service, where the applicants have to provide or fill up the form with accurate details. The applicant and the co-applicant have to fill up a form that requires them to provide with basic and personal details just like any other document related form. Along with personal details, applicant and co-applicant have to provide the bank with financial information. The form in general contains following sections:
Present banker details – Name of your current, branch address, account type, liability, etc.
List of documents required
Now that we are clear with what an education loan application form contains and the documents that one might require. We must proceed to learn about how to apply for an education loan meaning the step-by-step process of education loan.
Research and conclude a list of reliable banks that you think are capable to approach for acquiring education loan scheme details. Most of the banks have these details on their website however if one is not comfortable or clear about the education loan, it is recommended they discuss with that particular bank and acquire details of the loan. (period of time required – 5 days)
The process to get an education loan approved takes about 15 days to 1 month. It is important to choose an efficient and dependable bank as the education abroad has hefty expenses and needs a trustworthy bank to rely on.