Aug 5, 2019

Education Loans to Study Abroad for Indian Students in 2019-2020

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For many students, Education Loans to Study Abroad makes their higher education possible in foreign countries. Last year, more than 7,50,000 Indians were reported studying abroad in 90 countries. Studying abroad comes with a price though, and almost every time, the price is higher than what should have been paid by the student if he or she were to study in India. If you are an aspiring student willing to study abroad, and concerned about its cost, here is all you need to know about education loans:

Education Loans to Study Abroad

As we have mentioned, the costs of studying abroad can be high for many. The Education Loans are a great way to fund your education abroad. The Loans not only take care of the tuition fees, but also help with travel and living costs. A number of Indian Banks, along with Indian Government and RBI, has various loans and schemes to help students financially when it comes to higher education abroad. Various banks have different rates of interest, margins, and repayment policies. The most important of them being the rate of Interest:

Education Loan Interest Rate

The interest rates of the education loan is the percentage of interest you pay on the loan amount. With banks and financial years, the rate of interests will change. Some of the banks also have different slabs for different amounts. Here are the rates of interest for Indian Banks in 2019:  

Education Loan for Abroad Studies Interest Rate:

No Banks & NBFC Loan Amount Rate of Interest
1 Andhra Bank Up To Rs. 7.50 Lakhs MCLR(1 year) + 2.00 %
    Above Rs. 7.50 Lakhs MCLR(1 year) + 1.70 %
2 Avanse For all loan types and amounts 10% to 16.50%
3 Axis Bank Up to Rs. 4 Lakhs 0.152
    Greater than Rs. 4 Lakhs, upto Rs. 7.5 Lakhs 0.147
    Greater than Rs. 7.5 Lakhs 0.137
4 Bank of Baroda For all loan types and amounts 8.50% onwards
5 Canara Bank Up to Rs. 4 Lakhs 0.104
    Rs. 4 Lakhs to Rs. 7.50 Lakhs 0.104
    Loans above Rs. 7.50 lakhs 0.102
6 Credila For all loan types and amounts 11.85% onwards
7 HDFC Bank Minimum APR 0.09
    Maximum APR 0.1386
    Average APR 0.1157
8 Indian Bank Education Loan Prime MCLR(1 year) + 0.60 %
9 Kotak Mahindra Bank For all loan types and amounts 11.5% to 24%
10 Punjab National Bank PNB Saraswati/Udaan 10.30% onwards
11 State Bank of India Up to Rs. 7.5 Lakhs 0.1025
    Above Rs. 7.5 Lakhs 0.105

Source: 1

(NBFC stands for Non-Banking Financial Company. MCLR stands for Marginal Cost of Funds based Lending Rate, below which banks are not allowed to lend money.)

Education Loan Eligibility

Now, there are some eligibility criteria for education loans to study abroad that students are needed to fulfil. The most common of them being: the student should be a legal citizen of India. The other requirements include: Acceptance in the Universities abroad and good academic record in high school or college. The other requirements will include admission in specific courses and even specific countries based on the banks. Banks also need the statements and proof of income, and if the student is unemployed, a joint applicant is needed. The Joint applicants are generally the members of close family.

General Document Requirements for Education Loans to Study Abroad:

  • Academic records such as mark sheet and transcripts of previous education
  • Acceptance Letter from the university.
  • KYC documents for Identity, Signature and Residence.
  • Income Documents (Bank statements, Salary Slips, Tax Returns)
  • Mortgage Papers like building plan, property title deed and NOC
  • Guarantor Form (If required)

Education Loan for Abroad Studies in SBI

The largest bank of India, SBI has an education loan to study abroad for Indian students. The SBI Ed-Vantage Loan can cover up to 1.5 Crore of amount based on the need of students. Students going for nine countries are eligible for the loan. The countries include: USA, UK, Canada, Australia, Europe, Singapore, Japan, Hong Kong and New Zealand. The loan covers the tuition fees at the universities abroad, traveling costs, Library fees and other miscellaneous costs that come with studying abroad. 

SBI Education Loan Apply Online:

SBI Education Loan to Study Abroad can be applied online on the bank’s portal for the loan. The students are required to fill in some basic questions like personal information, amount of loan required, the university you are applying to and course you have applied to. Once you have successfully completed the registration, you might receive the call or email regarding the quotation of the loan. 

Other Education Loans to Study Abroad: 

The Entities offering Student Loans such as Banks and NBFC are listed above, including Andhra Bank, Avanse, Axis Bank, Bank of Baroda, Canara Bank, Credila, HDFC Bank, Indian Bank, Kotak Mahindra Bank, Punjab National Bank and State Bank of India. Other than that, these are some of the options for students:

Global Student Loan Corporation (GSLC)

For Students going to USA

International Student Loan Program (ISLP)

For Students going to USA

Oriental Bank of Commerce Education Loan

For Studying in India and Abroad

Education Loans to Study Abroad: Terms & How to Apply

How to Apply for the Education Loans to Study Abroad?

  1. The first step to seek the terms and conditions of the Education Loan you are trying to apply for. See if the course and university you are trying to apply is listed under the eligible institutes of the loan.
  2. Figure out what amount you are going to need for studying abroad, and how much of that amount you can arrange on your own.
  3. Compare different banks and entities, their facilities and interest rates to get the best out of your Education loan.
  4. Once everything is decided, fill out the application form for the Loan, along with the supporting documents listed above.

Terms to Know:

Mortgage or Collateral: The property or asset (immovable in most cases), which is offered by the students to bank for securing the loan. It can be a house, land or any other valuable asset.

Moratorium: The Moratorium period is the period for which students are not required to pay the loan back. Moratorium can be for a year, shorter or longer than a year, or for the length of course depending on the bank.

Repayment: The repayment is students paying their loan back after the Moratorium Period is over. The loan needs to be repaid with the rate of interest along with the amount.

Loan Margin: Majority of the banks do not provide the full loan amount. Most of approve the loan of 90% of the total amount, and the rest is to be arranged by the students themselves.

Education Loan for Abroad Studies without Collateral:

Now that you know what collateral means, there are some NBFC that allow students to apply for an Education Loan to study abroad without a Collateral. Avanse, Auxilo, Credila and Incred are the NBFC in India that offer student loans without Collateral. The upper limits for these NBFCs can go as high as 50 Lakh. According to the Reserve Bank of India, the government banks are allowed to provide Student Loans up to 4.5 lakh without any need of collateral. The parents or guardians are made joint applicants and in some cases, there is a third party guarantee is acquired.

Education Loan for Abroad Studies by Indian Government:

The University Grant Commission or UGC, provides the education loan to study abroad up to 15 lakh with the collaterals involved. Without Collateral, the loan amount is limited to 4 lakh. These loans are needed to be paid within 5 to 7 years. The rules of the loan differ with different banks however.

About the Author:

Dhruv is fond of words and everything related to them. Writing about different things from around the world gives him immense pleasure, and a very healthy by-product is sharing of the information and helping others in the process.

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