Education Loan to Study in Germany

Germany is a country filled with beautiful landscapes and lakes. There is everything that an international student would need to enjoy staying and studying in the country. Student life in Germany is filled with excitement and full of fun. German universities have world-class infrastructure and offer a wide range of subjects.

One of the biggest difficulties international students have to face for studying in Germany is collecting funds. It is not possible for each student’s dream of studying in Germany to come true, as it is not very affordable.  So in this article, we are going to present you each minute detail of Education Loan to Study in Germany.

How to get the Education Loan to Study in Germany?

International Students planning to study abroad in Germany with the help of an education loan must start their process minimum of 3 months before applying for a student visa. You can also start your loan application process along with your university admission application. Here are the steps you need to follow for applying for a student loan:

1. Do some research regarding the banks providing international education loans to study abroad in the university in Germany, its eligibility criteria and document requirements.
2. Estimate the fund requirements for the studies in Germany. You should also calculate the amount you will finance on your own and the loan amount you want to get.
3. Apply for the university in Germany and get a letter of acceptance.
4. Compare various loan options provided by the different banks for covering expenses while studying in Germany and finalize the one which meets your needs.
5. After deciding the bank and the loan amount, you should fill out the abroad education loan application form. It can be done online as well as offline, depending upon the bank facilities.
6. Submit all the documents such as your  Identification document, birth certificate, bank statements, salary slip, residency proof etc.
7. Once the bank approves your loan, it will issue a loan agreement that includes terms and conditions of the loan. Read each point carefully and sign it. 
8. After signing your loan document, the bank will pay the amount to you as decided in the agreement.

Do you want more detailed information for each step? In the next part, we will discuss all steps with complete information. Go through each step thoroughly, as it is a big decision which will affect your financial life.

Research about the banks and loan options

Your process begins with researching about different banks and loan options. But before you start your research, there are few things you have to throw light on:

Factors to consider for education loan to study in Germany

Before applying for a student loan to study in German universities, you should have a clear idea about how much money you will require and how much you are going to manage by your fund. Other important factors are:

• Decide the university and course you want to study in Germany.
• Calculate the total amount you will require to study abroad in Germany.
• Make the list all the documents and collect them accordingly to submit during the application.
• Make sure to keep ready the guarantor or collateral. (as required)
• Make sure to apply for the international educational loan before the three months before applying for a student visa for Germany.
• Estimate the time of fund disbursement.

Once you are ready according to the above-mentioned things, check your eligibility for an education loan to Study in Germany. Here are the criteria:

Eligibility Criteria to apply for international education loan

Different loan providing institutions have different eligibility criteria. Before applying, check your eligibility to apply for the education loan to study in colleges in Germany. The common eligibility criteria followed by most of the banks are:

• You should have a fantastic academic record.
• You must have a Letter of acceptance from a reputed German university.
• You must be admitted into ay of the job-oriented study program in Germany.
• You must be able to provide some form of collateral against the study abroad loan, such as shares, debentures, bank deposits or government securities.
• The applicant must be above 18 years of age otherwise his or her parents will have to apply for the loan.

Calculate the amount required to study in Germany

It’s time to estimate the fund requirements for your studies in Germany. Usually, an education loan to study in Germany covers the total student cost of an education in Germany. While calculating the total cost, you should include the following expenses:

• Tuition Fee:- The academic fee for each academic period in the universities of Germany.
• Other compulsory Fees:- This involves expenses like exam fee, student activity fees, recreation fees, new student fees, etc. 
• Accommodation expenditure:- This expense includes on-campus or off-campus living expense. For example Rent expense, price of Regular meals, utility expense etc 
• Purchase of books, stationery and laptop/computer.
• Travel expenses:- Things like airfare, parking permit, monthly bus/ train pass etc.
• Other reasonable expenses that would be required to complete the course

Estimating the Cost of studying in Germany is one of the important steps. Once you get your final amount, you have to check with your savings as how much you will be able to pay on your own and how much you will require to take a loan. 

Get Acceptance Letter from the German University

Universities in Germany admit international students twice in a year, January and September. You have to apply to the Universities with all the documents required under eligibility criteria. Once you get the letter of acceptance from the university, you can show that as proof while applying for the education loan. To help you with the Universities here we have mentioned the top universities in Germany:

1. Technical University of Munich
2. LMU Munich    
3. Heidelberg University
4. Humboldt University of Berlin
5. Free University of Berlin
6. KIT, Karlsruhe Institute of Technology
7. RWTH Aachen University
8. Technical University of Berlin
9. University of Tubingen
10. University of Freiburg

Not only the above-mentioned universities, but you also have various other options in Germany where you can pursue your further studies. You will get full information here: Universities in Germany

Comparison of Education loan options

In this step, you have to make a comparison between the different loan options provided by the different banks for studying in Germany. Make a decision only after considering the following factors   

• Rate of Interest
• Expenses covered such as tuition fee, books, travel etc.
• Processing Fee
• Loan margin
• Duration of the loan
• Income tax exemptions
• Loan processing time
• Prepayment terms
• Repayment Period

Each element plays an important role, so ake decision after proper comparison. If you decide after careful planning and comparing you can save a few Euros. 

International Education Loan application form.

In this step, you will legally start the process of applying. After deciding the bank and amount of loan you will require, you have to fill the loan application form. It can be done online or offline according to the bank. You must fill the application form accurately and truthfully. 

In the application form you will have to fill your name, parents name, address, date of birth, age, ID proof, course name, duration of the courses, university name, Income, Liabilities, employment details, type of security, tuition fees, other expenses etc. Fill everything you are asked in the form correctly and recheck it before applying.

Submit the documents

While applying for an education loan, you need to submit some common and important documents along with the Loan Application Form.  Here is a list of the documents, you will require while applying for loan:

• A copy of a valid passport.
• Proof of Admission at the University of Germany.
• Documents of collateral security.
• Academic documents of the student.
• A document containing an estimation of the study program expenses.
• Recent Passport size photographs.
• Identification proof such as Aadhar Card, Voter’s ID Card, Valid Passport or PAN Card.
• Proof of Residence. For example Driving License, Aadhar Card, Telephone /Electricity bill.
• Proof of Age. You can present your Birth Certificate as evidence.
• Photograph, Residence proof of guarantor
• Proof of income. For example Salary slip.
• Bank statements

Other Optional Documents

• Official Certificate of Minority Caste.
• Certificates of Extra-curricular activities 
• Documents regarding any disability or illness

Education loan agreement to study in Germany

Once your loan application is approved by the bank, it will issue a loan document. The document will include various terms and conditions of the loan along with the basic details. There will be the borrower’s name, agreed loan amount, the period of repayment, interest rate, the signature of both the parties, collateral security details etc. Read the terms and conditions properly and if you agree then sign it.

Disbursal of the Education loan

After signing your loan document, the bank finally disburse the loan. It will pay the amount to you in instalments or lump sum as per your and university requirement. In some cases, the bank may pay the tuition fee directly to the relative university. Once you receive your amount, spend on the necessary expenses such as tuition fee, books and supplies, accommodation etc. Don’t waste your money on the non-essential expenses. 

Security for the international education loan

Generally, banks do not ask for collateral security for loans which include less amount. However, for a high amount of loans, most banks require collateral or a guarantor.

What is Collateral?

Any property either movable or an immovable, which can be kept as a security in the bank for an education loan is collateral.  Most of the banks demand collateral as security to reduce the risk involved in paying off the credit.

Instruments used as collateral: 

• Land or building. For example houses, commercial places.
• Government Securities and public sector bonds
• LIC policy, gold, shares, debentures,
• Fixed deposits in the name of the student, parent/guardian with a suitable margin.

Who is Guarantor?

A guarantor is required for getting an international education loans. It could be a parent or family member. The bank will conduct a thorough background check of your guarantor’s credit history before accepting or denying your loan application.

There are some of the important things bank inspect before granting loan:

• The repayment capacity of the student's parents/family/Sponsor.
• The representative of the bank will verify your property used for collateral and prepare a report.
• Additionally, the value of Collateral Security is calculated. Banks usually get the valuation of the collateral done from an approved Valuator only then process the loan application.

Repayment of Education Loan to Study in Germany

The loans taken to study in Germany are to be paid in instalments, as decided in the loan agreement. Pay the instalments on time with the agreed amount. Make sure you do not delay in paying the instalments.

The loan can be repaid within 10 -15 years after taking the loan. The repayment period starts from 4- 12 months after the end of the course. Moratorium time varies with different loans providing banks. 

You should also read these articles:
Admission Process to Visa: Study in Germany
How to Apply to Universities in Germany?
Stay back and Work Permit after Study in Germany