Education loans in India to Study Abroad

Education loan abroad studies in India are financial assistance options offered by various banks and financial institutions to assist students in covering the costs of their higher education in other countries. These loans are intended to help students pay for tuition, living expenses, and other costs related to studying abroad. They frequently offer a flexible repayment period and are available to students who meet specific eligibility requirements, including as a strong credit score and a co-signer. Applying for an loan to study abroad can be a complicated procedure, and students should research and compare various loan choices before making a decision.

Loans for Indian students studying abroad have become increasingly popular in recent years. These loans are designed to help students finance their education in a foreign country, which can be quite expensive.

Education Loan

There are two main types of education loans for Indian students studying abroad: government-backed loans and private loans.

Government-backed loans, such as the Education Loan Scheme of the Indian Government, often provide lower interest rates and more flexible payback terms. They may, however, have higher qualifying restrictions and may necessitate a co-signer or collateral. Private loans, on the other hand, such as those provided by banks and other financial institutions, may have higher interest rates and stricter repayment terms, but they may also be easier to obtain and require less qualifications.

This article will go through education loans for Indian students studying abroad, covering the many types of loans available, the conditions for obtaining a loan, and the best ways to manage and repay the loan.

IN THIS GUIDE:

1. Benefits of Education Loan for Study Abroad

2. Eligibility of Education Loan for Study Abroad

3. Documents required for Education Loan

4. Procedure of Education Loan

5. Top Education Loans Providers in India for Studying Abroad

6. government-backed loans

7. private loans

8. Conclusion

Benefits of Education Loan

Education loans for studying abroad offer a range of benefits that can help students finance their foreign education. Some of the key benefits include:

  • Covering the high costs of tuition fees and living expenses: Studying abroad may be a costly endeavor, with costs frequently reaching tens of thousands of dollars. Education loans for studying abroad can assist to offset these costs, making a foreign education more affordable for students.
  • Easing the financial burden on students and their families: Students and their families may face substantial financial challenges when pursuing a foreign education. Education loans can help to alleviate this load by providing financial aid to cover tuition, living expenses, and other costs involved with studying abroad.
  • Flexible repayment options: Many education loans for studying abroad provide flexible repayment options, such as extending the repayment period beyond the completion of the course. This allows students to gain experience in the workforce before beginning to repay the loan.
  • Low-interest rates: Education loans for international study commonly have low interest rates, making them a more affordable option than other types of loans.
  • Eligibility criteria: Students who meet specific eligibility criteria, such as having a decent credit score and a co-signer, can apply for an education loan.
  • Building credit history: Applying out an education loan and repaying it on time also helps students build their credit history, which can be beneficial in the long run. It may also provide opportunities to apply for additional loans in the future.
  • Tax Benefits: Interest on education loans paid by the student or parent is eligible for tax benefits under section 80E of the Income Tax Act.
  • No collateral Required: Education loans for studying abroad, unlike other types of loans, do not require collateral.

Eligibility of Education Loan

Students must typically meet certain criteria set by the bank in order to be eligible for an education loan for studying abroad. These criteria may differ depending on the bank, but some of the most common eligibility requirements are as follows:

  • Indian citizenship: Most education loans for international studies need the student to be an Indian citizen.
  • Age: To be eligible for an education loan, students must normally be a particular age. The age range varies based on the bank, however it is often between 18 and 35 years.
  • Course and Institution: The bank must recognize and authorize the course and institution for which the student is asking for the loan.
  • Program cost: The program’s cost must be within a particular range, as established by the bank.
  • Income: The student or co-borrower (if any) must have a consistent source of income that falls within a particular range as assessed by the bank.
  • Credit score: To be qualified for an education loan, the student or co-borrower (if any) must have a strong credit score.
  • Co-signer: Some banks may require a co-signer on the loan, such as a parent or guardian.
  • Guarantor: Some lenders may require a guarantor, who will be liable for the loan if the borrower fails to repay it.
  • Collateral: Some lenders may require collateral to secure a loan, such as a property or other assets.

Documents required for Education Loan

When applying for an loan to study abroad, a variety of documentation must be submitted to the bank. The paperwork necessary vary depending on the bank, but some of the most typical documents requested are:

  • Application Form: A completed application form that includes the student’s personal and financial information, as well as information about the course and institution they intend to attend.
  • Identity proof: A government-issued ID, such as a passport, Aadhaar card, voter ID, or PAN card, is required to demonstrate the student’s identity.
  • Proof of address: A document proving the student’s present address, such as a utility bill, rental agreement, or bank account.
  • Income documentation: Documents proving the student’s income, such as pay stubs, income tax returns, or Form 16.
  • Admission letter: An official admission letter from the foreign institution, which includes information about the course and the cost of tuition and other expenses.
  • Visa: A valid student visa for the country in which the student plans to study.
  • Co-borrower/Guarantor documents: If the student is applying for the loan with a co-borrower or a guarantor, they will also be required to submit identity and income proof documents.
  • Collateral documents: If the student is required to provide collateral for the loan, they will be required to submit documents related to the collateral, such as property papers or other assets.
  • Educational documents: The student’s educational certificates and mark sheets, such as class 10th, 12th, and degree certificates.
  • Passport size photographs: A recent passport size photograph of the student and the co-borrower/guarantor (if any)

Procedure of Education Loan

Obtaining an loan for study abroad often entails complex elements, including:

  • Researching loan choices: Students should investigate and compare various education loan possibilities provided by various banks and financial institutions. This will assist them in determining which loan best matches their demands and which bank offers the finest terms and conditions.
  • Filling out an application form: Once a student has decided on a lender and loan option, they must complete an application form. This form will normally include the student’s personal and financial information, as well as information about the course and institution they intend to attend.
  • Submitting required documents: In addition to the application form, students must submit a number of documents to the bank. Identity and address evidence, income proof, admittance letter, visa, educational certificates, and other documents as requested by the bank may be included.
  • Credit appraisal: After receiving the application form and papers, the bank will undertake a credit appraisal to determine the student’s creditworthiness and ability to repay the loan.
  • Sanction letter: If the student is determined to be eligible, the bank will send a sanction letter outlining the loan amount, interest rate, repayment duration, and other loan terms and conditions.
  • Loan disbursement: After the student has accepted the loan terms and conditions and signed the loan agreement, the bank will disburse the loan amount. The disbursement can be made in two ways: directly to the college/university or to the student’s bank account.
  • Repayment: Once the loan has been disbursed, the student must begin repaying it in accordance with the terms and circumstances indicated in the loan agreement. This usually entails making regular monthly payments until the loan is completely repaid.

Top Education Loans Providers in India for Studying Abroad

There are various banks and financial institutions in India that provide education loans for international students.

  • State Bank of India (SBI): SBI is one of the top education loan providers in India. SBI, one of India’s largest public sector banks, provides education loans to students wishing to study abroad. The bank provides loans of up to Rs. 1.50 crore for study at authorized institutions in other nations. The loan has a repayment period of up to 15 years.
  • Bank of Baroda (BOB): BOB is another public sector bank that provides education loans for international students. The bank provides loans of up to Rs. 20 lakhs for studying in authorized institutions in other countries. The loan has a repayment period of up to 15 years.
  • Axis Bank: Axis Bank is a private sector bank that provides education loans for international students. The bank provides loans of up to Rs. 75 lakhs for studying in authorized institutions in other countries. The loan has a repayment period of up to 15 years.
  • HDFC Bank: HDFC Bank is a private sector bank that provides education loans for international students. The bank provides loans of up to Rs. 30 lakhs for studying in authorized institutions in other countries. The loan has a repayment period of up to 15 years.
  • ICICI Bank: ICICI Bank is a private sector bank that provides education loans for international students. The bank provides loans of up to Rs. 20 lakhs for studying in authorized institutions in other countries. The loan has a repayment period of up to 15 years.
  • Credila: Credila is an education loan provider that is a subsidiary of HDFC Limited that specializes in providing education loans for international students. The company provides loans of up to Rs. 1.5 Crore for studying at approved institutions in foreign countries. The loan has a repayment period of up to 15 years.
  • Avanse: Another education loan provider organization that concentrates on offering education loans for studying abroad is Avanse. The company provides loans of up to Rs. 30 lakhs for studying at approved colleges in foreign countries. The loan has a repayment period of up to 15 years.

Government-Backed Loans

There are various government-backed loan options in India for students who want to study abroad. These loans are meant to assist students who would otherwise be unable to afford the significant expenses involved with studying abroad. Here are some examples of government-backed loans for studying abroad:

  • CSIS (Central Sector Interest Subsidy Scheme): This is a scheme introduced by the Indian government to provide interest subsidies to students from economically disadvantaged groups pursuing higher education in India and abroad. The student must pay the loan interest during the course duration, and the government will grant an interest subsidy on the remaining loan amount.
  • Vidya Lakshmi Education Loans: Vidya Lakshmi is an Indian government platform that provides education loans to students. The webpage serves as a one-stop shop for education loans, providing information on numerous programs and loan possibilities provided by banks and financial institutions, including loans for international study.
  • Indian Banks’ Association (IBA) India Education Loan: The Indian Banks’ Association (IBA) has also developed a scheme called India Education Loan, which provides education loans to students wishing to study abroad. The loan amount is up to Rs. 20 lakhs, with a repayment period of up to 15 years.
  • Higher Education Financing Agency (HEFA) education loan: The Higher Education Financing Agency (HEFA) is an institution established by the Government of India to grant loans to students wishing to pursue higher education in India and abroad.
  • Educational Loans for Overseas Studies for Students from Economically Weaker Sections (EWS/SC/ST): This is a scheme launched by the Indian government that aims to provide education loans to students from economically weaker sections, Scheduled Castes, and Scheduled Tribes who wish to pursue higher education in foreign countries.

Private Loans

Private loans for studying abroad are financial assistance options that are provided by private banks, financial institutions, and other lending organizations. These loans are intended to provide financial assistance to students who wish to study abroad and may not be able to access credit through government-backed loan schemes. Some examples of private loans for studying abroad include:

  • State Bank of India (SBI) Education Loans: State Bank of India (SBI) offers education loans for students planning to study abroad. The loan is not guaranteed by the Indian government and is provided by the bank. The loan amount offered is up to Rs. 1.50 Crore for pursuing studies in recognized institutions in foreign countries. The repayment period for the loan is up to 15 years.
  • Axis Bank Education Loans: Axis Bank is a private sector bank that offers education loans for studying abroad. The bank offers loan up to Rs. 75 Lakhs for pursuing studies in recognized institutions in foreign countries. The repayment period for the loan is up to 15 years.
  • HDFC Bank Education Loans: HDFC Bank is a private sector bank that offers education loans for studying abroad. The bank offers loan up to Rs. 30 Lakhs for pursuing studies in recognized institutions in foreign countries. The repayment period for the loan is up to 15 years.
  • ICICI Bank Education Loans: ICICI Bank is a private sector bank that offers education loans for studying abroad. The bank offers loan up to Rs. 20 Lakhs for pursuing studies in recognized institutions in foreign countries. The repayment period for the loan is up to 15 years.
  • Credila: Credila is an education loan provider company which is a subsidiary of HDFC Limited, which specifically focuses on providing education loans for studying abroad. The company offers loan up to Rs. 1.5 Crore for pursuing studies in recognized institutions in foreign countries. The repayment period for the loan is up to 15 years.
  • Avanse: Avanse is another education loan provider company which focuses on providing education loans for studying abroad. The company offers loan up to Rs. 30 Lakhs for pursuing studies in recognized institutions in foreign countries. The repayment period for the loan is up to 15 years.
  • HDB Financial Services: HDB Financial Services is a non-banking financial company (NBFC) that offers education loans for studying abroad. The company offers loan up to Rs. 30 Lakhs for pursuing studies in recognized institutions in foreign countries. The repayment period for the loan is up to 15 years.
  • Tata Capital: Tata Capital is a leading NBFC that offers education loans for studying abroad. The company offers loan up to Rs. 50 Lakhs for pursuing studies in recognized institutions in foreign countries. The repayment period for the loan is up to 15 years.

It’s important to note that these are just a few examples of private loans for studying abroad, and there are many other banks and financial institutions that also offer education loans for studying abroad. Additionally, the loan amount, interest rate, and other terms and conditions may vary depending on the lender, students should research and compare different loan options before making a decision. It is also important to keep in mind that private loans may have higher interest rates and stricter repayment terms compared to government-backed loans, so it’s important to consider the overall cost of the loan and one’s ability to repay it before applying.

Conclusion

It is critical that the loan be managed and repaid carefully. Making timely payments, keeping track of interest rates and costs, and taking steps to pay off the debt as quickly as possible are all part of this. Furthermore, students should be informed of the loan’s repayment terms and conditions, including the interest rate, loan length, and any late payment penalties.

Lastly, loans for Indian students studying abroad can be an excellent option to fund a foreign education. However, it is critical to thoroughly analyze the many types of loans available, the loan conditions, and the best ways to manage and repay the loan.