study abroad loan providers in higher education

Study Abroad Loan Providers for higher education

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Every student dreams of studying abroad. It has become a realisable dream today with many banks and NBFCs coming up with attractive education loan options. Therefore, you can experience a higher flow of students from India towards countries like the US, the UK, Canada, Australia, Ireland, and so on.

 

Why do you need an education loan?

Pursuing an education abroad is an expensive proposition. Reputed international universities provide scholarships to students. However, tuition fees alone do not comprise the requirements of the students when they go abroad for higher studies. They incur boarding and lodging expenses, and so on. The education loan is the best way to fund these expenses. The easy repayment schedules enable the students to take out a loan and pursue their studies. They get ample time for repaying these loans. We shall look at various education loan options in this article.

 

The options available

Almost all the nationalized and private banks have education loan products. The Reserve Bank of India has formulated the guidelines for the education loans, and all banks follow it in letter and spirit. You have some private education loan providers as well to help out these students.

The nature of expenses a student can incur

Studying abroad is different from pursuing education inside India. The student has to shift base to a foreign country. They incur a lot of expenses as follows. Remember, these expenses start much before the student boards the flight to the international destination. We shall look at each of these expenses, both before and after the departure of the student from India. We have a specific reason for raking up this discussion because there are financing options for these activities as well.

  • Pre-departure Expenses – We shall classify these expenses into two parts, the pre-admission stage, and the post-admission stage

 

Pre-admission stage expenses

Foreign universities offer various courses for students such as graduate courses, post-graduate Masters Degrees, post-graduate diplomas, certificate courses, and so on. Usually, the trend in India is to go for the post-graduate Master’s Degrees. The preparations for these courses start from the final year of their degree course in India. Let us look at the various expenses a student incurs while preparing for these courses.

a. GRE (Graduate Record Examinations)

The Educational Testing Services conducts the GRE. It is compulsory for students intending to pursue their higher education in countries like the US. Other countries like Australia, Ireland, the United Kingdom, and so on do not require the student to appear for the GRE.

The GRE is an aptitude test that requires the students to prepare well in subjects like English and Maths. Various private institutions conduct GRE training courses for interested students. Naturally, they have their fee structure. Similarly, the students have to register for the GRE. As of today, the fee for registration is $205. You can send your scores to five universities in the US free of cost when you register for the GRE. Should you wish to apply for more universities, you need to pay extra.

b. IELTS/TOEFL/PTE

In addition to the GRE, the students have to appear for any of the following tests to prove their efficiency in the English language. Students who are not native English speakers should give this test and attain a satisfactory score to be eligible to seek admission abroad.

  • IELTS International English Language Testing System – Minimum acceptable score 6 to 6.5 overall
  • TOEFL Test of English as a Foreign Language – Minimum acceptable score – around 90 and above is a good score
  • PTE Pearson Tests of English – Minimum acceptable score – 58 overall

These exams also require the student to register by paying substantial fees.

c. The application fee for colleges abroad

When you apply for colleges in the US, you have to pay the application fee that can range between $50 and $100. Usually, a student applies for a minimum of 5 to 6 colleges. It costs you money. It might not be the case with other countries, especially if you approach the universities through educational consultants. You do not have to pay the fees as the educational consultants receive commissions when the student confirms the admission and pays the tuition fee.

  • Post-admission stage expenses
  1. Tuition fee – Depending on the student’s academic performances in India, they are eligible for various scholarships. Almost all the colleges in different countries have some scholarships for Indian students. It reduces your tuition fee expenses by a considerable amount. In spite of the scholarships, you have to arrange for the tuition fee that can vary from college to college and from course to course. It can cost you anything from as low as ₹ 5 lakhs to ₹ 75 lakhs or more depending on the country, college, duration of the course, and so on.

 

Of course, you do not have to pay the entire tuition fee in a single instalment. These colleges and universities give you the facility to pay the tuition fee in stages.

2. Visa and Flight tickets – On securing your admission, you need to apply for your visa and book your flight tickets. You can incur substantial amounts for these activities. The education loan providers have products to finance these expenses as well.

  • Post Departure stage

Lodging and Boarding expenses – In addition to the tuition fee, you incur a substantial amount for your lodging and boarding. Almost all the universities have on-campus lodging facilities. However, students prefer to stay off-campus as the rates are comparatively inexpensive. These lodging and boarding expenses can also cost in the region of ₹ 10 lakhs to ₹ 40 lakhs for the entire duration of the course. The banks and NBFCs consider these factors as well while providing education loans for studying abroad.

Now, that we have seen the nature of expenses a student incurs for studying abroad, let us look at the financing options available to them by way of education loans from banks and NBFCs.

The nationalized banks, private banks, and NBFCs have attractive education loan products. We shall look at ten such options that can help students to secure education loans with ease. Before looking into these options, let us keep our documents ready to help them process the education loans quickly. The set of documents are the same across all banks and NBFCs.

Documents required for processing education loans for higher studies abroad

 

Every education loan will have a co-applicant in the form of a parent or a guardian. Both the student and the co-applicant have to keep these documents ready.

  1. KYC Documents
  • Identity Proof
  • Passport
  • PAN Card
  • Aadhar Card
  • Driving Licence

 

  • Address Proof
  • Passport
  • Aadhar card
  • Driving Licence
  • Ration Card
  • Registered Rent Agreement

2. Income Proof Documents – The co-applicant has to submit these documents. The repayment of the loan is the prime responsibility of the student. The schedule of repayment commences one year after finishing the course or six months after getting gainful employment, whichever is earlier. However, banks and NBFCs require the income details of the co-applicant to justify their processing norms.

  • IT returns for the last two years
  • Salary slips if the co-applicant is a salaried individual
  • Proof of regular business income if the co-applicant is a self-employed professional or business person.
  • Statement of bank accounts of the co-applicant to enable the lending institutions to determine the continuity of income and look for recurring liabilities.

3. Collateral – Usually, all education loans above ₹50 lakhs require collateral. It is as per the RBI norms. However, certain private lending institutions like Credila and Avanse have education loan products that do not require collateral for specific countries and up to the specific ceiling. In case you have to furnish collateral, you should have all the necessary documents relating to the collateral. The collateral can be in the form of immovable property, fixed deposits, LIC policies, and so on.

4. Educational Qualifications – The student has to submit the following documents in support of their educational qualifications. The student should note to submit attested photocopies of all the following documents for easy

  • Photocopies of the Std X and Std XII examination Marksheets
  • Photocopies of degree examination Marksheets (all semesters)
  • Photocopies of degree certificate and any other qualifications
  • Photocopies of the GRE and other qualifying examinations like IELTS/TOEFL/PTE and so on
  • Photocopies of admission letter (optional – because banks can sanction loans even without the admission letter) – You should ensure to submit the admission letter before disbursement of the loan because the banks pay the fees directly to the universities.

 

Financing Options for studies abroad

Let us look at some of the banks and financial institutions that provide education loans to students intending to pursue studies abroad.

 

a)     Nationalised Banks

 

Name of Bank State Bank of India
Maximum Limits Up to ₹ 1.50 crores
Margin requirement 5% of the expected expenses to be brought in stages at the time of each disbursement – Facility to include scholarship in the margin
Rate of Interest 1-year MCLR + 2.25% (Presently 10.50%)
Collateral Yes
Other information Female students get a discount of 0.5% in the interest rates

Processing times – Very quick – They sanction in-principle education loans as well.

Insurance of the student is compulsory – The loan amount includes the one-time premium amount

Processing fees – ₹ 10,000

Tax benefit under Sec 80E

Loans sanctioned before issuance of Visa or I20 (in case of US universities)/Admission letter

Simple interest during the study period and up to the end of the moratorium

1% interest rebate if you service interest during the moratorium period

 

Name of Bank Bank of India
Maximum Limits ₹ 20 lakhs – No maximum limit if secured by 100% collateral
Margin requirement 15% of the expected expenses to be brought in stages at the time of each disbursement – Facility to include scholarship in the margin
Rate of Interest 1-year MCLR + 2.50%
Collateral Yes for loans above ₹ 7.50 lakhs
Other information Female students get a discount of 0.5% in the interest rates

Processing times – 1 week

Insurance of the student is compulsory – The loan amount includes the one-time premium amount

Processing fees – ₹ 5,000

Tax benefit under Sec 80E

Simple interest during the study period and up to the end of the moratorium

1% interest rebate if you service interest during the moratorium period

 

 

 

Name of Bank Central Bank of India
Maximum Limits ₹ 20 lakhs – No maximum limit if secured by 100% collateral
Margin Requirement 15% of the expected expenses to be brought in stages at the time of each disbursement – Facility to include scholarship in the margin
Rate of Interest 1-year MCLR + 2.00%
Collateral Yes for loans above ₹ 7.50 lakhs
Other information Female students and students belonging to SC/ST category get a discount of 0.5% in the interest rates

Processing times – 1 week

Insurance of the student is compulsory – The loan amount includes the one-time premium amount

Processing fees – Maximum ₹ 1,000 for loans above ₹ 10 lakhs, but refunded when student avails the loan.

Tax benefit under Sec 80E

Simple interest during the study period and up to the end of the moratorium

1% interest rebate if you service interest during the moratorium period

 

Name of Bank Union Bank of India
Maximum Limits ₹ 30 lakhs – No maximum limit if secured by 100% collateral
Margin Requirement 15% of the expected expenses to be brought in stages at the time of each disbursement – Facility to include scholarship in the margin
Rate of Interest 1-year MCLR + 2.00%
Collateral Yes for loans above ₹ 7.50 lakhs
Other information Female students get a discount of 0.5% in the interest rates

Processing times – 1 week

Insurance of the student is compulsory – The loan amount includes the one-time premium amount

Processing fees – No processing fees.

Tax benefit under Sec 80E

Simple interest during the study period and up to the end of the moratorium

1% interest rebate if you service interest during the moratorium period

 

 

Name of Bank Canara Bank
Maximum Limits ₹ 15 lakhs – No maximum limit if secured by 100% collateral
Margin Requirement 15% of the expected expenses to be brought in stages at the time of each disbursement – Facility to include scholarship in the margin
Rate of Interest 1-year MCLR + 1.80%
Collateral Yes for loans above ₹ 7.50 lakhs
Other information Female students get a discount of 0.5% in the interest rates

Processing times – 1 week

Insurance of the student is compulsory – The loan amount includes the one-time premium amount

Processing fees – No processing fees.

Tax benefit under Sec 80E

Simple interest during the study period and up to the end of the moratorium

1% interest rebate if you service interest during the moratorium period

 

b)     Private Banks

Private Banks like ICICI Bank and others give education loans in the form of loans against securities or loans against property.

 

Name of Bank ICICI Bank Ltd
Maximum Limits ₹ 20 lakhs – No maximum limit if secured by 100% collateral
Margin Requirement 15% of the expected expenses to be brought in stages at the time of each disbursement – Facility to include scholarship in the margin
Rate of Interest Presently 11%
Collateral Yes for loans above ₹ 7.50 lakhs
Other information Processing times – 1 week

Insurance of the student is compulsory – The loan amount includes the one-time premium amount

Female students get a concession of 0.5% in the interest rate

Processing fees – Nil

Tax benefit under Sec 80E

Simple interest during the study period and up to the end of the moratorium

 

Name of Bank Axis Bank Ltd
Maximum Limits ₹ 75 lakhs – No maximum limit if secured by 100% collateral
Margin Requirement 15% of the expected expenses to be brought in stages at the time of each disbursement – Facility to include scholarship in the margin
Rate of Interest 1-year MCLR
Collateral Yes for loans above ₹ 7.50 lakhs
Other information Female students get a discount of 0.5% in the interest rates

Processing times – 1 week

Insurance of the student is compulsory – The loan amount includes the one-time premium amount

Processing fees – Nil.

Tax benefit under Sec 80E

Simple interest during the study period and up to the end of the moratorium

 

Name of Bank IDBI Bank Ltd
Maximum Limits ₹ 30 lakhs – No maximum limit if secured by 100% collateral
Margin Requirement 15% of the expected expenses to be brought in stages at the time of each disbursement – Facility to include scholarship in the margin
Rate of Interest 1-year MCLR + 1.45%
Collateral Yes for loans above ₹ 7.50 lakhs
Other information Female students get a discount of 0.5% in the interest rates

Processing times – 1 week

Insurance of the student is compulsory – The loan amount includes the one-time premium amount

Processing fees – 1% of the loan amount.

Tax benefit under Sec 80E

Simple interest during the study period and up to the end of the moratorium

 

c)     Non-Banking Financial Institutions

 

Other than the nationalized and specific private banks, there are many MBFCs that process and approve education loans for studies abroad. The most prominent among such institutions are Credila and Avanse. We shall look at some of the attractive features of the products offered by these two NBFCs.

 

Name of NBFC Credila Ltd – Finance through HDFC Bank Ltd
Maximum Limits No maximum limit
Margin Requirement Nil margin
Rate of Interest 11% to 14.50% Current average Rate of Interest is 12.10%
Collateral The collateral depends on the country and the credentials of the student. For the USA, there is no collateral up to ₹ 40 lakhs in case the student has an exceptional educational background. You need to furnish collateral for other countries. The mortgage is through HDFC Bank Ltd
Other information Female students a discount of 0.5% in the interest rates

Processing times – 1 week

Insurance of the student is compulsory – The loan amount includes the one-time premium amount

Processing fees – 1% of the loan amount

Tax benefit under Sec 80E

Simple interest during the study period and up to the end of the moratorium

Credila requires the co-applicants to service a portion of the interest on a monthly basis after the disbursement of the loan

Credila has facilities to approve loans before the student secured admission in the University

Credila approves bridge loan facilities as well

Credila approves loans for pre-departure expenses like GRE, IELTS, TOEFL, and PTE.

Credila provides Education loan approval letter to prove the source of funds to the universities

Under exceptional circumstances, Credila disburses part amount to show the availability of liquid funds in the account in case the university demands for the same

 

Name of NBFC Avanse Financial Services Limited
Maximum Limits No ceiling on the loan amount
Margin Requirement Nil Margin 100% financing
Rate of Interest 11.50% to 14%
Collateral The collateral depends on the country and the credentials of the student. For the USA, there is no collateral up to ₹ 40 lakhs in case the student has an exceptional educational background. There is no stipulation of collateral for countries like Canada and Ireland. You need to furnish collateral for other countries. They accept the second charge on properties provided the existing home loan is with Dewan Housing Finance Limited (DHFL).
Other information Female students get a discount of 0.5% in the interest rates

Processing times – 1 week

Insurance of the student is compulsory – The loan amount includes the one-time premium amount

Processing fees – 1% of the loan amount.

Tax benefit under Sec 80E

Simple interest during the study period and up to the end of the moratorium

Avanse requires the co-applicants to pay upfront interest (50% of the actual interest for the amount disbursed for a maximum of course period + 6 months)

Avanse has facilities to approve loans before the student secured admission in the University

Avanse approves bridge loan facilities as well

Avanse approves loans for pre-departure expenses like GRE, IELTS, TOEFL, and PTE.

Avanse provides Education loan approval letter to prove the source of funds to the universities

Under exceptional circumstances, Avanse disburses part amount to show the availability of liquid funds in the account in case the university demands for the same

 

We have thus seen ten financing options for students wishing to study abroad. Students can take advantage of these facilities and pursue their higher studies without any problems.

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