Education Loan for studying abroad

Introduction:

Going abroad to study is a great opportunity to further your career and goals, as the quality of education abroad is incomparable. But many Indian students shy away from considering this opportunity as the tuition fees and the living expenses in foreign countries are very high.

To rescue students out of this situation, all the banks (both private and public), offer student loans for foreign studies. Getting a student loan is an easy task, you only need to know the process of application. It might seem a cumbersome and tiring process at first but with the right documentation and understanding of the process, things can move very fast.

What is covered:

Usually, parents and students feel that the education loan will only cover the tuition fees and that they must sponsor the rest. It is not true. The education loan can be availed to cover the following

1. Tuition Fees
2. Stationery Fees
3. Purchase of Laptop
4. Flight Tickets
5. Visa Process
6. Initial deposit for rent and accommodation
7. Travel Expenses
8. Staying cost in the country for the duration of the course.

Eligibility Criteria

The general eligibility criteria that are followed by all the banks are –

• You should be an Indian citizen
• You must have a strong academic record
• You must be seeking admission to a professional or technical course of study. Banks maintain that the course of choice should be job oriented
• You must have already secured admission at the foreign university
• You must be above the age of 18 years or your parents will have to avail the loan

Documents Required

1. Loan Application form duly signed and photo affixed on it.
2. Photograph of student and sponsors – 2 Nos
3. Two cheques in favor of Bank for Valuation Report and Search Report fees

University Details

1. Cost sheet
2. Offer letter
3. Course details of college
4. Ranking of the university

KYC documents of Student, Father, Mother or Sponsorer

1. PAN Card
2. Aadhar Card
3. Passport copy (first and last page)
4. Last 6 months saving bank account statement/passbook

Student Academic details

1. IELTS / TOEFL / PTE / GRE Mark sheets.
2. 10th, 12th Mark sheet
3. Graduation mark sheets (all semesters/years)
4. Degree / Diploma/ Certificate / Provisional certificate
5. Gap Certificate (if any)

Student work Details

1. Appointment letter / Work Experience letter
2. Salary Bank Account statement of last 6 months

Income / KYC documents of Parents or Sponsorer‐ Salaried

1. Income Tax returns of 2 years
2. Form No.16 ‐ 2 years
3. Latest 3 months’ salary slips
4. Pension, Salary or Saving account passbook/ statement of last 6 months

Income / KYC documents of Parents or Sponsorer‐ Business/Self-employed

1. Income Tax returns of 2 years
2. Computation of Income
3. Balance sheet
4. Profit and Loss Account
5. Business registration Certificate/ Gumasta
6. Business Accounts, Saving account passbook/statement‐ 6 months

Property Documents

1. Tax Receipt latest, Electricity Bill
2. Mutation copy (Akhiv Patrika)
3. Sale Deed, Agreement to Sell
4. Resale property – Previous Sale Deed
5. Transfer Deed / Gift Deed (if any)
6. Building Permit letter
7. Sanctioned Map of the property
8. Any other documents depending upon your type of property

Rate of Interest

Overseas Education Loan interest rates vary from 9.5% to 14% depending on the kind of financial institution.

Servicing of monthly interest during the study period and the moratorium period is optional for students.

Few Nationalized Banks offer a 1% concession on the interest rate if the student starts paying a simple interest during the study period and moratorium period.

What is Collateral

Collateral is an asset pledged against your education loan. It can be a tangible asset like a house or an intangible asset like a Fixed Deposit.

Banks and financial institutions ask for collateral to mitigate the risk. If a student fails to make the repayment of the education loan, the collateral is used towards the payment of the same.

A collateral security can be in the form of a house, flat, bungalow, non-agricultural land, fixed deposit, life insurance, etc.

Repayment schedule:

It is important to understand the repayment terms and repayment schedule for your education loan.

Repayment starts only after the end of course. If the student gets employed within one year after the completion of course, the repayment will start immediately after one to six months from the date of employment (time varies from bank to bank).

If you are unable to secure a job within a full year of completing the course then repayment starts, irrespective of your employment status. Ideally, the repayment term varies between 3 years to a maximum of 15 years.

A longer tenure can reduce your EMIs, making repayments comfortable; while opting for a shorter tenure increases your EMI but you’ll be paying the interest-only for that period instead of the full tenure.