Education Loan for Abroad Studies

Pursuing international education is a dream for many aspiring students in India. To turn this dream into reality, financial institutions in the country offer specialised Education Loans for Abroad Studies. These financial solutions facilitate access to quality education, ensuring that financial constraints do not hinder students from pursuing higher education in esteemed institutions worldwide.

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Introduction to Education Loan for Abroad Studies

Education loans abroad are the financial tools that help students cover the expenses of their education in foreign countries. These loans typically cover expenses like:

  • Tuition fees

  • Living expenses

  • Books and supplies

  • Travel expenses

  • Other related costs

To qualify, students usually need to provide proof of admission to an accredited institution and a repayment plan. Interest rates and repayment terms vary, and some loans offer grace periods after graduation. Education loans for abroad studies aim to facilitate access to quality education for students aspiring to study in international institutions.

Importance of Education Loan for Overseas Studies in 2024

Education loans for studies abroad are a crucial financial solution that facilitates access to quality education in India. These loans help bridge financial gaps and cover tuition fees, living expenses, and related costs. 

With the rising costs of international education, these loans play a pivotal role in making studying abroad feasible for aspiring students. They provide a financial pathway, ensuring that deserving individuals can pursue educational opportunities globally. This contributes to the personal growth of students and fosters a globally competitive workforce.

Types of Lenders that Offer Overseas Education Loan

The following types of financial institutions offer loan for overseas education in India:

  • Banks: Traditional banks often provide overseas education loans with competitive interest rates.

  • Non-Banking Financial Companies (NBFCs): NBFCs offer flexibility in terms of eligibility criteria and documentation, making them an alternative to banks.

  • Government Schemes: Some government initiatives provide education loans for overseas studies at subsidised rates.

  • International Financial Institutions: Certain global financial institutions collaborate with Indian banks to offer education loans for studying abroad.

  • Educational Institutes: Some educational institutions collaborate with financial entities to provide tailored loan options for their students studying abroad.

  • Scholarship and Grant Providers: While not traditional lenders, scholarship organisations and grant providers can ease the financial burden of studying overseas.

Features of Education Loan for Abroad Studies

The key features of a study loan for abroad studies are listed in the table below:

Feature Description
Loan Amount Covers tuition fees, living expenses, and other related costs.
Interest Rate Competitive rates are based on the lender and market conditions.
Repayment Period Flexible repayment tenure, typically after course completion.
Grace Period Allows a grace period before the start of repayment, often 6 months to 1 year.
Collateral It may require collateral or a co-signer, depending on the loan amount.
Application Process Streamlined online application with specific documentation requirements.
Moratorium Period Moratorium period for the repayment of the principal amount.
Currency and Exchange Rates Loan disbursed in foreign currency; interest rates may be affected by exchange rates.
Eligibility Criteria Based on academic performance, admission to a recognised institution, etc.
Co-Borrower Some lenders may allow a co-borrower, typically a parent or guardian.

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Eligibility Criteria to Apply for Education Loan for Overseas Studies

Criteria Description
Nationality Indian citizen
Age Usually 18-35 years (may vary with lender)
Academic record Good academic standing in previous studies
Admission Confirmed admission letter from a recognised overseas university
Financial stability Co-applicant with steady income (usually parent/guardian)
Guarantor It may be required for larger loans or specific lenders
Collateral Not always required, but may be preferred for higher loan amounts
Documents KYC documents, proof of income, academic records, admission letter, fee structure, etc.
Eligible Courses The following courses offered by top-ranked universities that UGC and AICTE recognise are eligible for education loans for abroad:
  • PhD Courses
  • Graduation and Post Graduation (PG) Courses:  MBA, MS, PhD, MA, MSc, MEng
  • Professional/Technical Courses: CA, CPA, CIMA, CFA, Pilot Training, Aeronautical Engineering, Nursing
  • Job-Oriented Programs: Vocational or trade courses leading to employment
Courses Not Eligible
  • Short-term/certificate courses: Language courses, summer programs, less than 1 year
  • Non-recognised degrees/institutions: Unaccredited universities, online-only degrees
  • Vocational/skill development courses: Pilot training, nursing diplomas, ITI certificates
  • Job-oriented diplomas/certificates: Data entry operator course, beautician training
  • Certain professional studies: Aeronautical training, pilot licenses

Documents Required to Apply for Education Loan for Abroad Studies

The list of documents required to apply for a student loan for education abroad is as follows:

Category Applicant Co-applicant Documents
KYC (Know Your Customer) YES YES Photo ID (Passport, PAN, Voter ID)
Address Proof YES YES Utility Bill, Aadhaar Card, Lease Agreement
Academic Records YES N/A 10th, 12th, Graduation Marksheets
Entrance Exam Scores YES N/A GRE, GMAT, IELTS, TOEFL, etc.
Admission Proof YES N/A Offer Letter or Conditional Offer Letter
Cost of Study/Expenses YES N/A Fee Schedule, Living Expenses Budget
Financial Proof (Co-applicant) N/A YES Salary Slips, Income Tax Returns
Guarantor Documents (if applicable) N/A YES Same as co-applicant documents
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Steps to Apply for Education Loan for Overseas Studies

You can follow the steps mentioned below to apply for an education loan for abroad studies:

  • Research: First, explore and compare different loan options, interest rates, and eligibility criteria offered by various lenders.

  • Check Your Eligibility: Ensure you meet the citizenship, age, and academic requirements set by the lenders.

  • Calculate Your Expenses: Estimate your total expenses, including course fees, living costs, and travel expenses.

  • Decide on Loan Amount: Apply for a loan that covers all your expected expenses during your studies.

  • Gather Necessary Documents: Collect essential documents such as KYC details, academic records, admission proof, and financial information of your co-applicant.

  • Apply Online or Offline: Submit your application through the lender's website or at their branch, depending on your preference.

  • Provide Additional Information: Respond to any queries from the lender and submit any additional documents they may request.

  • Review and Sign: Carefully review and sign the loan agreement. Once approved, receive funds in installments or as needed.

Benefits of Education Loan for Overseas Studies

The list of benefits offered by loans for overseas study is as follows:

  • Financial Support: The student loan for abroad studies provides funding for tuition, living expenses, and other study-related costs.

  • Flexible Repayment: It offers flexible repayment options tailored to the borrower's financial situation.

  • Competitive Interest Rates: Study loans for abroad often come with competitive interest rates compared to other financing options.

  • Builds Credit History: These loans help in building a positive credit history for the borrower.

  • No Collateral for some loans: Some education loans for overseas studies may not require collateral.

  • Tax Benefits: In some countries, interest paid on education loans is eligible for tax benefits.

  • Enhances Career Opportunities: Enables pursuing quality education abroad, enhancing career prospects.

  • Grace Period: Education loans for overseas study typically come with a grace period before repayment begins, allowing for a smooth transition post-education.

  • Skill Enhancement: These financial solutions facilitate acquiring global skills and exposure, improving employability.

  • Investment in Future: Loans for overseas study are viewed as an investment in future career and personal development.

Summing It Up

Obtaining an education loan for abroad studies can be a crucial step in realising your academic and career aspirations. This financial support opens doors to quality education, diverse experiences, and global opportunities. The investment in education loans proves to be an invaluable means to personal growth for students and contributes to a brighter, internationally enriched future. 

FAQ's

  • Can I get a 100% loan to study abroad?

    Yes, it is possible to get a 100% loan to study abroad, though it depends on several factors:
    • Private banks and NBFCs are more likely to offer 100% loans to students planning further studies abroad.

    • While some public banks like SBI offer up to 100% financing for specific countries or universities, they often require a margin (partial self-funding) of 10-20%.

    • The future earning potential of your chosen field of study can influence the lender's decision.

    • Providing collateral like property or a co-signer with a good credit score can strengthen your application.

    • 100% financing might be easier for lower-cost countries or programs compared to expensive universities.

    • Some loan schemes have specific university or study program lists where 100% financing is offered.

  • Which loan is best for abroad education?

    Choosing the best loan for studying abroad depends on your specific needs and financial situation. However, here are 5 of the most popular and highly-rated options in India:
    • SBI Student Loan

    • Axis Bank Education Loan

    • HDFC Credila Education Loan

    • HDFC Credila Education Loan

    • Auxilo Education Loan

    • Prodigy Finance

  • What is the eligibility for an education loan for abroad studies?

    Eligibility criteria for education loans for abroad studies can vary slightly between lenders, but generally, there are some common requirements you need to meet:
    • Nationality: You must be an Indian citizen.

    • Age: You must be at least 18 years old. If you are below 18, your parent or guardian can apply as the co-borrower.

    • Academic Background: You should have a good academic record in your previous studies. This usually means scoring at least 50% or higher in your past exams like 10th and 12th standard and relevant entrance exams like GRE, GMAT, TOEFL, etc.

    • Admission Confirmation: You must have secured admission to a recognised university or college abroad.

    • Co-applicant: Most lenders require a co-applicant, usually a parent or guardian, who has a good credit score and stable income.

    • Income Proof: The co-applicant must provide income-proof documents like salary slips, income tax returns, etc.

  • Can I get a Rs. 40 lakh education loan to study abroad?

    Yes, getting Rs. 40 lakh education loan for studying abroad is definitely possible, but it depends on several factors, including:
    • Private banks and NBFCs: These institutions are generally more flexible with lending criteria and may offer loans up to Rs. 40 lakhs or even higher without collateral for specific universities or courses.

    • Public banks: While some public banks like SBI offer up to Rs. 75 lakhs for abroad studies, they often require collateral or a margin (partial self-funding) of 10-20% for higher loan amounts.

    • Cost of Education: Getting a Rs. 40 lakh loan might be easier for lower-cost countries or programs compared to expensive universities.

    • Approved Institutions: Some loan schemes have specific university or study program lists where higher loan amounts are offered.

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^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
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^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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