Over the years the number of Indian students travelling abroad to fulfil their educational dreams has been increasing steadily. According to the Times of India, more than one million Indian nationals are studying in 85 countries across the world. North America accounts for more than half of all student emigrants from India followed by East Asian countries and Australia.
India is a developing country. Since it is the Indian middle class who mostly aspire for foreign education the need for study abroad education loans are on the rise. In this article let’s see everything about availing of an education loan to study abroad.
Eligibility Criteria
To fulfil the eligibility criteria, the applicant must
- Be a citizen of India
- Have aged 18 years or above (if not her/his parents will have to take the loan on their behalf)
- Have a good academic background
- Have secured admission into a recognised foreign university/educational institution
- The course the applicant is going to study should be a technical/professional one (as banks give preferences for job oriented courses)
List of Documents Required To Avail A Study Abroad Education Loan
- Admission letter of the candidate (from the institution)
- Mark sheets of their previous qualification (school/college)
- Age proof
- Identity proof (Aadhar/PAN/Voter ID etc.,)
- Address proof
- Signature proof
- Mark sheets of their board exams
- Mark sheets of their entrance exam (GRE/GMAT/TOEFL/IELTS etc.)
- Salary slips/payslips (Income proof)
- ITR with the income computation
- Audited balance sheet
- Bank statements
- Proof of turnover (service tax return/sales receipt)
- Completed application form with signature
- Latest passport size photographs
- Appropriate Visa for studies abroad
Costs Covered Under Study Abroad Loan
- Fees payable to educational institutions (including tuition, hostel and miscellaneous fee).
- Examination/laboratory/library fee.
- Travel expenses/passage money for people who prefer to study abroad.
- Insurance premium for student borrowers (if applicable)
- Caution deposit, building fund/refundable deposit supported by institution receipts (however the total expense should not exceed 10% of the total loan).
- Purchase of books/uniforms/equipment/instruments (total expense should not exceed 20% of the total loan).
- Purchase of a personal computer at a reasonable cost, if needed to complete the course (however the total expense should not exceed 20% of the total loan).
- Any other expenses required to complete the course, like study tours, project works, thesis submission etc. (total expense should not exceed 20% of the total loan)
Benefits of Availing a Study Abroad Education Loan
- Loan financing up to ₹ 1 crore is available.
- The maximum loan repayment period can be up to 15 years.
- Education loans are given for studies in India as well as foreign countries.
- Many lenders offer preferential interest rates to the children of bank employees.
- Certain lenders offer concessional/subsidised interest rates to female and transgender students.
- Moratorium holiday - Borrowers can enjoy a loan moratorium period of up to 1 year after completing the course.
- Income Tax Benefits - Borrowers enjoy tax exemption of up to 8 years on the interest paid.
Study Abroad Loan From NBFCs
Apart from Scheduled Commercial Banks, study abroad education loans can also be availed from Non-Banking Financial Companies (NBFCs). However, the collateral demanded by NBFCs is generally more than INR 7.5 lakhs. The interest rates are also slightly higher (12-14%) than what is charged by Public Sector Banks. The list given below is some of the popular NBFCs to secure a study abroad loan.
- Credila (HDFC group)
- Global Student Loan Corporation (GSLC)
- Avanse
- International Student Loan Program (ISLP)
Loan Disbursement
- The actual loan amount will be disbursed in Indian Rupees.
- The tuition and hostel fees will be disbursed directly to the educational institution, in instalments, based on the requirement of the institution.
- The loan amount related to other expenses will be transferred in instalments spread throughout the course and is usually transferred to the co-borrowers account.
Repayment Period
- Minimum Repayment Period: 12 Months.
- Maximum Repayment Period: 120 Months or 10 years (Including course duration).
- Grace Period of 6 Months after the course completion or 3 months after landing a job.
Processing Fees
Most NBFCs typically charge a processing fee between 1-2% of the loan amount and is calculated on a case-to-case basis. The final amount is arrived at while processing the loan application.
FAQs
1. What is the maximum loan amount that I can get?
It depends on the lender you approach. Most lenders offer loans up to INR 1 Crore. However, some lenders like Avanse don’t have any ceiling limit for the loan amount.
2. For what type of courses do the lenders offer study abroad loans?
Banks and NBFCs offer study abroad loans for professional and technical courses that are job-oriented.