An invaluable opportunity and learning experience for the students who opt for abroad studies. New exposure always enhances adaptability and increases one's creativity and knowledge. In present days, it’s too common for students to go and have exposure overseas; it would be beneficial for their future plans. Students can learn new languages and cultures; they will benefit from international education, internships, and job placements. Though a financial factor can become a slight issue, there are tons of scholarship programs and loan facilities available in our country.
There are so many companies/banks private, government, and public offering different loans for students who want to pursue education abroad, which may cover most of the expenses like academic, living, books, and other essential study-related expenses.
In general, there are mainly two types of educational loans:
On basis of collateral
- Secured Education loan
- Unsecured education loan
On basis of lenders
- The loan from public sector banks
- The loan from private banks
- The loan from non-banking companies
- Loans from international lenders
Secured Education Loan: An applicant is required to offer security to the lender, it may be property, some policy, etc. This kind of loan takes a longer duration to approve as the bank has to verify the amount of lending with the value of security offered by the loan bearer. It has a low rate of interest and no need to repay during the study period.
Unsecured Education Loan: in this category collateral is not mandatory, it is best for those who don’t have any security to offer. Unlike the secured loan it has a high rate of interest and is much harder to approve. It also has demerits that a short amount is needed to pay to lenders in the study period which can be a difficult task to do for a student and a minimum income is mandatory for the co-applicant.
A loan from the public sector
India has a wide range of public and government banks, offering a number of loan policies. Majorly without collateral up to 8 lacs loan can be sanctioned but for the amount of more than 8 lacs, collateral is a must as security. The tax benefit is provided. Repayment time is usually 15 years.
Some banks offering both these types of loans are SBI, BOI, and PNB, etc.
The loan from private banks
Private Banks also offer both secured and unsecured loans but the condition may be varied. A lot of factors are considered by private banks like a destination country where the student is going to pursue education, student’s personal profile, parents/ guardian financial profile. These banks have a high charge of interest on loans. They take much less time for the approval of loans as compared to the public banks. Tax benefits can be provided on the basis of a loan. The repayment time is usually 12-15years.
Some private banks offering loans are ICCI, AXIS, etc.
Loans from non-banking financial companies (NBFCs)
They also provide both secured and unsecured education loans based on the basis of type, of course, an applicant profile, financial profile, etc. The rate of interest is higher than both public and government banks. Time to approve loans is generally less than government banks. The time given for repayment is 10 years which is lesser than the above two mentioned.
Some NBFC banks are Avanse, incred, etc.
Loans from international lenders
They offer loans to study abroad but a lot more factors are considered and the country where the student is going to pursue education is mentioned and loans may be given in those currencies. Some major foreign loans providing lenders are prodigy finance, MPOWER financing, etc.
Eligibility criteria to apply abroad studies educational loan
•The applicant must be a resident/citizen of India.
•He/she must have attained the age of 18 or else the loan is permitted in the name of their parents.
•Academic background of the student is verified, the good/ merit marks are given priority.
•Banks are likely to give preference to job-oriented courses, if it is a technical course, the chances of approval are higher.
•The candidate must have admission to a recognized university.
Documents required for the approval of the loan
•Passport size photographs.
•Academic related documents.
•Bank statements of the last 6 months or in some cases last 1 year.
•In the case of a secured loan on the basis of collateral, then it must be immovable property.
Some technical documents are also required
•Copy of approval/ permission.
•Possession certificate of the owner, in case of collateral loan.
•Property tax receipt.
These required documents are the general list, it may vary completely depending upon the types of banks lending loans.
By Mithila Rathod