With opportunities growing across the globe, more and more Indian students are aspiring to study abroad at various universities. Studying abroad brings in promises of high-flying careers, with the sky being the limit. Institutions across the world offer a multitude of courses and students have various options to choose. Additionally, most universities offer scholarship programs and financial aid in some cases to students, which only improve their job opportunities. With growing aspirations, there is another responsibility that has to be fulfilled by students and their parents. Funding the foreign education is a major factor that affects the type of course that students enroll for and also the institution selected. The best form of financing is to avail an education loan for foreign studies. Banks in India offer various schemes depending on the institution selected and the course of study. Most education loan schemes come with flexible repayment options and allow the borrower to plan his finances accordingly. Education loans carry a moratorium or holiday period which is very beneficial as the borrower is given a period of around six months after the completion of the course. The education loan repayment can be started after this period or as soon as the borrower has found a job. Education loans also cover the cost of boarding, lodging, tuition fees, travel and other related costs for the student.
Features of education loans:
Any individual aged between 18 and 35 years can avail an education loan to pursue studies at any approved university abroad.
Students can procure education loans for management courses, engineering courses, medicine, and graduate and post graduate degrees, arts, architecture, pure science, hotel management, etc.
The expenses covered under an education loan include tuition fees, exam fees, lab and library fees, caution deposit, travel, books and equipment, projects and study tours.
Borrowers have to bring in a margin of 5% to 15% for loans taken for foreign studies.
During the moratorium period, borrowers have to pay the interest, with the principal payment starting when the loan tenure begins.
Education loans can be repaid in monthly instalments through ECS or via post-dated cheques to the bank.
Generally, banks sanction education loans with tenure to up seven years, inclusive of the moratorium period.
A co-applicant has to be selected for education loans taken for full time courses. Co-applicants can include siblings, spouse, parents or other family members.
Banks will sanction a maximum of Rs. 20 lakhs with the moratorium period and up to a maximum of Rs. 10 lakhs for loans without a moratorium period.
No security has to be submitted for education loans taken up to Rs. 4 lakhs. Third party guarantee has to be furnished for loans between Rs. 4 lakhs and Rs. 7.5 lakhs and tangible collateral security is required for loans above Rs. 7.5 lakhs.
The Central Government has also introduced an interest rate subsidy scheme for repayments done during the moratorium period for the benefit the weaker section of the society.
Top education loans providers in India:
Given below are the top education loan providers in India aiding students wishing to pursue their education abroad.
State Bank of India:
State Bank of India offers a term loan to Indian students aspiring to continue their higher education abroad. SBI finances further education for all job-oriented technical and professional graduate and post-graduate degree courses like MBA, MCA, MS, etc., diploma courses at reputed institutions and also for courses offered by the Chartered Institute of Management Accountants (CIMA), London and the Certified Public Accountant (CPA), USA. The education loan offered by State Bank of India covers tuition fees, Examination, Laboratory and Library fees, caution deposit, cost of books and equipment, travel costs and other necessary expenses. The loan amount provided is up to a maximum of Rs. 30 lakhs, with collateral security required only for loans above Rs. 7.5 lakhs. The loan margin requirement is 15% for SBI education loan borrowers. SBI does offer a moratorium period during which the entire interest can be repaid, so that when the actual loan tenure starts the monthly installment can be just the principal amount. Borrowers have to start repaying the education loan after one year of completion of the course and the tenure can be taken to up to 15 years. The interest rate offered on education loans will be up to 2% on the current base rate of SBI. Education loan borrowers have to submit the admission letter, loan application form, details of course costs, co-applicant details and other required KYC documents while applying for a State Bank of India education loan.
Axis Bank offers education loans at competitive interest rates for Indian students planning to study abroad. Students can apply for technical or professional courses, career-oriented courses, etc., and avail an education loan from Axis Bank with hassle-free process. Axis Bank offers a maximum loan of Rs. 20 lakhs which covers hostel fees, tuition fees, book costs, etc. The minimum loan amount that can be availed is Rs. 50,000. A margin is not required for loan amounts below Rs. 4 lakhs, but 15% has to be brought in by the borrower for loans above Rs. 4 lakhs. Education loans are sanctioned by Axis Bank within fifteen working days, subject to submission of documents. A parent or guardian is required as a co-applicant, with third party guarantee or collateral security asked only for special cases. Axis Bank might also ask for a LIC policy for 100% of the loan amount on a case-by case basis. The education loan will be disbursed directly to the institution where the borrower has received admission from. Axis Bank does not charge any processing fees or prepayment charges for education loan borrowers. The interest rate for Axis Bank education loans ranges from 16.50% to up to 17.50%, with special rates for women applicants.
HDFC Bank offers education loans with flexible repayment tenures and preferential rates for reputed universities. Customers can get education loans at their doorsteps for over 950 courses across 36 countries, worldwide. HDFC Bank provides education loans to up to 100% of the educational requirement, with no necessity to bring in a loan margin. The maximum loan amount that will be sanctioned by HDFC Bank is up to Rs. 20 lakhs. HDFC Bank education loans can be availed and sanctioned even before the student has secured admission at a university in order to avoid last minute hassles. Borrowers can enjoy flexible security collateral and co-applicant options from HDFC Bank. Co-borrowers can be selected from different cities across India while applying for an education with HDFC Bank. Indian residents aged between 16 to 35 years are eligible to apply for an education loan. The co-applicant can be any family member like parents, siblings, in-laws, uncle or aunt, which is mandatory for full-time courses. The processing fees charged by HDFC Bank for education loans is up to 1.5% of the loan amount, with no fees levied for prepayment of the loan.
Punjab National Bank:
Punjab National Bank offers the “PNB Udaan” education loan scheme for students planning to study abroad. Students who have procured admissions for graduate, post-graduate courses. Diplomas, job-oriented professional and technical courses, CIMA/CPA courses, etc. Admissions secured by students should be at premier institutions abroad. The PNB education loan covers university fees, travel, exam fees, lab fees, library fees, book/equipment fees and other related expenses. Indian nationals who have procured admission through merit or an entrance examination are eligible to apply for a Punjab National Bank education loan. PNB sanctions as per the requirement of the borrower, with a loan margin requirement of 15% or loans taken above Rs. 4 lakhs. For education loan amounts below Rs. 4 lakhs, no loan margin is required. Assistantship and scholarships can be added to the loan margin. PNB offers the base rate as the interest rate on loans taken for pursuing education at top 200 universities across the world. For other types of applicants, PNB charges an interest rate which is the total of a certain percentage on the base rate. The moratorium period offered is up to a year, with no prepayment charges levied by PNB. An upfront processing fees of 1% has to be borne by the borrowers. The tenure options available for PNB education loan borrowers is up to 15 years.
Customers can avail education loans from Canara Bank for studying abroad for eligible professional and technical courses, graduate and post-graduate courses which promises job opportunities. Admission must be secured only at recognized educational institutions. The Canara Bank education loan covers university fees, travel, exam fees, lab fees, library fees, book/equipment fees and other related expenses. Canara Bank sanctions as per the requirement of the borrower, with a loan margin requirement of 15% or loans taken above Rs. 4 lakhs. The maximum loan amount that will be sanctioned by Canara Bank is up to Rs. 20 lakhs. The repayment tenure chosen can be up to 10 years for loans up to Rs. 7.5 lakhs and up to 15 years for loans above Rs. 7.5 lakhs. Security is not required for loan amounts below Rs. 4 lakhs and third party guarantee has to be given for loans between Rs. 4 lakhs and Rs. 7.5 lakhs. Education loans have to be taken along with a co-borrower and 100% collateral security will be required for loans above Rs. 7.5 lakhs. The education loan can be availed from a Canara Bank branch nearest to the permanent address of the parent or guardian.
The IDBI Bank education loan is offered to students going for higher studies abroad and have qualified using an entrance test or a merit based selection process. Students enrolling in professional and technical graduate courses, post-graduation courses, diploma, and CPA/CIMA courses are eligible to avail the education loan from IDBI Bank. The IDBI Bank education loan covers university fees, travel, exam fees, lab fees, library fees, cost of computers, book/equipment fees and other related expenses. IDBI Bank sanctions as per the requirement of the borrower, with no security requirement loans taken below Rs. 4 lakhs. The maximum loan amount that will be sanctioned by IDBI Bank is up to Rs. 20 lakhs. The repayment tenure chosen can be up to 10 years for loans up to Rs. 7.5 lakhs and up to 15 years for loans above Rs. 7.5 lakhs. Third party guarantee has to be given for loans between Rs. 4 lakhs and Rs. 7.5 lakhs. Education loans have to be taken along with a co-borrower and 100% collateral security will be required for loans above Rs. 7.5 lakhs. Customers can make balance transfers from existing loan accounts to a new IDBI education loan account.
Bank of Baroda:
Indian students applying for professional and technical courses abroad can avail an education loan from Bank of Baroda under the “Baroda Scholar” scheme. Admission secured for recognized courses at reputed foreign universities are accepted by Bank of Baroda. The maximum loan amount sanctioned by Bank of Baroda is up to Rs. 20 lakhs, with a loan margin requirement of 15%. Borrowers can also get a holiday or moratorium period of one year or six months after getting employment, whichever is earlier. Customers can repay education loans taken up to Rs. 7.5 lakhs within 120 months and education loans taken above Rs. 7.5 lakhs within 180 months. Security is not required for loans below Rs. 4 lakhs, third party guarantee should be given for loans between Rs. 4 lakhs and Rs. 7.5 lakhs and tangible collateral security is required for loans above Rs. 7.5 lakhs. BOB Education loans borrowers have to pay only simple interest during the moratorium period and women applicants can get a concession of 0.50% on the interest rates. Bank of Baroda will charge a penal interest of 2% for delayed payments, if the loan amounts is more than Rs. 4 lakhs.
Avanse Financial Services:
The Avanse Study Loan can be availed for pursuing education at over 1600 foreign universities across the world. For the convenience of borrowers, Avanse offers pre-visa disbursement loans, fast-track loans, pre-admission loans and certificate of availability of funds. Indian citizens can avail the Avanse education loan with a co-borrower for pursuing graduate and post graduate courses at reputed institutions. Borrowers have to submit KYC documents, course fee and details, collateral documents, income documents, etc., when they avail an Avanse education loan. The minimum loan amount sanctioned for foreign education is Rs. 1, 00,000 with the maximum limit customised according to the borrower’s requirements. The Avanse education loan covers tuition fees, travel, living expenses, books /equipment fees and other related expenses. No margin is required and the loan tenure can be taken between 12 months to up to 120 months. The holiday period given is 6 months after completion of the course or three months after securing employment. As per the loan amount, the security requirement will be determined by Avanse.