Education Loan for Studying Abroad

In today's competitive world, where advancement and opportunities are ample, obtaining a study loan for abroad has become essential for career growth and success. We at Gradding empower students by providing education loans for study abroad services to support them in pursuing their desired course in their dream country.

What is an Education Loan?

Education loan is a type of financial aid that allows students to study without worrying about the related expenses. There are several study loan for students are available in the lending sector, and students can explore the options to find the most suitable option for their profile. 

Educational loans are sometimes referred to as student loans.

In the study abroad arena, education loans financially enable students to pursue exciting chances at foreign colleges. While studying abroad might be expensive for the average student from a middle-class household, an abroad study loan allows the student to study at top colleges and pursue greater academic and career prospects.

Unlike in the past, education loan alternatives are more diverse now, catering to the demands of students from all financial situations. We at Gradding attempt to bridge the gap by offering expert guidance and tailored solutions for your educational loans to study abroad. 

Benefits of Study Abroad Loan

There are a plethora of benefits of an education loan for study abroad. Let's know one by one:

Reduce Financial Burden

These loans have higher lending amounts than personal loans. A study loan is adequate for a student to cover tuition, living expenses, and other essential costs. As a result, it reduces the financial burden on students while studying overseas.

Lower Interest Rates

In most cases, student loan for studying abroad have lower interest rates than personal loans. This makes them one of the most cost-effective methods of funding your studies. Reduced interest rates result in reduced monthly payments, which extends the time of the refund.

Flexible Loan Tenures

Student loan for study abroad provides greater freedom in terms of financing possibilities. You can choose any tenure duration from 7 to 10 or 15 to 20 years. This makes it easy to make EMI more manageable. Personal loans frequently have a short repayment duration. Most of these are roughly 5 years old, which might lead to significant EMIs.

Offer Hiatus Period

Education loans have a grace period during which you are not required to pay any returns. You may have to pay basic interest while studying or extend your study period by six months after graduation. However, personal loans typically require quick EMI payments, which can be difficult for both students and their families.

No Need to Dissolve Valuable Assets

When you apply for an education loan, banks utilize your assets as collateral, such as Fixed Deposits (FDs), government bonds, and so on. They give you a loan secured by these assets. Consequently, your study abroad loans will not hinder your long-term financial objectives.

Types of Education Loan

As you learn about the various benefits of student loan for abroad studies, you must also know the types of education loan for which students can apply. Here are the details about the two categories of study loan in India.

Secured Education Loans

Secured education loans require you to provide an asset as a guarantee. This asset, known as collateral, can be property, a fixed deposit (FD), land, or something similar. If the student is unable to repay the loan, the lender uses this collateral as security.

Unsecured Education Loans

These are loans that do not need you to pledge an asset as a deposit. The maximum amount provided to a student in an unsecured loan or non collateral education loan for abroad by the nationalized banks is INR 7.5 lakh. This fund is not sufficient to pay the entire cost of education in a nation overseas.Best Banks to Offer Education Loan for Studying Abroad 2024

Below is the list of top banks that offer education loan with interest rate for abroad study: 

So, these were the top indian banks that offer student loan for abroad study. Now, let’s understand what expenses are covered under the education loan offered by these banks.

Expenses Covered under Education Loans for Studying Abroad

Here's what the study  loan in India will cover:

1. Tuition fees

2. Hostel fees

3. Travel expenses

4. Insurance premium

5. Cost of books/ equipment/ instruments/ uniform

6. Examination/ laboratory/ library fees

7. The cost of a computer/ laptop required for course completion

8. Caution deposit, building fund/ refundable deposit supported by institution bills/ receipts

9. Any other expenses required to complete the course, such as study tours/ thesis /project work

List of Documents Required to Avail a Study Abroad Education Loan

Here is a list of the documents required for a student loan for studying abroad:

1. Admission letter from the educational institution

2. Mark sheets (previous education - school/college)

3. Age proof

4. ID proof

5. Address proof

6. Signature proof

7. Salary slips

8. Recent bank account statements

9. ITR with the income computation

10. Audited balance sheet

11. Recent bank statements

12. Proof of turnover (service tax return/sales receipt)

13. Completed application form with signature

14. Latest passport-size photographs

15. Appropriate Visa for studies abroad

Eligibility Criteria to Get a Non-collateral Education Loan for Abroad

Here are some eligibility criteria to get an education loan without collateral:

1) Academic Performance

To be eligible for a non-collateral education loan, students must have a strong academic record and consistent grades throughout their education.

2) Admission to a Recognized Institution

You need to have an offer or admission letter from a recognized university or college abroad, as lenders require proof of enrollment in an accredited institution.

3) Co-applicant's Financial Stability

Since no collateral is involved, the co-applicant's financial stability, such as their income and credit score, plays a crucial role in loan approval.

4) Loan Amount Limit

Non-collateral loans typically have a limit, so students need to check if their required loan amount is within the lender's maximum allowed.

5) Nationality and Age Requirements

Applicants must be citizens of the country where the loan is being applied for and meet the lender's age criteria, typically falling between 18 and 35 years of age.

How to Apply For an Education Loan to Study Abroad

Here is a step-by-step process to apply for a study abroad education loan:

1. Research Loan Providers

Identify banks and financial institutions that provide study abroad loans. Conduct careful research on the finest Bank for study loans overseas. Some well-known Indian providers are State Bank of India, HDFC, Axis Bank, ICICI Bank, and others.

2. Check Eligibility Criteria

Review the eligibility criteria fixed by various lenders. It may include admission to a recognized foreign institution, co-signer requirements, and academic performance.

3. Determine Loan Amount

Calculate the total cost of your studies, including tuition fees, living costs, travel, and any other associated costs. Apply for a loan amount that covers all expenses.

4. Select a Co-Signer (if required)

Many lenders require a co-signer, mainly a parent or guardian. Make sure that your co-signer understands the responsibilities and is willing to provide the required documentation.

5. Keep Require Documents

Gather all the necessary documents, such as admission proof, academic transcripts, standardized test scores, a valid passport, visa, and income proof of the co-signer.

6. Compare Interest Rates

Compare rate of interest, processing fees, repayment terms, and other charges. Now, you can select a loan with terms that suit your financial situation.

7. Apply for Loan

To apply for a loan, complete the loan application form provided by the chosen lender. Submit all the necessary documents along with the application form. This can often be done online.

8. Wait for Approval

The lender will assess your application and determine whether you are eligible for the loan or not. This process usually takes some time, so you need to be patient.

9. Accept the Loan Offer

Once your loan application is approved you need to carefully review the terms and conditions. You may then accept the loan offer if you are comfortable with the terms. Once accepted, the funds will be disbursed directly to the educational institution or to your account, depending on the lender's policies.

10. Repayment Options

Understand the repayment terms, including the grace period after graduation, interest rates, and monthly payments. Explore various repayment options, such as moratorium periods and flexible EMIs.