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A ready reckoner on Basics of Foreign Education Loan

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A ready reckoner on Basics of Foreign Education Loan  

In past decade, the number of Indian students opting for study abroad options has grown exponentially. There are many reasons for this including increased awareness and world view, exposure to available options via shrinking internet based world, better paying capacity of Indians and availability of student loans to facilitate better education abroad.   Indian students have always been superlative in creating their space wherever they go and assimilating in international societies. Now with the right financial aid, the foreign education dream is not restricted to only financially well of section of society.   Talking specifically of education loans, today, there are numerous lenders, banks and NBFCs, offering education loans to Indian students.  

When applying for a study loan, following criteria is to be kept in mind:  

  • Applicant must be an Indian national.
  • Applicant must have a co-applicant (may be parents, sibling or spouse)
  • For loans between greater than Rs 4 – 7.5 lacs INR (depending on bank) a third-party guarantor might be required
  • Collateral needs to be provided for student loans above Rs 7.5 lacs
  • Loan repayment commences 6 to 12 months after course completion

  These Education Loans Can Cover:

  • Tuition fees
  • Travel expenses
  • Cost of purchasing books, equipment, instruments and uniform
  • Exam fee, library membership, laboratory fee and accommodation
  • Caution money, security deposits etc
  • Limited living expenses

A Comprehensive Documentation List Needed For Study Abroad

  It basically varies from Bank to Bank and NBFC to NBFC , but there are some documents which form the basis of starting an education loan application process. This list is not a complete list but an indicative list.  

  • Proof of admission to the course ie OFFER LETTER from overseas College/University
  • Mark sheet for qualifying examination for school and college like 10th 12th undergrad degree etc
  • Schedule of expenses for the course (fee outlay, accommodation etc.)
  • Proof of scholarship, if any recieved
  • Two passport size photographs,proof of ID and Proof of Address
  • Statement of bank account of borrower for last six months
  • Income Tax assessment/returns upto two years old
  • Brief statement of Borrowers Assets and Liabilities

Some Banks and NBFCs offering Education Loans Almost all nationalized, private,co-operative banks and NBFCs offer education loans. The terms of some of those are mentioned below however to get updated information please visit or talk directly to the representatives of these institutions.

State Bank of India  SBI finances international higher education for job-oriented professional and technical graduate as well as postgraduate degree courses. Some examples of these courses are MBA, MCA, MS, diploma courses at reputed universities etc. The loan offered by SBI covers tuition fees, exam fee, lab fee, library fee, caution deposit, books and equipment cost, travel expenses etc.  

Maximum loan amount – Rs. 30 lakhs 

Collateral security required – For loans above Rs. 7.5 lakhs  

Loan margin – 15% for SBI education loan borrowers 

Repayment tenure – 1 year to 15 years   

HDFC Bank 

Maximum loan amount – Up to Rs. 20 lakhs 

Processing fees – Up to 1.5% of the loan amount

Axis Bank 

Maximum loan amount – Rs. 20 lakhs  

Minimum loan amount – Rs. 50,000 

Interest rate – Ranges from 16.5% to 17.5% with special rates for women  

Loan margin – Not required for a loan below Rs. 4 lakhs. For loans above Rs. 4 lakhs, 15% has to be brought in by the borrower  Axis Bank might also consider LIC policy for 100% of the loan amount but it depends from case to case.  

Punjab National Bank 

Maximum loan amount – PNB sanctions loans according to the requirement of the borrower,  

Loan margin – 15% for loans above Rs. 4 lakhs. For loan amount below Rs. 4 lakhs, the loan margin is not required.

Moratorium period – Up to a year with no prepayment charges levied by the bank 

Processing fees – 1% 

The tenure options available for PNB education loan borrowers is up to 15 years   

Bank of Baroda 

Under the Baroda Scholar scheme, admission secured for professional and technical courses at reputed foreign universities are sanctioned for education loan.  

Maximum loan amount – Up to Rs. 20 lakhs 

Loan margin requirement – 15% 

Repayment tenure – Loans taken up to Rs. 7.5 lakhs can be repaid within 10 years and loans above Rs. 7.5 lakhs can be repaid within 15 years  Borrowers can get a holiday or moratorium period of six months to one year after getting employment. Security is not required for loans below the amount of Rs. 4 lakhs. Third party guarantee is required for loans between Rs. 4 lakhs and Rs. 7.5 lakhs and a tangible collateral security is required for loans above Rs. 7.5 lakhs.   

Canara Bank   The Canara Bank education loan covers university fee, travel costs,exam fee, lab fee, library fee, book/equipment fee, and other related expenses. Education loan has to be taken with a co-borrower and 100% collateral security is required for loans above Rs. 7.5 lakhs. 

Maximum loan amount – Upto Rs. 20 Lakhs 

Loan margin – 15% for loans taken above Rs. 4 lakhs 

Repayment tenure – Can be up to 10 years for loans below Rs. 7.5 lakhs and up to 15 years for loans above Rs. 7.5 lakhs.  

Security – Not required for loans below Rs. 4 lakhs. Third party guarantee has to be given for loans from Rs. 4 lakhs to Rs. 7.5 lakhs. 

IDBI Bank  The IDBI education loan covers university fee, travel, exam fee, lab fee, library fee, the cost of computers, book/equipment fee and other related expenses. IDBI Bank sanctions loan amount according to the requirement of the borrower, with no security on loans below Rs. 4 lakhs.  

Maximum loan amount – Up to Rs. 20 lakhs 

Repayment tenure – Up to 10 years for loans below Rs. 7.5 lakhs and up to 15 years for loans more than Rs. 7.5 lakhs 

Third party guarantee is required for loans between Rs. 4 lakhs and Rs. 7.5 lakhs. Education loan has to be taken along with a co-borrower. 100% collateral security is required for loans more than Rs. 7.5 lakhs. 

 Apart from these banks, NBFCs like HDFC Cedilla and Avanse Financial Services also offer education loans for foreign studies. Students are advised to do due diligence at their end to get the updated information directly from concerning bank or NBFC and not rely 100% on the information mentioned here.  

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