How to Get an Education Loan for Your Studies Abroad?
Education loans for abroad studies act as a lifesaver for those who want to pursue their higher studies abroad. Studying abroad can be a life-changing decision, and many students find it challenging to arrange the funds. This is where education loans that finance all the expenses for studying abroad come into the picture.
Many financial institutions nowadays provide education loans for studies abroad. In this article, we have covered every detail related to how to get an education loan for studies abroad.
Education Loans for Studying Abroad
An education loan for studies abroad can be obtained from a bank or non-banking financial company (NBFC). It covers all the schooling expenditures and ensures that students finish their course without facing financial difficulties.
Further, there are two types of education loans for foreign studies:
- Secured education loan: Secured education loans require the applicant to pledge some security as collateral against the loan.
- Unsecured education loan: Unsecured education loans do not require the students to pledge collateral. However, the eligibility criteria for these loans are more stringent than those for secured loans. Such loans require a person with a stable income to act as a co-applicant.
Eligibility Criteria for Education Loans for Studying Abroad
Checking the eligibility criteria is the first and foremost thing to do while applying for an education loan. Eligibility criteria vary from bank to bank, but the basic guidelines remain more or less the same:
- The candidate must be a citizen of India.
- The government must recognise the course and university.
- The candidate must have applied for a full-time undergraduate or postgraduate programme.
- The candidate must be accompanied by a co-applicant such as a parent, guardian, sibling, or cousin (especially if it is an unsecured loan).
- Other underwriting norms are set as standards for availing of an education loan.
Documents Required for Education Loans for Studying Abroad
The following documents are necessary when you apply for the loan:
- Duly filled and signed loan application form.
- Passport-size photographs of both applicant and the co-applicant.
- Photo ID proof of the candidate and the co-applicant (PAN card, voter ID card, driving licence, Aadhar card, or Passport).
- Address proof of the candidate and the co-applicant.
- Academic documents: These include the candidate’s mark sheet and certificates along with the GRE’s scorecard.
- Admission letter of the specified college or university.
- Last six months’ bank statements of the co-applicant.
- Income proof of the co-applicant (an education loan for studying abroad depends upon the co-applicants financial situation, location, and assets).
- For collateral loans, a property document, such as a property title deed, building approved plan, and NOC from a builder or society, is required.
Procedure for Getting an Education Loan for Studying Abroad
Follow the below steps to apply for an education loan for studying abroad.
- Check your loan eligibility, along with the eligibility of the selected course, with the banks.
- Figure out the amount required for expenses and how much you can arrange.
- Compare the education loan provided by different banks and financial institutes.
- Fill out the loan application form after deciding and approaching the bank. Also, complete the pledging of the collateral if you borrow a secured loan.
- After the loan is approved, the bank will issue a loan document containing various loan elements.
- The loan document is to be signed by the student and co-applicant, following which the bank will disburse the amount in instalments or as asked by the university.
Government Schemes for Education Loans for Studying Abroad
The government has introduced numerous education loan schemes with low-interest rates and an easy application process. Let us quickly go through some popular schemes:
1. Vidya Lakshmi Education Loan
Vidya Lakshmi Education loans are available only for graduate, post-graduate and doctoral courses. Under the scheme, the Government of India approves a maximum loan of up to ₹30 lakh.
2. National Backward Classes Finance and Development Corporation (NBCFDC)
The NBCFDC provides education loans for abroad studies to students from backward classes. Students can avail of a loan of up to ₹20 lakh with a moratorium period of 5 years.
3. National Scheduled Castes Finance And Development Corporation Education Loan (NSCFDC)
The NSCFDC provides education loans for abroad studies to students who are scheduled castes. A maximum of ₹30 lakh can be obtained under the scheme for studying abroad.
4. National Safai Karamcharis Finance and Development Corporation Education Loan (NSKFDC)
This scheme is only for the students belonging to the community of cleanliness workers. Under the scheme, students from any field can avail of an education loan for abroad studies with a maximum limit of up to ₹20 lakh.
5. National Minorities Development & Finance Corporation Education Loan (NMDFC)
National Minorities Development & Finance Corporation, under the Ministry of Minority Affairs, provides education loans to students belonging to minority communities with low annual incomes. A maximum of ₹30 lakh can be obtained for studies abroad and professional and technical courses.
6. Padho Pardesh Scheme of Interest Subsidy for education loans
The Padho Pardesh Scheme of Interest Subsidy for education loans is another scheme for minority communities who wish to study abroad. Students belonging to minority communities and those coming from economically weaker sections can avail of the interest subsidy on their education loans.
7. Dr Ambedkar Central Sector Scheme
This is another popular education loan scheme for students belonging to minority communities. Students with select courses such as Masters, MPhil, and PhD courses are eligible for an education loan for abroad studies under the scheme.
Education loans fulfil millions of dreams yearly by allowing students to pursue their higher studies abroad without worrying about funds. Several banks and financial institutions provide education loans for abroad studies, and the steps above and procedures might help avail an education loan.
What education loans are available for studying abroad?
Education loans to study abroad can be divided into two categories: secured education loans and unsecured education loans.
What maximum loan amount can I get for higher studies abroad?
It depends from bank to bank. Most banks offer an education loan of up to ₹20-30 lakh for higher studies abroad.
Can I get an education loan for studying abroad without collateral?
Yes, many government banks offer up to ₹7.5 lakh in education loans without collateral for studies abroad. And many private banks and NBFCs offer education loans up to ₹60 lakh without collateral for abroad studies.
Which bank or financial institution is best for education loans abroad?
Several lenders available can provide an education loan depending on the requirements. You can apply for a loan with a nationalised bank and a government-approved non-banking financial institution.
How long does it take to process an education loan for abroad studies?
An education loan to study abroad can take up to 10 days for approval when applied with collateral and up to 4 days without collateral.