Education loan for study abroad

Every student dreams of studying abroad. Financial constraints shouldn't make that dream impossible. Banks offer education loans to eligible students to bridge that gap. Since fees at foreign colleges are significantly higher than domestic institutes, banks provide substantial loan amounts to prospective students.

College Fees College fees for studying abroad increase every year. For an undergraduate engineering course, fees range from 5 to 10 lakhs. For master's degrees like an MBA, costs could be anywhere between 7 and 20 lakhs. Private colleges for a five-and-a-half-year medical course can charge up to 25-40 lakh.

What is needed for an education loan?

1. A co-applicant is mandatory for an education loan, whether it's a parent or someone else.
2. A third party and guarantor are required for loans between 4 and 7.5 lakhs.
3. For loans exceeding 7.5 lakh, the bank will ask for collateral (security).
4. The loan repayment period typically begins 6 months after course completion.
5. If the student remains abroad, the bank will collect loan repayments from the co-applicant.

Documents needed for an education loan? Before granting a loan, banks require students to submit identity cards, accommodation certificates (for both the student and the loan guarantor), an admission letter, a fee outline (expense statement), photographs, and academic certificates.

For the loan application, the student must provide the income certificate of the co-applicant (guarantor). The loan amount is often determined based on this income. Students studying abroad also need to submit letters from the university's department head, visa papers, travel documents, and GMAT, GRE, or SAT scores.

Some banks also consider age, offering loans only to students between 16 and 30 years old.

How to apply for an education loan? You can fill out an online form for an education loan or apply offline by visiting a bank. The completed form and required documents must be submitted to the bank. The bank will review the application and documents before deciding whether to approve the loan.

What expenses are covered? The loan covers tuition costs, exam fees, lab fees, uniforms, library and hostel fees, arrival expenses, books, and other essential equipment.

What is the condition of the loan? Before sanctioning a loan, the bank verifies that the student's university is a valid institution. The bank also assesses the student's job prospects after completing the course. Additionally, the student's credit history is checked. For high loan amounts, the bank gathers detailed information about the property offered as collateral.

What is the interest rate? Interest rates for education loans range from 11.50 to 14.50 percent per annum. These rates depend on the loan amount. For reputable institutes, banks may offer a discount of 25 basis points. Many private banks also provide a 25 basis point discount to female students.