Want to study abroad but concerned about the higher tuition, living expenses, insurance, transportation, and other costs associated with studying at an international university or college?
If students are short on funds, they can apply for a student education loan from a bank, NBFC, or other lenders.
Students should educate themselves on the subject before applying for a student loan.
Student loans for studying abroad are the most important thing for students who do not have enough money. A student loan is an amount borrowed from a private lender or a government bank to fund a student’s entire education in the United States or abroad. The loan amount raised can be repaid to the lender on agreed-upon terms after the agreed-upon duration. Students can enroll in undergraduate, graduate, or other professional study programs at a university in another country. Students can use the borrowed loan to pay tuition and cover living expenses while studying abroad.
Abroad education loans can be a life-changing opportunity for any aspirant, but it can be difficult to find Student Loans for Studying Abroad. A study abroad loan is intended for students who want to further their education in another country. It is necessary for students to meet the eligibility requirements and submit the necessary documentation.
Applying for a student loan from the Indian government or another lender is a big step. As a result, it is recommended that students who apply for it conduct thorough research, comparing interest rates, terms, and conditions. Before submitting an application for approval, it is also necessary to weigh the pros and cons and alternatives.
Types of Student Loans
- Secured or collateral loans
- Unsecured or without collateral loans
- The Indian Lenders
Indian lenders are well-known for offering higher education loans to qualified applicants. Potential lenders include public and private sector banks, as well as non-bank financial companies (NBFCs). These Indian lenders follow the rules and regulations established by the Government of India and the Indian Central Bank.
These are known to provide both secured and unsecured education loans for only overseas education. Borrowers benefit from this service by receiving interest rate discounts and other benefits. Students can reach Private Banks like HDFC Bank, ICICI Bank, AXIS Bank, Federal Banks etc. or Public banks like Bank of Baroda, State Bank of India, Bank of Maharashtra, Union Bank of India etc. to get educational loan for studying abroad.
In India, education loans are available to students seeking admission to almost all colleges, and universities that have been approved by the All India Council for Technical Education (AICTE), the University Grants Commission (UGC), and the Indian Medical Council (IMC).
- The International Lenders
Students can also apply for educational loans from international loan providers; however, students should be aware that these loans are only available for higher education abroad. These loan providers make a loan available after the student completes the necessary paperwork. Students planning to enroll in job-oriented graduate and post-graduate programs such as MS, MCA, MBA, and study programs facilitated by CIMA – London, CPA – USA can also benefit from low-interest rate education loans from international lenders.
About Education Loan Amount
While raising funds for education, students should be aware of everything. It will assist in making better study abroad plans. In general, the amount of money a student can apply for load is determined by tuition and study abroad expenses. Students can borrow up to Rs.75 to 80 lakhs in educational loans to fund their education abroad. The loan amount may differ depending on the lender or bank chosen. The loan can also be obtained through NBFCs. Banks cover approximately 85-90% of study abroad expenses, whereas NBFCs cover 100% of expenses.
How does it Works?
Loan approval is likely to depend on the fulfillment of eligibility criteria, documentation, course selection, university, location, and other factors. The interest rates charged vary by bank and range from 7.5% to 11% per year. The sanctioned student loan is transferred to the student’s account provided at the time of application. During the course of the studies, a few other lenders transfer the agreed-upon amount directly to the university’s bank account.
Unlike a few loan types, Educational loans feature a payment moratorium. The loan duration is generally for 5 to 10 years which can be extended at the lender’s discretion. Repayment of education loan commences post completion of the course and is to be paid back in Equated Monthly Installments (EMIs).
- Guarantor/co borrower is required for any amount of loan
- Guarantor/ co borrower must have a good credit record
- Guarantor required and also the borrower need to arrange collaterals that includes plot of land, house or jewellery or other items acceptable to a lender for a loan amount above Rs. 7, 00,000.
Student loans come with certain terms and conditions. Students are advised to gather the relevant information about the applicable terms prior to applying for a loan with a lender to finance education overseas.
Learn About the Pros Related to Student Loans
Below are a few of the considerable pros of a student loan:
Education loan tax benefit
- Improves Credit Score
- Low-interest rate
- Concession or discounts on interest
- Easy online application
- Easy Repayment in EMIs
- Minimum documentation
- Quick and Easy Processing
- Benefit of Moratorium Period that may range from six months to one year after completion of the course.
- Helps in Visa Approval as it acts as evidence of funds while securing a student visa
More on the Student Loan Pros
- Lower Rate
International banks charge a relatively low interest rate on education loans. Subject to certain conditions, it can help you save up to 3% in annual interest. As a result, students can benefit from lower interest rates on student Educational Loans.
- Cover Essentials Expenses
Aside from tuition, room, and board, student loans can cover a variety of other study expenses. A student loan for studying abroad is an excellent choice for funding educational necessities such as laptops or computers, books, and other related expenses. In this case, students do not have to pay for necessities with money raised from other sources.
- Get Secure and Unsecured Loans
There are two types of education loans available: secured and unsecured loans. A secured loan from a bank requires the borrower to submit collateral. Some banks do offer students interest rate breaks. On the other hand, NBFCs are available for an unsecured education loan for specific courses, with amounts ranging from up to 65 lakhs in some cases and depending on which country the student chooses. The option chosen would be determined by the student’s academic needs. There is no upper loan limit with NBFCs, but there is no loan concession. A secured loan also has tax advantages depending on the country.
Avail of The Paying Off Student Loans
There are several loan payment services available to students at reduced rates through discounts. Before applying for this loan, students should confirm the interest rate reduction and loyalty discount on their existing loans. Private lenders provide a discount if the student is able to obtain another loan from the same company.
- Increase Career Opportunities
If students are taking loans from international lenders connected with some of the reputed universities, it also opens many job opportunities for the loan seeker. Students studying without taking loan facilities are unable to avail this opportunity.
About the Cons Related to Student Loans for Studying Abroad
Consider the Cons of the lenders before seeking Student Loans for Studying Abroad
Demand for Many Documentations
Because of the complex documentation procedures, it may be difficult for students to obtain loans in many cases. In some cases, the student may be required to keep the property papers as collateral for the education loan. Bankers or lenders request collateral to reduce the risk of payment default and student non-payment.
- Loan Available for Limited Programs Only
We will talk about limited opportunity education loans in this section. Some lenders process unsecured loans in which no assets, property papers, or other collateral are required. This loan is only available for a limited number of courses, and students must make a compromise with the university and course in this case.
- Education Loans with No Security
Many international loan providers offer unsecured study loans after a credit check and income verification based on eligibility criteria. It is not available to every aspirant. This loan requires students to have a good background or a clear credit history with no payment defaults. Students are sometimes unsure about the university where they want to study abroad and their decision to study abroad.
- International Loan Providers Require a Guarantor
If students take international loans for overseas education, co-applicants play an important role in their careers. In that case, lenders require the co-applicant or any guarantor to be located in the country where students wish to begin their studies abroad. However, many students are unable to do so. Most students find it difficult to present a guarantor with a green card or overseas citizenship. This loan option is known as unsecured loan service, and students who do not have a guarantor are unable to use it.
More About Cons of a Student Loan
Also, remember that failure to repay the raised student loan can become cause of unwanted consequences.
The below consequences can become trouble for student and their family:
Higher penalty interest for missed EMIs
- Impact your credit score
- Financial hardship for the family
- Restriction on buying essential goods
- Inability to change the study program
Alternatives to Avoid Student/Education Loans for Overseas Studies
Alternative loan facilities make studying easier after borrowing money from lenders, and students are not required to show the reason for their higher education. It is easier to borrow education loans for study abroad in the digital age from multiple companies that provide loans on property or gold without knowing the study records or background.
There are a few alternatives that can help students avoid taking out a student loan to cover the costs of studying abroad.
Learn about a few alternatives below:
- Avail Property Loan with No Purpose – This loan is called a loan against the property. This loan is an easier solution to a start study abroad without mentioning the purpose of the loan. Loan providers accept property like a flat or land as collateral. Student’s parents will take this load for their children without revealing any reason for the loan, like academic records, co-applicants abroad, etc.
- Go for The Gold Loan at Lower Rates – The gold loan is a traditional part of Indian banks, and they keep their gold in the bank to take a gold loan at a lower interest rate. If students have a good quantity of gold, then they are eligible to take a higher amount from the bank and non-banking financial companies offering loans against gold. Students would have a good cost of as 50% to 70% of the gold value within 24 hours. Students can use this amount for study abroad purposes.
- Scholarships (full or partial scholarships)
- Self-financing – using the family saving and assets
- Government grants byCentral & state governments of India
- Community schemes by various ethnic communities Organizations
- Earn & learn– Several educational institutes abroad provide deserving students the option to earn and pay for their chosen course. Such needy students are provided classes during the evening and night.
In the foregoing content, we attempted to summarise the benefits, drawbacks, alternatives, and other factors that students may consider when seeking student loans to pursue their dream of studying abroad. We also discussed various options for borrowing money to study abroad from Indian and international lenders. All of the advantages and disadvantages, as well as the alternatives, are important for students who want to study abroad. Alternative loan options enable you to choose the best location, university, and programme for your higher education without regard for financial constraints.
Some lenders provide education loans with no collateral, while others require collateral to provide the necessary education loans. Study Smart advises students to apply for student loans only after thoroughly weighing the benefits and drawbacks of the lenders with whom they intend to apply for the necessary education loans.
Moreover, before applying for a student loan, gather as much information as possible about government and private banks, as they may have special offers on interest and repayment terms. For assistance with education loans, documentation, and admissions. With over 13 years of experience in the field, Study Smart is one of the Top Overseas Education Consultants in Delhi, Pune, Mumbai, Ludhiana and throughout India. Over 5500 students from 12 different countries have been placed in some of the world’s most prestigious colleges and universities. Call us today to speak with one of our Experts about your questions, whether they are financial, educational, or cultural.