Now, funding study abroad is simple as Global Reach helps students get education loans! We work in collaboration with reputed financial institutions and help students get education loans for fulfilling their study abroad dream.
The education loan covers primarily basic course fees and other expenses like accommodation, examination charges and additional miscellaneous charges. If you are a student, you are the primary borrower, and the co-applicant can be a parent, sibling or spouse. The loan amount offered to the students varies from bank to bank.
For a loan application, you must be an Indian citizen and have taken admission into a university or college acknowledged by the abroad college or university authority. You must complete a higher secondary school level to apply for a study abroad program and loan simultaneously.
What are the Basic Eligibility Criteria for an International Education Loan?
Some of the common eligibility requirements that loan applicants are required to meet for an education loan are:
- They must be an Indian citizen.
- They should have proof of confirmed admission to a recognised international university, college or study institution overseas.
- The co-applicant (generally a parent, sibling, spouse or close relative) must have proof of stable income and a strong credit history.
- Applicants must be in the age range of 16-35 years at the time of applying for the education loan.
- Loan applicants must also provide a strong academic record, such as at least a 60% overall aggregate or an equivalent GPA (as may be specified by different lending institutions)
Related Source: https://www.icicibank.com/blogs/loan/
What Documents are Usually Required When Applying for a Study Abroad Loan?
Different lending institutions may require a set of documents at the time of applying for the education loan. Some of the key documents that you should keep handy for submission are:
- Completed the form for the education loan application
- A valid passport (as ID or proof of travel)
- Academic transcripts such as completion certificates of 10th, 10+2, and other degree courses (as applicable)
- Recent passport-sized photographs
- Proof of admission at a recognised international university (offer letter)
- Scores of entrance exams like GRE, GMAT, IELTS (as required)
In addition to the above, the co-applicant or financial guarantor may also need to submit the following documents as part of the loan application process:
- Proof of ID – Aadhaar Card, PAN Card, Voter’s ID, valid passport
- Proof of income – Form 16, salary slips and IT Returns (in case of salaried professionals) and balance sheets, proof of business and profit-loss statements (for self-employed individuals)
Financial documents required for both the applicant and co-applicant:
- Complete information of assets and liabilities (in case of secured education loans)
- Bank statements for the last 6-12 months
- Collateral documents such as registration papers, property title deed, valuation report and encumbrance certificate (in case of secured loan)
What are the Key Factors to Consider Before Choosing a Lender?
With several banks and other financial institutions available (both national and foreign) for offering education loans to students, here are some factors that can help make an informed choice:
- Rates of interest: Compare the fixed vs. variable rates and also check if the rates are relatively lower for secured loans.
- Processing time and fees: Take into account the time taken by the lender for processing the loan application. This is helpful if you have a deadline for admission or a visa application. Also consider the loan application processing fees charged and hidden charges (if any).
- Terms of repayment: These include the option of a moratorium period or longer tenure for repayment (some banks offer up to 15 years). Also, check for any prepayment penalties.
- Customer service: This is an important consideration as a highly responsive lender can be of particular help during urgent loan requirements, such as fee deadlines or visa interviews.
- Reputation of the lender: Make sure to compare offers from multiple lenders and check their credibility and track record. It is a reflection on their transparency in loan transactions and reliability.
How Does the Repayment Process Work for Overseas Education Loans?
The loan repayment for studying abroad generally begins after the moratorium period. This refers to the time period between securing the loan and the start of its repayment. It is generally the duration of the course + 6-12 months (grace period) after course completion or until you get a job (whichever is earlier).
During this period, the applicant is not required to make full EMI payments for the loan. Some banks may require a partial EMI or simple interest only. The different repayment options available to the loan applicant after the moratorium period are:
- EMI: This is generally auto-debited from your bank account. You can also check with your lender for a step-up EMI option.
- Pre-payment or part-payment: These options are also available with certain lenders, which allow you to pay off your education loan earlier than planned or scheduled.
Any default on the education loan repayment may result in a drop in your CIBIL or credit score, affect the status of your study-abroad visa (if proof of financial ability is required), seizure of collateral (in case of secured loan) and legal consequences too.
Can a Student Avail Tax Benefits on Education Loans for Overseas Study?
Yes, tax benefits are available to students on the interest paid towards education loans under Section 80E of the Income Tax Act in India. The interest payable on the loan amount is fully deducted from taxable income. Additionally, no cap or limit is imposed on the amount of interest that can be claimed for tax benefits. However, this benefit is subject to certain conditions explained below:
- The loan must have been secured only for higher education (including overseas education) from a recognised bank or financial institution or an approved charitable trust.
- The tax benefit can be claimed only up to a maximum duration of 8 years or until the interest is fully repaid (whichever is earlier).
- Only the interest (and not the principal) is applicable for tax benefits.
What are Some Common Mistakes to Avoid When Applying for a Study Abroad Loan?
Some potential pitfalls that loan applicants should be aware of when securing an education loan are:
- Incomplete or hurried lender research: Make sure to compare all your lender options thoroughly. Rushing to secure the first loan offer may not be beneficial in the long run. Research well the terms and conditions of the lender, compare the interest rates of all lenders and check for any hidden charges.
- Last-minute application: Applying for the loan late may cause delays in application processing and approval, which may further delay your university application deadlines for admission.
- Incomplete understanding of loan terms: Some students may not be able to understand certain key terms in the loan application. These include fixed and floating interest rates, moratorium period, etc. This misunderstanding or lack of complete understanding may result in unexpected problems later. Make sure you fully understand the loan agreement before signing it.
- Providing incorrect information: Filling out inaccurate details in your loan application form may have serious consequences, including rejection of the application or even legal action. Never provide incomplete or inaccurate information on your financial ability, academic performance, or misleading details about your co-applicant.
- Not having a solid repayment plan: This is yet another mistake to avoid at the time of applying for an education loan. Assess your financial strength, potential income and repayment tenure of the loan. Make sure you have a solid employment plan after graduation and some backup for emergencies as well (in case of potential delay in securing a job).
Need Expert Help with Your Study Abroad Loan? GLOBXPLORE Can Guide You!
Want to apply for an education loan to turn your study-abroad dreams into reality? IDP Education can help. We are one of the most credible and trusted study-abroad consultants in India and we help simplify the student loan process for aspiring applicants.
Our consultants provide the necessary expertise to help navigate through the study loan process and its various complexities. Additionally, our valuable connections with leading financial institutions in India allow students to apply for study loans seamlessly.
IDP helps apply for education loans for higher studies in the USA, the UK, Canada, Ireland, Australia, and New Zealand. Get in touch with one of our experts today for guided assistance on the best education loan for study abroad in any of these countries.
