Education Loan Process for Abroad Studies

In 2022, education loan disbursements in India surged significantly, rising from Rs 16,000 crore in the 2021-22 fiscal year to an impressive Rs 17,000 crore in 2022-23. 

These funds have been instrumental in facilitating access to educational opportunities both within India and abroad.

Whether you're aspiring to study at prestigious institutions in the United States, the United Kingdom, Canada, Australia, or elsewhere globally, this comprehensive guide equips you with the knowledge and confidence to navigate the complexities of educational financing.

Types of lenders for abroad education loan

When considering education loans, it is essential for candidates to compare education loans from different types of providers. Basically there are four types of education loan providers.

1. Public banks

Public banks are government-owned financial institutions. They often have low interest rates and special schemes for students pursuing higher education. These loans are typically considered more secure and reliable due to government backing.

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2. Private banks

Private banks are privately-owned financial institutions. They may have slightly high interest rates as compared to public banks. Private banks often provide more personalized services and may be more flexible in offering education loans tailored to specific needs.

3. NBFCs

NBFCs are non-banking financial institutions that offer education loans as part of their financial services. They can be an alternative to traditional banks and sometimes offer loans with more relaxed eligibility criteria. 

4. International lenders

International lenders are financial institutions that provide education loans to international students studying abroad. The terms, interest rates, and eligibility criteria for such loans can vary widely and may depend on the borrower's course and the country where they plan to study.

Types of education loans for studying abroad

There are two primary types of abroad education loans: secured loans and unsecured loans.

Secured education loans

Secured education loans require the borrower to provide collateral, which is an asset of value (e.g., property, fixed deposit, or other assets) to secure the loan. This collateral serves as a guarantee to the lender that the loan will be repaid.

Unsecured education loans

Unsecured education loans do not require the borrower to provide collateral. Instead, the lender assesses the borrower's creditworthiness based on factors such as credit history, income, and co-signers (if applicable).

Key features of abroad education loans 

Education loan process for abroad studies

From loan application to approval and disbursement, the entire loan process is time-consuming, to streamline the student loan application process, it's advisable to begin early. To answer the question “How to take bank loan for education?” follow these steps:

Step 1: Research your options

Before diving into the loan application process, it's crucial to research the various financing options available. Common sources of education loans include government banks, private banks and lenders, and scholarships. Each option has its own eligibility criteria, interest rates, and repayment terms. 

Step 2: Choose your destination and institution

The destination country and the university you choose play a significant role in the loan process. Some lenders may have specific loan programs for particular countries or institutions. Make sure your chosen destination and university are eligible for the loan program you're interested in.
 

Step 3: Calculate your expenses

Estimate your total expenses, including tuition fees, accommodation, living costs, and other
miscellaneous expenses. This step is crucial in determining the loan amount you'll need. Create a detailed budget plan to ensure you're borrowing an amount that covers all your financial needs.
 

Also read: Expenses covered under an education loan

Step 4: Understand eligibility criteria

Different lenders and loan programs have varying eligibility criteria. Typically, you'll need to meet the following criteria:

• Admission to an accredited institution: You must have an acceptance letter from a recognized university.
• Creditworthiness: Lenders will assess your credit history, income, and co-signer (if applicable).
• Co-signer (if required): Some lenders may require a co-signer, typically a family member or guardian with a good credit history, to support your application.  

Also read: Education loan eligibility criteria

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Step 5: Research loan terms

Review the terms and conditions of the loan carefully. Pay close attention to interest rates, repayment schedules, and grace periods. Understand the difference between fixed and variable interest rates and choose the one that suits your financial stability and risk tolerance.

Step 6: Apply for loans

Once you have selected the lender and understood the terms, it's time to apply for the loan. Most lenders offer online application processes, making it convenient to submit your documents and track your application status. Be sure to double-check all the information you provide to avoid any delays.

Step 7: Compare loan offers

If you receive multiple loan offers, take the time to compare them. Consider factors like interest rates, repayment terms, and any additional benefits or fees. Choose the loan that offers the most favorable terms for your financial situation.

Step 8: Plan for repayment

Before you accept the loan, create a repayment plan. Understand when your repayments will start, how much you'll owe each month, and the total amount you'll repay over the loan term. It's essential to budget for these repayments to avoid any financial stress later on.

Read about: How to plan your education loan repayment?

How to apply for an abroad education loan with GyanDhan?

The process to apply for an abroad education loan should always start from exploring and comparing different lenders and their products. Borrowers win half the battle as GyanDhan evaluates your profile and selects the best lender for them. To apply for an abroad education loan through GyanDhan, you need to follow five simple steps.

Step 1: Check your loan eligibility.

Step 2: Expert education loan counselor will evaluate your profile.

Step 3: Team GyanDhan will either arrange a doorstep pickup for your documents or you will receive a customized checklist to upload.

Step 4: Once the documents are uploaded, GyanDhan will proceed with the rest of the formalities.

Step 5: The bank will disburse the amount as per schedule.

Securing an education loan for studying abroad can be a complex process, but with careful planning and expert advice, it is entirely achievable. By understanding your financial needs, eligibility criteria, and the terms and conditions, the GyanDhan team suggests the best loan program for you. Not only this, we provide you with a customized document list that ensures a complete file. 

So, if you are on the lookout for a hassle-free student loan experience with the added advantage of expert assistance, don't hesitate to give GyanDhan a try. We are here to help you achieve your academic goals without any financial stress. To start your education loan journey with us, check your education loan eligibility.

Calculate your Education Loan EMI

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Additional Read:

• Education loan from ICICI Bank
• Education loan from Axis Bank
• Education loan from IDFC First Bank 
• Student loan application in public banks
• Student loan application in private banks

 

Frequently asked questions

What is the education loan process for abroad studies?

To apply for an abroad education loan, the applicant must be an Indian citizen. If the applicant is below the age of 18, then their parents will have to act as joint borrowers. The candidate must have a strong academic profile. The candidate must have been accepted to a reputable university, institution, or college abroad.

How to take bank loan for education?

Research financing options, choose your destination and institution wisely, calculate total expenses, understand eligibility criteria, review loan terms, apply for loans, compare offers, and plan repayment. Banks like ICICI, Axis, and IDFC First offer loans for specific colleges. Consider interest rates, repayment terms, and loan amounts for financial stability.

What is the maximum limit of foreign education loans with collateral?

The maximum limit for public banks is INR 1.5 cr, and INR 80 Lakh for private banks.

How much education loan can I get without collateral?

Candidates are applicable for INR 20 Lakh as an education loan without collateral.

How to check education loan eligibility?

To check your education loan eligibility click here.