Federal Bank Education Loan
Education Loan

Federal Bank Education Loan for Abroad Studies

Federal Bank Education Loan for Abroad Studies

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A guide on Federal Bank education loan for abroad studies including interest rate, eligibility, documents required & how to apply. Check expenses covered to study abroad under Federal Bank education loan.

GyanDhan

Mansi Bisht

Updated on: 25 Oct 2023

Getting an education loan from Federal Bank makes sense for two reasons; banking in India has been in steady growth for the past years and private sector banks have shown significant growth to be the market shareholders, according to the RBI’s Report on Trend and Progress of Banking in India 2021 - 22. Federal Bank is a prominent private-sector bank with 1.40 Crore customers. Regarding education loans, the bank has specialized offerings under its education loan schemes to help students study abroad. 

Additionally, accessibility is a great factor favoring Federal Bank for students. Most of its branches out of the total 1,282 are located in semi-urban areas (685), followed by rural (233), metro (207), and urban (157) areas. These are good reasons to think of applying for an education loan from the Federal Bank to study abroad. 

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Overview of Federal Bank education loans for abroad studies

Before we dive deep, an overview of Federal Bank education loans to study abroad will give you a big picture to organize and connect the data in the blog sections. Federal Bank education loans are mainly secured education loans, and unsecured loans are limited to a small amount (see the difference between secured and unsecured education loans if you are new to the terms). 

  • list items For study-abroad education loans from Federal Bank, no collateral security is required for amounts up to INR 4 Lakhs
  • list items A third-party guarantee or collateral security is required for loans up to INR 7.5 Lakhs
  • list items For loan amounts above INR 7.5 Lakhs, collateral security with a stipulated margin is required, which is 10% - 50% for various collaterals

 

See the table below and check whether the education loan products by the Federal Bank align with your study abroad goals:

 

Interest rate

12.55% onwards

Processing fee

0.25% of the loan amount (maximum INR 2,500)

Margin money

15% for above INR 4 Lakhs, nil for up to INR 4 Lakhs

Documentation charges

INR 500 - 5,000 (for INR 2 Lakhs - 1 Cr)

Moratorium period

Course period + 6 months -1 year or 3 months after getting a job, whichever is earlier

Repayment during the moratorium period

May be required or not, depending on the loan scheme

Loan tenure

10 -15 years excluding the moratorium period

Guardian for the loan

Close family members - parents, siblings, spouse, etc. 

Pre-closure charges

3% of the loan amount

Delayed-repayment charges

2% per month of the overdue portion

 

If you are satisfied with the terms of Federal Bank education loans, let’s explore the education loan schemes by Federal Bank.

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Federal Bank loan schemes for abroad studies

Federal Bank education loans for abroad studies are provided through two schemes, namely Special Vidya Loan and Federal Career Solutions Loan. Details of Federal Bank loan schemes are given below: 

Special Vidya Loan

In the Special Vidya Scheme, education loans from Federal Bank can be availed for higher studies in India and abroad. Take note of eligible courses; you may study degree, diploma, or any course except vocational training and skill development study courses. Other features of the scheme include the following: 

  • list items Maximum loan amount: INR 20 Lakhs
  • list items Interest repayment during the moratorium period is not mandatory
  • list items The allowed moratorium period is 15 years
  • list items Loan tenure is up to 15 years after the moratorium period
  • list items Guardian for the loan must be the student’s parent, sibling, or spouse

Federal Career Solutions Loan

Federal Career Solutions Loan scheme helps you to fund higher education for courses such as pilot training, skill up gradation, diploma or degree courses offered in aviation, hospitality and travel management, executive development etc. 

  • list items Maximum amount: INR 1 Cr, or up to 75% of the estimated cost of the study
  • list items Interest repayment during the moratorium period is mandatory 
  • list items The moratorium period is the course period plus 6 months or 3 months after getting a job, whichever is earlier
  • list items The loan tenure is up to 10 years after the moratorium period
  • list items The guardian can be parents, siblings, spouse, or parents in law

 

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Federal Bank education loan interest rate and maximum amount

From June 2023, Federal Bank education loan interest rate is 12.55% onwards. The interest rate is calculated as the sum of the Repo rate and Spread. The repo rate is the interest rate determined by the RBI to lend money, and Spread is decided by the individual banks based on the difference in the interest rate for deposits and lending.

  • list items Federal Bank education loan interest rate is floating, meaning that it is subject to market changes
  • list items Current repo rate is 6.50% and Spread 6.05%, making the effecting interest rate on Federal Bank education loans 12.55%
  • list items The Marginal Cost of Lending Rate (MCLR) for Federal Bank is 9.30% per year. It means that the maximum possible lower interest rate for Federal Bank education loans is 9.30%
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Eligibility criteria for Federal Bank education loans

Federal Bank has set eligibility requirements for education loan schemes to streamline the administrative burdens and manage the risks associated with each application. The eligibility criteria for education loans to study abroad are slightly different for Federal Bank loan schemes, as you can see in the sections below: 

Eligibility criteria for Special Vidya Loan

  • list items The student should be an Indian national
  • list items Secure admission to professional or technical courses through entrance test or a selection process
  • list items The course and institution of study should have necessary approval or recognition by the government and prominent organizations
  • list items The course certificate should be issued by the university, govt. dept, or a body formed by enactment of parliament
  • list items Vocational training and skill development study courses will not be eligible

Eligibility criteria for Federal Career Solutions Loan

  • list items The student should be an Indian citizen
  • list items Show the proof of admission to the proposed course
  • list items Age of the student must be between 18 - 45 years
  • list items The net worth must be minimum double the loan amount. The guarantor’s collateral can also be added
  • list items Age of the guardian must not cross 60 during the currency of the loan (if post-retirement income justifies there is relaxation). If the age crosses 60, an additional guarantor with the same eligibility is needed
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Documents required to apply for Federal Bank education loan

Documentation is crucial in your education loan application as the documents prove your credibility. The lender evaluates the documents and decides your eligibility for an education loan. Here is the concise list of documents required to apply for an education loan from Federal Bank: 

  1. list items Proof of identity - passport, voters ID card, driving license, or PAN card
  2. list items Proof of address - ration card, bills (telephone, electricity, gas, etc.), lease agreement, passport, trade license, sales tax certificate, etc. 
  3. list items Photograph of applicant and guardian
  4. list items Mark list of qualifying examinations
  5. list items Income proof of guardian
  6. list items Details of admissible course-related expenses
  7. list items Evidence for selection to the course of study
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Expenses covered by Federal Bank education loan to study abroad

As the major point of taking an education loan is covering your expenses, see the expenses covered by Federal Bank education loan and decide whether it satisfies you or not. The funds for studies are released initially for admission expenses, followed by regular disbursements on each semester of study. 

  • list items Study-related fees: college school, hostel, tuition, examination, library, and lab
  • list items Purchase related to study: books, equipment, instruments, uniform, computer (if essential for the course)
  • list items Travel expenses
  • list items Expenses for study tours, project work, thesis etc.
  • list items Other bills: caution deposit, the amount payable towards building fund, refundable deposit, etc., supported by bills or receipts but cannot exceed 10% of the tuition fee

 

Check Your Education Loan Eligibility

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How to apply for Federal Bank education loan for abroad studies?

You can apply online or offline for education loans to study abroad. To apply online, you have two options: first, visit the official website of Federal Bank and redirect to the contact section to get in touch with the bank via email or a phone call. The second option is applying for an education loan via the Vidya Lakshmi portal.

To apply offline, you can visit the nearest Federal Bank branch with the required documents. The bank will verify your application and let you know the next steps if the application is accepted. 

In short, Federal Bank can be your companion for education loans of its affordable loan products. However, if your aim is finding the most affordable education loan, your exploration must not be limited to Federal Bank. Consider the following situations:

  • list items What if you don’t have collateral to pledge? 
  • list items What if Federal Bank does not accept your country or course of study? 
  • list items What to do if you want an education loan with no margin money, unlike the Federal Bank education loan? 

 

As a matter of fact, the best education loan for your profile can be found only after a series of explorations, filterings, and selections based on various factors such as the loan amount, interest rate, margin money, collateral requirement, etc. In your exploration, consider taking help from GyanDhan, India’s first study abroad marketplace for students. Here’s an aid to check your education loan eligibility right now.

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Frequently Asked Questions

What is the maximum amount of education loan in Federal Bank?

The maximum amount of education loan from the Federal Bank varies for different schemes. It is INR 20 Lakhs for the Special Vidya Loan scheme and INR 1 Cr for the Federal Career Solutions Loan scheme. 

What is the interest rate on a student loan at Federal Bank?

The interest rate for student loans at Federal Bank depends on various factors in your application, such as academic scores, collateral value, etc. It is determined based on the RBI Repo rate and Spread. Currently, the interest rate for Federal Bank education loans is 12.55%. 

Is Federal Bank popular in India for education loans? 

Federal Bank is a popular private sector bank in India with 1,284 branches in cities and rural areas. As per the latest reports, the bank has 1.4 Cr customers in India, making Federal Bank one of the popular banks in India. The bank offers study abroad education loans under two schemes covering popular degree or diploma courses and vocational training and other courses. 

Does the Federal Bank offer better interest rates for education loans? 

Federal Bank offers better interest rates than NBFCs in India for education loans. The interest rate is currently 12.55% yearly. The interest rate for Federal Bank education loan is calculated as sum of Repo rate plus Spread, and it is calculated based on market conditions. 

In how many states does the Federal Bank have branches? 

Federal Bank has branches in 24 Indian states, Delhi NCT, and 4 Union Territories. The states in India where Federal Bank does not have any branches are Manipur, Arunachal Pradesh, and Sikkim.

Is it easy to apply for education loans from the Federal Bank? 

Applying for an education loan from Federal Bank is easier if you have the required documents, as the bank offers online and offline options to apply. To apply online, visit the official website of Federal Bank and follow the guidelines. You can apply offline by visiting the nearest branch of Federal Bank with required documents. 

What is the loan documentation charge for Federal Bank education loans? 

The documentation charge for Federal Bank education loans is determined upon the loan amount. There is no documentation charge for education loans of up to INR 2 Lakhs and for higher amounts the documentation charge is as follows:

  • list items INR 2 - 10 Lakhs - INR 500
  • list items INR 10 - 30 Lakhs - INR 1,000
  • list items INR 30 - 50 Lakhs - INR 2,500
  • list items INR 50 Lakhs - 1 Cr - INR 5,000
  • list items Amounts more than INR 1 Cr - INR 10,000