Kerala Gramin Bank Education Loan For Abroad Studies

One of the most important factors to consider before applying for a student loan is its eligibility criteria.

If you are not eligible for the loan, there is no point in exploring any further. The eligibility criteria differ from one lender to another, so you shouldn't assume things on your own. Below are the eligibility criteria for Kerala Gramin Bank abroad education loan:

• The loan applicant (the student or the parents/guardian) must be an Indian citizen.
• In case the student is a minor, they ought to have their parents representing them.
• The borrower has to ensure that the loan should be in the joint name of both the student and parents/guardian.
• The student must have secured admission to a recognised university abroad, failing which the loan application will not be considered.
• The student must have secured admission through a merit-based selection process. The student can show the entrance test results or any other document that ascertains their merit being the reason for selection to that particular educational institution.

These are some broad sets of criteria, and there might be certain addition or deletion in the eligibility criteria. Some criteria might change depending on case to case basis, but the overall eligibility pivots around the above-mentioned points.

The limit for Kerala Gramin Bank abroad education loan is INR 20 lakh. However, this is not a fixed amount, and there might be variations to it, as the sanctioned loan amount is subject to a cap that depends on the preferred course.

Not all the courses are evaluated on a similar footing, and there are variations that ultimately decide the loan amount that will be sanctioned. Since different courses have different prospects, and also the institution where the student is planning to study has a bearing on the prospects. So, all these factors are considered before sanctioning the loan.

Before proceeding with the margin, let's see its definition. The margin is that portion of the loan amount that the borrower has to pay. The borrower must have the capability to pay the margin money, as ultimately, the loan will be sanctioned after assessing your ability to pay this amount. For instance, if you are taking an abroad education for INR 1,00,000 and the margin is 15%, you will have to pay INR 15,000, and the bank will take care of the rest.

Abroad education requires borrowing huge sums of money, and most PSBs ask for collateral. These loans where the borrower has to pledge collateral are known as secured loans.

The loan amount depends on the valuation of collateral and its liquidity. The liquidity of an asset is its ability to get converted into cash. The more liquid the collateral, the greater the sanctioned loan amount will be. For example, suppose you are pledging your house, land (only non-agricultural land is accepted as collateral), flat, etc. In that case, they will be considered more liquid than gold, fixed deposits, sovereign gold bonds, etc.

The collateral is needed for all the above INR 7.5 lakh loans. For these loans, the parents must be the cosigners or co-applicants.

As far as the land property value is concerned, the Kerala Gramin Bank expects you to pledge collateral that has a value over and above 150% of the total loan amount. The borrower must also assure the bank of future income and the payment of installments. You can substantiate your future income by showing the past placement record of the institution or any other proof that makes your case strong to the bank.

The repayment of an abroad education loan is a pretty cumbersome task since the payment has to be done for a huge amount. So, it becomes imperative to understand the education loan repayment process. All the education loans by Kerala Gramin Bank amounting to INR 7.5 lakhs and above have a maximum repayment period of 15 years.

Although the loan repayment period is sufficient to pay it smoothly, the shorter the repayment period, the better it is for the students. Since the interest loan on abroad education loan also amounts to a considerably large expense, it is in the best interest of the students to pay it as soon as possible and save money on interest payments.

The moratorium period or the repayment holiday is that time post completion of the course for which you don't have to start the repayment process.

Kerala Gramin Banks also understands the fiscal constraints of students post-completion of their studies and gives students the time to start the repayment of the loan. The bank gives a period of course duration plus one year or six months after getting the job, whichever is early.

The interest rate for abroad education loans is 12.60%. The bank also gives the students a rebate of 1% in interest repayment during the moratorium period or the repayment holiday. The interest rate rebate is only at the bank's discretion for those who have been prompt in paying their interest payment so far.

So, the better you manage your interest payment, the more you will save in the moratorium period.

It is very important for the students to ascertain the expenses which the abroad education loan covers. Since the cost of living and other expenses can be a pricey affair abroad, it's better to know the expense coverage before signing up for the loan.

The extent of expenses covered varies from one bank to another, but these are some of the expenses that most the banks cover:

• Tuition fees for college.
• Hostel and mess charges.
• Examination, library, laboratory fees.
• The cost incurred for uniforms, books, etc.
• Cost of laptop or computer if that is required for the completion of the course.
• Expenses for traveling abroad if it is part of the study (for projects and thesis).

The borrower might request the bank to add some expenses or remove some, but that is up to the bank to decide.

One needs to keep all the documents with them before moving ahead with the abroad education loan application. All the documents must be right to the best of the knowledge of the loan applicant, as any discrepancy will have a direct consequence on loan. So, it's better to keep all the documents handy.

These are the list of documents that must be submitted for an abroad education loan: