Education Loan for Abroad Studies: Explore Student Loans
An investment in knowledge pays the best interest! And if the knowledge is attained at a top-tier and premium university then it is sure to elevate your career to the next level. However, the unfortunate reality is that the cost of studying in a reputed college is usually quite steep. And studying in a good college overseas is an even more expensive proposition.
Education loans for abroad studies help students, irrespective of their financial status, realize their dream of studying in one of the best universities in the world.
Numerous banks and other lenders now provide foreign education loans for students who want to study abroad. These lenders have different education loan schemes on offer, but choosing the one that is right for you is not an easy task. And that is where GyanDhan helps.
We match you with that lender, which is the best education loan for abroad studies that suits your profile and needs perfectly, and then help secure the loan approval in the most seamless and hassle-free manner.
What is the Maximum Loan Limit For Education Loans to Study Abroad?
In secured education loans, students can apply for student loans of up to INR 1.5 cr. In foreign education loans without collateral, students can apply for study loans of up to INR 45 Lakhs. This loan amount limit can increase or decrease depending on the applicant’s and co-applicant’s profile, country, course, etc.
How to Apply for Abroad Education Loans?
The steps to apply for a loan for financing the studies abroad are:
Step-1: Check your loan eligibility online.
Step-2: Get expert loan counseling to compare the options available.
Step-3: Select a lender and apply online.
Step-4: Get the customized education loan document checklist.
Step-5: Submit the required education loan documents either online or get documents picked up from your home by our representative.
Step-6: Get the property & other legal evaluations done (in secured loans).
Step-7: Get the loan sanction letter after the education loan approval from the lender.
How to Choose the Best Overseas Education Loan?
Taking an education loan to supplant the cost of education overseas is the right choice. Depending on the amount and your profile, financial institutions can finance even 100% of the cost of the course.
However, to get the best education loan option, one needs to carefully analyze the following key aspects of the various options available. When you apply to GyanDhan, we do this analysis for you. In case you do the loan comparison yourself, consider these factors:
Interest Rate: Even a 1% increase in the education loan interest rate has a substantial financial effect. Example - Loan Amount: Rs. 30,00,000, Loan Repayment in: 5 years after you graduate, Course Duration: 2 years; While at 10%, you’ll pay Rs. 9.7 lakhs in interest, at 11%, you’ll pay Rs. 10.9 lakhs - that’s a difference of 1.2 lakhs for just 1%!. Also, historical changes done by any lender in its interest rates should also be considered.
Repayment Holiday/Moratorium Period: It is a specified period during the loan tenure in which the borrower is exempt from making repayments. Loans with a moratorium period have a big plus, as you don’t have to worry about making repayments while you study overseas.
Tax Rebate: Education loans for foreign studies taken from Indian banks are special in that the entire amount paid as interest is exempt from income tax. This has a huge impact: Example - Loan Amount: Rs. 30,00,000, Marginal tax bracket: 30%, Repayment in: 5 years after graduation, Course Duration: 2 Years, ROI: 10%... If your loan has tax rebate, you can save Rs. 2.9 lakhs!
Margin Money: The amount that you need to pay from your own pocket while the rest is paid by the bank. If a bank offers a 0% margin, it means they’ll fund all your education expenses in the offered loan amount.
Hidden Fees: There are numerous hidden fees that your lender might be charging you and when accumulated these will cost you a considerable amount, such as:
Forex Margin: Some lenders charge a forex conversion charge when the overseas education loan is sanctioned in INR and disbursed in some other currency. This can be as high as 1.5%, which translates to Rs. 45,000 for a loan amount of Rs. 30 lakhs.
Processing Fees: This varies from zero to as high as 2%. For a loan of Rs. 30,00,000, the processing fees can be as high as Rs. 60,000
Cost of Credit Life Insurance: Some lenders make it mandatory for the applicant to go in for credit life insurance with their education loan scheme so that their loan amount is protected against any unfortunate eventualities. If the premium amount is on the higher side then it eventually increases the cost of the education loan as well.
Mandatory Cross-Sell: Some lenders try to cross-sell other policies before sanctioning the education loan, even though it is not required on the applicant’s end.
Interest Rate in Different Currencies: Often students face a dilemma of choosing over an education loan in USD with a lower interest rate or an equivalent amount in INR with a higher interest rate. By the previous trend of the rising prices of US$ to INR conversion rates, it is a smart choice to go for the loan amount in INR even though it may come with a higher interest rate.
As you can see, by selecting the right overseas education loan, the reduction in cost can be as high as 5-6%.
Which is the Cheapest Education Loan in India to Study Abroad?
Public sector banks offer the State Bank or BoB lowest interest rates on loans for foreign education compared to private banks & NBFCs. If your institution is listed in BOB’s premium list of colleges, Bank of Baroda offers the cheapest education loan for abroad studies. Otherwise, the State Bank of India offers the cheapest education loans. However, the extent of the cheap education loan in India depends on several factors including the applicant’s profile, co-applicant’s financial profile, target country, target course, etc.
Are you eligible for an abroad education loan? Check here.