Indian Banks offering Education Loans for Studying Abroad

Indian Banks offering Education Loans for Studying Abroad

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Study Info CentreTue Jan 04 2022

An education loan is an amount of money borrowed from banks or other financial institutions to pay for the tuition fees in your own country or abroad. 

With the hype of going abroad for education in India, the number of people who seek out education loans has also increased. There are many Indian Banks offering Education Loans for Studying abroad. 

This article is going to illuminate you on the details of such financial institutions, eligibility criteria to get student loans, repayment time and so on. 

Getting an education loan can help you with entire tuition fees and other expenses including living and hostel expenses, travelling expenses, examination fees, library/laboratory fees; purchase of books / equipment's/instruments/uniforms; passage money for studies into India; purchase of computers/laptops considered necessary for the completion of the course. 

However, this cannot be said for all the Banks and other financial institutions offering loans. 

Things to remember while applying for education loans in India

Moratorium Period: The time is the time during which student/applicant need to make any repayment to the bank. The moratorium Period could be as long as the course duration plus one year.

Collateral: Movable or immovable property offered to the bank as security for a loan amount higher than the prescribed amount. 

Loan Margin: Scarcely bank offer the complete amount. Generally, they pay up to 90% of the total amount and the student/applicant need to manage the rest 10%.

Education Loan Providers in India

  • Banks
  • NDFCs (Non-Banking Financial Companies)
  • Foreign Lenders

Popular Types of Education Loans

  • Education Loans with Collateral (Secured Loans)
  • Education Loans without Collateral: Higher Interest Rates

Eligibility Criteria

  • Applicant and Co-applicant should be a citizen of India
  • Applicants should fall to the age group of 16-35
  • Applicants should have secure admission in graduate or postgraduate programs in India or abroad.
  • Applicants need to offer collateral in some cases. 

Indian Banks offering Education Loans for Studying Abroad: SBI Bank

State Bank of India (SBI Bank) grants generous loans to Indian Citizens for studying abroad. 

This is the feature of the SBI Student Loan Scheme offered by SBI Bank to Indian Nationals. 

    • Repayment period: 15 years after course completion+  12 months of repayment holiday. You can begin to repay one year after the completion of the course. 
  • Margin
      • For Loans up to 4 Lakhs: No charge
      • For Loans above 4 Lakhs: 5% for education in India, 15% for overseas education.
  • Security
      • For loan up to INR 7.5 Lakhs: Only Parent/ Guardian as co-borrower. No Collateral Security or third party guarantee is required.
      • For loans above INT 7.5 Lakhs: Alongside Parent/Guarina as Co-borrower, tangible collateral security is also required.
  • EMI Generation: 
      • The accrued interest during the moratorium period and course period is added to the principal and repayment is fixed in Equated Monthly Installments (EMI).
      • If full interest is serviced before the commencement of repayment; EMI is fixed based on the principal amount only.
  • Processing Charge: 
    • No charge for loans up to INR 20 Lakhs
    • Charge of “INR 10,000+ taxes” for loans of above 20 Lakhs.

SBI STUDENT LOAN SCHEME

Loan Limit

3 Year MCLR

Spread

Effective Interest Rate

Rate Type

Up to Rs 7.5 Lacs

6.65%

2.00%

8.65%

Floating

Concession

0.50% concession in interest for girl students

Above Rs 7.5 Lacs

6.65%

2.00%

8.65%

Floating

Concession

0.50% concession in interest for girl students

0.50% concession for students availing of SBI Rinn Raksha or any other existing policy assigned in favour of our Bank

Source: SBI Bank

Indian Banks offering Education Loans for Studying Abroad: HDFC Bank

HDFC Bank has distinct education loans for Indian Education and Abroad Education. 

Features: 

    • Loan Amount: Up to INR 30 Lakhs for education in India, no upper limit for education abroad with collateral 
    • Interest Rates: 8.64%
  • Repayment time/ Tenure: Up to 14 years including the moratorium period
  • Collateral Options: 
      • Moveable – Fixed Deposit with HDFC Bank or HL with HDFC Ltd
      • Immoveable Collateral – Flat, House, Bungalow, Land (Non-Agricultural), Shop, etc.
  • Charges:
    • Pre-payment Charges: Nil
    • No Object Certificate (NOC): Nil
    • Delayed Payment Charges: @ 2 % per month of instalment ( MI/PMII)+ applicable taxes thereon  
    • Origination Fees: 1.5% + Taxes of the Sanction Amount & in Non-Refundable

Indian Banks offering Education Loans for Studying Abroad: Axis Bank

  • Loan:
    •  Minimum INR 50,000 to a value that can cover your tuition fees, hostel charges, costs of books etc. 
    • A minimum of 40 Lakhs of unsecured loan. A secured loan has no set upper limit. 
  • Interest: Look at the table below.

Loan Type

Loan Amount (Rs.)

Effective ROI( Linked to Repo Rate )

Education Loan

Up to 4 Lakhs

15.20%

Loans greater than Rs. 4 Lakhs and up to Rs. 7.5 Lakhs

14.70%

Loans greater than 7.5 Lakhs

13.70%

  • Eligibility: 
      • 18 years of age
      • Minimum 50% marks during HSC and graduation
      • Obtained admission in career-oriented courses such as Medicine, Engineering, Management, etc., either at the graduate or post-graduate level.
  • Charges: 
    • Prepayment Charges: Nil
    • Penal Interest on delayed / overdue EMI: @24% per annum i.e.@ 2% per month on the overdue instalments.

Indian Banks offering Education Loans for Studying Abroad: Punjab National Bank

  • Margin:
      • Up to INR 4 Lakhs: NIL
      • Above 4 Lakhs: 15%
  • Security:
      • For loan up to INR 7.5 Lakhs: Only Parent/ Guardian as co-borrower. No Collateral Security or third party guarantee is required.
      • For loans above INT 7.5 Lakhs: Alongside Parent/Guardian as Co-borrower, tangible collateral security is also required.
  • Repayment time: Up to 15 years including moratorium period/repayment holiday. 
  • Documentation Charge: Varies.

Documents Required to apply for Education Loan for Study Abroad

General Document Checklist

  • Fully Completed and Signed Application
  • 2 Passport-sized photos (Applicant and Co-applicant)
  • Photo ID (Applicant and Co-applicant)
  • Academic Documents of applicant/student
  • Proof of Admission
  • Residence Proof (Applicant and Co-applicant)
  • Income Proof of Co-applicant
  • Bank statements of Co-Applicant (last 6 months-12 months)
  • Collateral details

Documents in Details

Document

Applicant/Co-Applicant

Residence Proof

It could be any one of the following: 

  • Passport
  • Driving License
  • Aadhaar Card
  • Voter's ID Card

Photo ID

It could be any one of the following. 

  • Permanent Account Number (PAN)
  • Passport
  • Driving License
  • Aadhaar Card
  • Voter's ID Card

Academic Documents

This includes: 

  • Transcripts/ Certificate of class 12
  • Marksheet/Certificate of Subsequent Years of Education e.g. BE, BCom, BSc, etc.
  • Marksheet of Any Entrance Exam Taken e.g. CAT, CET, etc. (If applicable)
  • GRE/GMAT/TOEFL/IELTS, etc. Marksheets (If applicable)
  • Scholarship Documents (if applicable)

Proof of Admission

Printed admission letter (on the institute letterhead) from the university or college 

Income Proof of Co-applicant

There are 2 cases for salaried employees and self-employed co-applicants.

Case-I: Salaried Employee

  • Latest 3 Salary Slips or Salary Certificate on Employer's Letterhead
  • Last 2 year's Form 16 from Employer or Last 2 Year's Income Tax Returns
  • Any Other Income Proof That is Not Reflected in the Above Documents

Case-II: Self Employed/ Business

  • Last 2 Year's Income Tax Returns
  • Last 2 Year's Certified Financial Statements or Provisional Financial Statements Duly Certified by CA
  • Proof Of Office (any one of the following, Lease Deed, Utility Bill, Title Deed, etc.)
  • Any Other Income Proof That is Not Reflected in the Above Documents

Technical Documents

  • Title deed (all the pages to be attached)
  • Copy of approved layout plan and permissions case specific
  • Revenue document (Khata / Patta)
  • BDA ALLOTMENT -NOC AND ALLOTMENT LETTER
  • Non Encumbrance certificate
  • Possession Certificate (In case the flat is taken from a builder)
  • A latest Property tax receipt
  • Copy of Prior sale deeds
  • Conversion certificate
  • Urban clearance certificate (Case-specific)

Collateral for education Loan in India

You can get an education loan- with or without limit- with collateral. You can use the following as collateral or immovable property. 

  • Flat/ Apartment
  • House
  • Non-Agriculture Land
  • Fixed Deposits

These are the documents that you might need to keep collateral in the Bank. 

  • Property Title Deed
  • 7 / 12 extracts in case of land
  • Registered Sale Agreement Along With Society Share Certificate
  • Original Registration receipt for the above agreement
  • Allotment Letter By Municipal Corporation / Authorized Govt. Authority Like MHADA, CIDCO, etc. Please add HUDA, DDA, JDA, GIDC etc
  • Previous Chain of Sale Deed establishing title
  • Latest Maintenance bill along with Receipts issued by builder/ society,
  • Latest Property tax bill along with receipts,
  • NOC for a mortgage from society/builder,
  • Approved building plan
  • Encumbrance certificates as on date etc.

Non-Banking Financial Companies (NBFC) offering Education Loans

There are several NBFCs offering students loans in India. Some of the NDFCs are-

  • Credila
    • Part of the HDFC Bank.
    • Repayment time is 10 years. 
    • Interest Rates are floating.
  • Avanse
    • Part of the DHFL group. 
    • Processing charge: 1-2% of the loan amount. 
    • Covers tuition fees and other expenses. 
    • Interest rates are floating.
  • International Student Loan Program (ISLP)
    • Minimum loan amount USD 1,500. 
    • There is no limit on the maximum amount. 
    • This program is for students who want to study in the US. 
    • The loan can help with tuition fees and other expenses. 
    • The repayment period can be extended up to 15 years. 
  • Global Student Loan Corporation (GSLC)

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