Student loan for studying abroad: From eligibility criteria to top providers in India, here are 5 thing you must know

Pursuing higher education in a foreign country is a dream for many Indian students. It allows them to experience diverse cultures, gain global perspectives, and obtain a world-class education. However, the financial burden of tuition fees, living expenses, and other miscellaneous costs can make this dream seem unattainable. Fortunately, education loans provide a viable solution, offering much-needed financial support to aspiring students who wish to study abroad.

The Benefits of Studying Abroad with a Student Loan

Studying abroad is an enriching experience that extends far beyond the classroom walls. It exposes students to new cultures, fosters personal growth, and enhances their employment prospects in an increasingly globalised job market. However, the financial aspect can be a significant hurdle, making it challenging for many students to pursue their dreams of international education. Student loans alleviate this financial burden, allowing students to focus on their studies without worrying about the immediate costs. Students can cover various expenses by securing a loan, including tuition fees, accommodation, travel costs, and other miscellaneous expenditures, ensuring a seamless and stress-free academic journey.

Eligibility Criteria for Education Loans in India to Study Abroad

Before exploring the world of education loans, it’s crucial to understand the eligibility criteria set by lenders. While requirements may vary across institutions, some common factors include:

● Indian Citizenship: Most lenders require applicants to be Indian citizens to qualify for an education loan to study abroad.

● Admission or Acceptance Letter: Applicants must provide an admission or acceptance letter from a recognised university or institution abroad, demonstrating their intent to pursue higher education overseas.

● Age Limit: Lenders often impose age restrictions, typically 18 to 35 years. The age limit is set to ensure applicants are within a suitable age bracket for pursuing higher education.

● Minimum Academic Qualifications: Lenders often specify minimum academic qualifications, such as a certain percentage or grade point average, to assess the applicant’s academic potential.

● Co-applicant or Collateral Security: Borrowers may be required to show a co-applicant or collateral security for loans above a certain amount.

Top Education Loan Providers in India

India is home to numerous banks and non-banking financial companies (NBFCs) that offer student loans for studying abroad. Here are some of the top players in the market:

● State Bank of India (SBI)

Over the years, SBI has become popular among students seeking education loans to study abroad. They offer loans for undergraduate, master’s, and doctoral programmes in job-oriented and technical fields. SBI’s education loans cover many expenses, including tuition fees, exam or lab expenses, travel, safety deposits, and even miscellaneous costs like books, supplements, or transportation.

● HDFC Credila

HDFC Credila provides customised loan options for different study destinations, such as the USA, Canada, and Germany. They offer a streamlined application process, ensuring loan approval before the visa process begins. HDFC Credila also allows for collateral in the form of houses, flats, fixed deposits, and other assets or properties.

● Axis Bank

Axis Bank is known for its competitive interest rates and comprehensive coverage, including tuition fees, transportation, visas, books, and supplies. Notably, Axis Bank offers in-house financing to Indian students aspiring to study abroad or in India, making it a convenient choice for many.

● Punjab National Bank (PNB)

PNB’s “Udaan” scheme caters to the needs of students pursuing undergraduate, graduate, master’s, or doctoral studies abroad. PNB’s education loans cover a wide range of expenses, including tuition fees, transportation, visas, books, and supplies, ensuring that students have the necessary financial support throughout their academic journey.

● Canara Bank

Canara Bank’s education loan covers many expenses, including tuition fees, housing, equipment, and travel costs. They offer loans for job-oriented, technical, professional, or STEM graduation and post-graduation courses, catering to the diverse needs of students pursuing various fields of study.

Choosing the Education Loan

When exploring loan options, it’s crucial to consider the overall cost and affordability to ensure that the loan is manageable and does not create an undue financial burden. Here are some factors to consider when choosing an education loan for studying abroad:

● Government-owned Financial Institutions: Government-owned financial institutions, such as public sector banks, typically offer subsidised and lower interest rates than private banks, making them a more affordable option for students.

● Tax Benefits: Certain lenders may provide tax benefits or deductions on the interest paid for education loans, effectively reducing the overall cost of the loan.

● EMI Structure and Repayment Tenure: Evaluate the EMI (equated monthly instalment) structure and repayment tenure offered by different lenders. A longer repayment tenure may result in lower monthly instalments, making the loan more manageable.

● Processing Fees and Other Charges: Compare processing fees, administrative charges, and other fees across lenders to identify the most cost-effective option.

● Interest Rates: While interest rates may fluctuate, it’s essential to compare the prevailing rates offered by different lenders to make an informed decision.

Repayment and Other Considerations

Most lenders offer a moratorium period of 6 months to 1 year after course completion, during which students are not required to repay loans. This grace period allows students to focus on their studies and secure employment before the repayment begins.

After the moratorium period, students must start repaying the loan through Equated Monthly Installments (EMIs) over a specified tenure, ranging from 5 to 15 years, depending on the lender and loan amount. It’s crucial to carefully review the repayment schedule and ensure the EMIs are manageable within your projected income and financial circumstances. Furthermore, thoroughly review the terms and conditions, including any fine print or additional clauses, to ensure you fully understand your responsibilities and obligations.

Conclusion

Education loans in India provide a vital lifeline for aspiring students, enabling them to access world-class education without excessive financial strain.

By understanding the eligibility criteria, exploring top lenders, and choosing the most affordable option, students can confidently embark on their international academic journey. Remember, researching thoroughly, comparing loan options, and maintaining a good credit profile are essential to securing the best education loan. With determination and proper financial planning, the dream of studying abroad can become a reality.

(Author Gaurav Batra is CEO & Founder – Infinite Group. Views expressed are personal.)