UK harbours some of the finest universities of the world offering courses like engineering, science, art and design, business and management, law and finance.Most of the Indian students now prefer to pursue their higher education from the top abroad colleges in order to avail the best of the educational opportunities and exposure. But due to the exorbitant fees of colleges, overseas, it becomes difficult and unaffordable for the students to pursue their higher education in such colleges.
In such a case, students resort to education loans for financial aid. Many banks (public and private) like SBI, Axis Bank etc. and NBFCs like Avanse, Incred etc. offer various education loan schemes for abroad.
Applying for a student loan in UK in 3 simple steps:
1. Application for education loan: You can apply to any of the banks and NBFCs considering your requirements (loan amount, secured or unsecured loan, etc) by filling out a detailed application form and supporting it with the validated KYC documents, admission letter and collateral which is required in the case of an education loan for studying in colleges of UK.
You can easily access the document checklist by visiting this page-www.credenc.com. You can even apply online for an education loan which is comparatively a fast and time-saving process.
2. Bank/NBFCs review your application: After all the documents have been submitted, the bank reviews the borrower’s application, his/her co-applicant’s credit history, value and verification of collateral and his/her background (academic and financial). Based on this data, the bank then decides whether to approve or reject their case. In situations where parents have a negative credit history, banks insist on having joint borrowers with clear credit history. In case, the loan is approved, the bank will decide the interest rate which is negotiable depending on the college and the course selected.
For the tier 1 and tier 2 colleges, the loan interest rate offered by banks is lower than the interest rate offered for the rest of the colleges. The interest rate offered by banks and NBFCs also greatly varies. Interest rate of private banks and NBFCs (11-14%) is always slightly higher than the public banks (9.2-11.75 %).
3. Disbursal of the loan:Following steps are followed to disburse the education loan for studying in the UK-
The borrower shares the admission letter and fee details provided by the college with the bank.
The bank verifies the information and calculates the amount required at the time of admission and throughout the course.
Now, the borrower has to share the detailed money requirement with the bank and then the bank will disburse the amount to your account or will directly disburse it to the connected college/institute after all the formalities and negotiations.
Some banks and NBFCs may also charge remittance (currency conversion charges). Thus, it is better to check with the bank earlier.
Some NBFCs like Avanse, Incred cover full tuition fees without leaving any margin money. Whereas, public and private banks leave a margin money of 15-20% which has to be funded by the borrower himself.
Although the loan approval letter from a nationalized or private bank can be presented to the Embassy or High Commission for visa application purpose as a proof/source of funding, loan approval letters from NBFCs like Avanse or Credila will not be recognized for visa purposes. In that case, it’s better to take the whole amount of loan at one go and keep that money in your bank account. It’s important to apply for the visa in case the student has to study for more than 6 months under tier 4 of the point based system.
For further information on the education loan process for studying in India and abroad, you can visit the page of credence (www.credenc.com), a fin-tech company which works to facilitate your loan journey by providing end to end service. It offers a single application form for applying across multiple banks and helps you get the best deal possible free of any service charge.