image

Education Loans
For Abroad Studies



Why to go for education loans for studing abroad?

Education loans are offered by the government or private money lending sources to students to finance education-related expenses. The expense of pursuing higher education in a foreign country could be colossal, making education loan a viable option for students who plan to pursue their education in foreign countries. Apart from providing financial assistance that helps to bridge the gap between the funds available and the required amount, education loans have a plethora of benefits:

  • Education loans are easily available for various courses at low-interest rates.
  • They cover almost all the expenses necessary to complete the course which includes tuition fees, hostel fees, books and equipment, travel expenses(for international flights) and other expenses.
  • Students get ample time to repay the loan, banks give moratorium period ranging from 6 months to 1 year to find a job which means he doesn't have to start repaying the loan just after he completes his studies.
  • Banks provide 3 repayment options where students can either start paying the simple interest or partial simple interest during the course or the payment starts after the moratorium period in which theCompound Interest is charged on the sum of Principal amount and Simple Interest
  • According to Section 80E of Income Tax Act of India, 1961, the interest amount paid on the education loan by the borrower can be claimed as a deduction which is an efficient way to save money on tax. However, the principal part does not qualify for any tax benefit.

Types of Education Loans

There are predominantly two types of education loans, secured (with collateral) and unsecured (without collateral). The chief difference between these education loans are the assets involved:

In a secured loan, lenders keep their immovable property or liquid assets as a guarantee against the loan. As the loan is given against the borrower’s assets; therefore it has low-interest rates and flexible repayment terms. Whereas, in an unsecured loan collateral is not required making the interest rates relatively high.


How to get an Education Loan in 3 simple steps?

Application for education loan:
The borrower can apply to banks or NBFCs depending on the requirement (loan amount, secured or unsecured loan, etc) by filling out a detailed application form and supporting the application form with the essential documents. Students can even apply online for an education loan.

Bank/NBFCs review the application:
After all the documents have been submitted, the bank reviews the borrower’s application, their co-applicant’s credit history, value and verification of collateral (in case of a securedloan) and their background (academic and financial). Based on this data, the bank will decide whether to approve or reject their case. In case, the loan is approved, the bank will decide the interest rate which is negotiable.

Disbursal of the loan:
After all the formalities and negotiations, the bank disburses the tuition and hostel fees either to the college/institute or in student’s account in some cases while loan amount for other education-related expenses is directly transferred to the borrower’s account.

A borrower can choose from various public, private banks or NBFCs to apply for an education loan. The processing of education loan and disbursement usually takes between 20-30 days, whereas Credenc helps in availing the loan in the record time of 7-8 days.


Disbursement of Loan

A borrower can either get the disbursement in his account or it is directly disbursed to the college/institute. Following steps are followed to disburse the education loan for studying abroad:

  • 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 their account or will directly disburse it to the connected college/institute.
  • Some banks and NBFCs may also charge remittance (currency conversion charges). Thus, it is better to check with the bank earlier.

Repayment of Laon

MORATORIUM PERIOD: It is the time period given by a bank to the borrower to find a job which means he doesn't have to start repaying the loan just after he completes his studies. It is like an EMI holiday usually ranging from 6 months to 1 year. There is one more type of moratorium period, called PRINCIPAL MORATORIUM in which the borrower is exempted from paying the principal amount, till the time holiday period ends or as soon as the person gets a job (whichever is earlier), but he has to pay the Simple Interest or a portion of it.

The repayment starts after the moratorium period or as soon as the person gets a job (whichever is earlier). But, the interest is charged even during the study period and the moratorium period. The interest charged during the study and moratorium period is Simple Interest whereas, after the moratorium period, the interest charged is Compound Interest. There are usually 3 modes of repayment

  • SIMPLE INTEREST: Here, the borrower keeps on paying the Simple Interest during his study period. The benefit of this mode is that the Simple Interest doesn’t keep on adding to the Principal amount and thus, the EMI is only the sum of Principal amount and Compound Interest.
  • PARTIAL SIMPLE INTEREST: In this mode, the borrower pays only a part of the Simple Interest and rest of the Simple Interest keeps adding to the Principal amount and after the moratorium period, the Compound Interest is charged on the Principal amount as well as the remaining Simple Interest.
  • EMI: This is the case when the borrower doesn’t pay any amount till the end of the moratorium period. Hence, the Compound Interest is charged on the sum of Principal amount and Simple Interest.

For some banks and NBFCs, there can be one more type of mode of repayment, known as Direct EMI. This is when the student has to start paying his/her EMI since the beginning of his/her course.


Documents Required


BORROWER CO-BORROWER
KYC
  • Aadhar card
  • Two passport-size photographs
  • Aadhar card and PAN card
  • Residence proof
EDUCATION
  • Admit letter
  • Cost of study statement
  • X and XII Mark sheet
  • Exam score card (GRE, GMAT, IELTS, etc)
INCOME
  • PAN Card
  • 6 months bank account statement

    SALARIED CO-APPLICANT
  • 6 months Salary A/C statement
  • ITR of last two years/Form 16
  • Income proof (Salary slip)
  • Company ID/Offer Letter

    SELF EMPLOYED CO-APPLICANT
  • Last 2 ITRs
  • Savings A/C Statement (Last 6 months)
  • Current A/C Statement (Last 6 months)

SECURITY
  • Brief statement of assets and liabilities (in case of secured loan)

Eligibility Criteria

  • The applicant should be Indian.
  • Students who are seeking admissions for master studies should have a graduate degree of 3 years duration in any stream. Successful completion of several Indian master’s degrees like M.A. and M.Sc. are also accepted for postgraduate admissions. He/She should have a valid score card as well (GRE, GMAT, TOEFL,IELTS etc).
  • As per the RBI guidelines, there is no upper limit on the age of applicant, but some banks may have it. Thus, the applicant must be in the age bracket of 16-35 years.

Why get an education loan through Credenc?

  • Apply at one place and get superfast approvals. Single application form for multiple banks.
  • Choose from multiple banks. Credenc provides a Single window platform i.e., the borrower can compare and choose from different banks and NFBCs to apply from.
  • Hassle-free process. Get a loan without going to the bank; the entire process is made online to make sure the process of getting a loan is fast and trouble free.
  • Low interest rate. Credenc negotiates with banks to ensure the lowest possible interest rates and quick approvals
  • Minimum marginal cost. Up to 100% loan amount covered.
  • No service charges. It’s FREE!