Are you too looking for funds to fulfill your childhood dream of being a Doctor? We all have once said in our childhood that we wanted to be doctors when we grew up, but it is now that we realize that pursuing an MBBS course is not a cheap affair, let alone the difficulty level of obtaining a medical seat in some of the prestigious medical colleges abroad.
An education loan is the primary funding choice of a lot of students from India who wish to study abroad. Keeping in mind the total duration of a typical MBBS course and the expenses involved, the best way of funding the course is an education loan for MBBS.
Why don’t NBFCs grant unsecured education loan for MBBS courses?
Private lenders like private banks and NBFCs generally do not fund courses that take a longer duration for students to complete as these lenders want returns on their investment as soon as possible.
This is also why NBFCs, in particular, hesitate to approve education loans for UG courses abroad that usually take 4 years to complete. Now Ph.D. and MBBS courses may take anywhere between 5-7 years to complete and during the course duration, as per RBI norms, these lenders can not start EMIs and so they do not approve unsecured education loans for MBBS.
Another major reason is that MBBS courses, in general, are very expensive in countries like the USA, Canada, etc. so students prefer countries like China and Ukraine for MBBS which is comparatively very cost-effective, but these countries are not on the list of countries for which private lenders fund education loan for. This leaves most of the candidates with one choice to fund their MBBS course abroad - Secured education loans from government banks.
Now, Government banks have no issue with the course you choose or the country you opted to study in. They pretty much fund all courses and countries with a reputable education system.
Secured education loan details
Secured education loans are granted on the basis of collateral security. In India, a huge percentage of students tend to opt for a collateral education loan for abroad studies, as these are granted by government banks such as SBI, Bank of Baroda, PNB, etc. Government banks also offer some of the most competitive offers on their education loan schemes for overseas studies.
In order to be eligible to borrow a secured education loan for abroad studies in India, students must possess the required collateral security.
Types of collateral security required for secured education loans
Collateral security can be of two different types; tangible and intangible.
Tangible collateral security refers to immovable properties which fulfill most of the requirements set down by the lending institution. Intangible assets are liquid assets such as fixed deposits, government bonds, etc. Here is a detailed list of the different categories of collateral that are accepted by government banks for an education loan for MBBS.
- Immovable Property: An immovable property is one of the most frequently pledged categories of assets as collateral against an abroad education loan for MBBS. This category involves assets like a house, a residential flat, a plot with defined boundaries, an independent house, a non-agricultural land, etc. The value of the property should be equivalent to or exceed the total education loan amount required by candidates.
- Liquid Security: Assets such as Fixed Deposits, government bonds, life insurance policies (term insurance) from government-approved lenders, etc. are accepted as collateral security for education loans.
- Third-Party’s Assets: In case a candidate does not possess any of the above assets or if their values do not cover the required education loan amount, then they can pledge a third party’s assets as collateral security. This third party essentially refers to individuals who are not part of the candidate’s immediate family. For e.g., uncle, aunt, friends of the candidate or the primary co-applicant, etc.
Also Read: Types of Collateral for SBI Education Loan
Government education loan for MBBS interest rate
The abroad education loan interest rate in India is determined by lenders on the basis of something called the MCLR, or Marginal Cost of Funds-Based Lending Rate. This figure is often considered to be the benchmark on the basis of which most Indian lenders of education loans calculate the abroad education loan interest rates. MCLR is calculated by taking into account various factors such as the tenure premium, the marginal cost of funds, the operating cost, etc.
Although MCLR is the basis of all the overseas education loan for MBBS, most government bank education loan interest rates are calculated as MCLR plus spread. This spread refers to a premium amount levied by banks, in addition to the basic MCLR value.
The abroad education loan interest rate of government banks varies between 7.65% and 9%. Since they grant education loans on the basis of collateral security, the final education loan amount sanctioned by government banks could go up to INR 1.5 Cr.
Education loan for MBBS: Eligibility criteria
If you are someone seeking an education loan for MBBS, it is very important to take note of one thing. Unsecured education loans are not granted to students who need financial assistance to pursue an MBBS course abroad. In this case, government banks offering secured overseas education loans are the only source of an education loan for MBBS. However, a government bank education loan comes with its own set of terms and conditions.
- The student’s academic profile has to reflect excellent performance throughout their academic career. This means that students having backlogs in their academic profile will not be deemed eligible for an education loan for abroad studies from government banks in India.
- The value of the collateral being pledged as security for an education loan should be higher than their actual education loan requirements.
- For students who need an education loan for abroad to fund their MBBS courses in countries like China and Ukraine, there are special rules and regulations. For eg., the SBI education loan which is considered to be the best bank for education loans in India requires students to take a country deviation to be able to fund their MBBS courses in such countries.
Chances of success in getting an abroad education loan for MBBS courses
Lenders always go through the profiles of students who have requested an abroad education loan for MBBS courses and make a decision according to the rate of success of a particular course or university/college. For example, the success ratio of applicants who have applied to MBBS programs in the USA is almost 100% because the USA is one of the most preferred countries for higher education by Indian students and most lenders consider universities based in the USA to be reliable.
The same success rate cannot be guaranteed for MBBS courses in countries like China and Ukraine. This is because most universities located in these countries are not present on the list of many government banks in India. It also depends on whether the student meets the criteria mentioned in the education loan details of most of such government banks.
If you are stuck in such a situation and are tired of approaching lenders for the same, do request a callback with our team. If your profile meets all the criteria of the particular lender, our team will ensure that you get your education loan application approved.
How to apply for student loans
Most of the episodes of the Loanflix web series tell you all about the abroad education loan process. If you are looking for an explanation regarding the education loan process for different countries, the WeMakeScholars team has developed a series of Loanflix episodes that give you the complete details of the education loan process specific to certain countries.
All in all, it may be concluded that getting an abroad education loan for MBBS courses may seem like a long and never-ending process. However, collecting sufficient knowledge about the entire process significantly helps in making the whole procedure an easy one.
At WeMakeScholars, we have a team of financial officers who are dedicated to ensuring that our students get to avail their abroad education loans without any hassles. In order to apply for an abroad education loan for MBBS course abroad, request a callback today.