Courses which do not fall in the list of traditional courses like STEM and management are labelled as unconventional courses. Courses belonging to the categories of Food and Tourism, Travel and Hospitality, Arts and Humanities, etc. are termed as unconventional courses by most of the Indian lenders. This article aims to give you an insight into how you can fund your higher studies if you have chosen to pursue any of the unconventional courses mentioned above.
Types of Education Loans In India For Unconventional Courses
Education loan for abroad studies in India is available under two different categories. These categories have been decided on the basis of the need of collateral security. Education loans which are lent on the basis of collateral security are called secured education loans and the ones which do not need any collateral security are called unsecured education loans.
Secured education loans in India for study abroad is mainly provided by major government banks like the SBI, Bank of Baroda, PNB, etc. Government banks are the first choice of most students and their parents for an education loan for unconventional courses due to their reputation of being government-run organizations. However, not all of the students are aware of the particulars of secured education loans from government banks.
Unsecured education loans are basically education loans without collateral. These loans are lent by privately run financial organizations called NBFCs (Non Banking Finance Companies) as well as a few private banks. Unsecured education loans of up to a certain amount are available to students who need an education loan for certain unconventional courses. The terms and conditions set by NBFCs and private banks for unsecured education loans are discussed in further paragraphs.
Secured Education Loan For Unconventional Courses Abroad
A lot of students who require an abroad education loan, often turn to some of the prominent government banks which are considered to be the best bank for education loan in India. Secured education loans are provided by government banks on the basis of collateral security. Immovable property and liquid security are the two categories of assets that can be pledged as collateral against an education loan borrowed from government banks.
One of the benefits of borrowing a government bank education loan is having the flexibility of naming a third party (someone other than the loan applicant’s immediate family members such as friends, cousins, etc.) as co-applicants in case if there are no individuals in their immediate family who have a stable income source or the relevant financial documents.
A lot of students often hesitate to proceed with their abroad education loan process with government banks because they do not possess collateral whose fair market value can cover the total education loan amount.
Again, the flexible policies adopted by government banks regarding education loan for abroad studies makes it possible for candidates to borrow an education loan for unconventional courses, even under such circumstances. It is possible for students to pledge a third-party’s assets as collateral security against their education loan.
Another concern which bothers a lot of loan applicants is the long processing time taken by government banks. Even the ones considered to be the best lenders have this issue. This is where the assistance and expertise of the WeMakeScholars team come in handy. The knowledge and expertise of our financial team have helped a lot of students in getting their education loan in India to study abroad within a stipulated time period without them having to face a lot of obstacles in the process.
When you apply for an education loan through WeMakeScholars, you get to experience a flawless education loan process with some of the most prominent government banks in India. Education loans are sanctioned within 15-18 days of applying with each of these banks. So, do get in touch with our team today in order to avail assistance regarding your secured education loan process.
Education Loan Without Collateral For Unconventional Courses
There are three major institutions which provide an education loan in India without collateral for study abroad. These are;
- NBFCs (Non-Banking Finance Companies)
- Private banks
- Nationalised banks/government banks
NBFCs and private banks are the primary lenders of education loans without collateral in India. NBFCs provide unsecured education loans on the basis of several factors of a candidate’s profile.
Let us take an example of hotel management courses. For the students who need an education loan to study in the USA, a maximum of INR 50 Lakhs are provided as education loans, for Germany, the maximum unsecured education loan amount provided by NBFCs is INR 20 Lakhs and INR 25 - 35 Lakhs is the maximum amount available as education loan for a Masters course in Hotel Management in Canada. Similarly, a higher amount can be borrowed as education loans for hotel management courses in countries such as Australia, New Zealand, Ireland, etc can be availed when candidates apply to NBFCs for unsecured education loans through WeMakeScholars.
Due to the absence of collateral, the interest rates charged by most NBFCs for an education loan without collateral is higher than what is charged by government banks for a secured education loan for unconventional courses. These interest rates vary between 11.9% to 14.5%. The processing fees charged by them depends on certain aspects of your academic profile and those of your co-applicant’s financial profile. NBFCs charge a processing fee that varies between 0.9% to 2% of the total education loan amount.
Government banks offer up to INR 7.5 Lakhs as unsecured education loan for unconventional courses. The terms and conditions applicable to secured education loans are also applicable to unsecured education loans taken from government banks.
Government Bank Education Loan Terms & Conditions
If you ask any education loan expert their opinion about funding a hotel management course with the help of an abroad education loan, they would recommend you to first consider approaching all the prominent government banks for secured education loans.
Maximum & Minimum Education Loan Requirements For Unconventional Courses
Let us understand how this works for a course in a field like a hotel management. Borrowers who need an education loan for a Bachelor’s in Hotel Management can avail one from all government banks, provided that they possess collateral security of sufficient value. On average, the tuition fee charged by institutions for a typical undergraduate level course in Hotel Management is approximately INR 6 Lakhs a year. That, combined with other costs, would bring the funding requirement to an approximate figure of INR 8 Lakhs a year. A Bachelor's degree in Hotel Management being a 3 years long course, the total loan requirement would come to INR 24 Lakhs. This is an estimated figure. There could be variations in the actual amount.
Similarly, pursuing a postgraduate degree in any of the unconventional courses from reputed universities abroad would cost close to INR 10 - 15 Lakhs per year. This will increase the education loan requirement to more than INR 30 Lakhs for the entire duration of the course. In order to be able to borrow education loans of such amounts, it is important to possess collateral of suitable value. Depending on that, candidates get to borrow a maximum of INR 1 Cr and a minimum amount of INR 20 Lakhs as government bank education loans to study for any of the unconventional courses.
So what makes secured education loans one of the best options to fund your higher studies abroad? If you plan on funding your unconventional course with the help of a government bank education loan, here are a few terms and conditions which you must be aware of.
For example, the interest rates charged by government banks for an education loan for Masters in Hotel Management does not exceed 10%. This is one of the lowest figures charged by any financial institution for abroad education loans.
Government banks have a fixed processing fee of INR 10,000 for abroad education loans. This is way lower than what NBFCs and private banks charge.
All government banks offer a loan repayment tenure of 15 years for study abroad education loans in India. This does not include the candidate’s course period.
Candidates are not expected to begin their education loan repayment for their entire course period, plus six months post that. The interest for this period is calculated on the basis of simple interest and can be paid once the moratorium period (loan holiday) ends.
There are many more benefits of borrowing a government bank education loan for studying unconventional courses abroad. These benefits will be explained well when you avail our assistance in the entire process, thus making it a hassle-free affair.
When To Apply For An Abroad education loan for an Unconventional Course Abroad?
Most of the episodes featured in the Loanflix web-series give ample information about the typical education loan application procedure. The financial team of WeMakeScholars recommends all its students to apply for an education loan at least 1.5 months before they need funds to fulfil all the preconditions for a Bachelors degree in any of the unconventional courses abroad.
All secured loan applications which are submitted by the WeMakeScholars team to government banks do not take more than 18-20 days to be processed. Unsecured education loans from NBFCs are processed within a week’s time due to the lesser amount of paperwork involved in the process.
If you have directly applied for an education loan to study any of the unconventional courses, then you may expect your government bank education loan to be sanctioned way later, i.e. within 1 month or so. Hence, the clever thing to do in such scenarios would be to apply through WeMakeScholars.
How To Apply For An Abroad Education Loan in India?
With the rising wave of digitization, a lot of government banks have now made it easier for loan applicants to get an education loan online. All government banks have separate digital platforms through which students can easily apply for secured education loans. For example, getting an education loan from SBI, one of the biggest lenders of education loans in India, has become easier with the help of the SBI Digital team. Similarly, applying for unsecured education loans is also a quick and simple process. For any further guidance regarding the application procedure of education loans, do watch all the previous episodes of the Loanflix web-series.
Education Loan Repayment Procedure
The loan repayment procedure of a typical secured education loan in India is more or less similar. Most of them grant a repayment tenure of 15 years to all the loan applicants. In addition to it, students get to avail a payment-free moratorium period. The total repayment period granted by government banks does not include the moratorium period. NBFCs, on the other hand, grant a maximum of 10 years to all loan applicants. This time period includes the course duration. The 29th episode of Loanflix covers this topic in detail, so make sure that you watch the episode before beginning your education loan process.
An education loan process may seem very overwhelming if you do not possess the right kind of information. The financial officers of WeMakeScholars strive their level best to provide the students with some of the best schemes offered by government banks, NBFCs, as well as private banks in India. Do request a callback if you are seeking an education loan to pursue any of the unconventional courses abroad, without a lot of hurdles.
Note: WeMakeScholars is an organization funded and supported by the Government of India that focuses on International Education finance. We are associated with 10+ public/Pvt banks/ NBFCs in India and help you get the best abroad education loan matching your profile. As this initiative is under the Digital India campaign, it’s at free of cost. The organization has vast experience dealing with students going to various abroad education destinations like the US, Canada, UK, Australia, Germany, Sweden, Italy, China, France among others