How to Get an Abroad Education Loan for Bachelors Studies?
Getting an abroad education loan for Bachelors studies has become quite a challenge for many students. The number of students who apply for an abroad education loan for Bachelors studies is less as compared to those who apply for loans to fund their postgraduate studies. Hence, the education loan schemes of a majority of lenders mostly cater to the financial requirements of students who wish to study for their Master’s courses rather than the undergraduate ones. Does this mean that one cannot get an education loan for undergraduate studies abroad? This article will tell you all about the various conditions under which lenders provide education loan for undergraduate studies and how you can save on a whole lot of time and money if you plan the whole process and then execute it.
Also, the video below will enlighten you more about how you can effectively obtain an abroad education loan for Bachelors studies. It is the 32nd episode of Loanflix, an informative web-series on abroad education loans, available on YouTube. You may check out the episode here.
Types of Lenders Who Lend an Abroad Education Loan For Undergraduate Studies
There are several episodes in the Loanflix playlist that give a detailed explanation of the two major categories of lenders who offer student loan for abroad studies, in India. When it comes to borrowing an education loan to fund your studies abroad, having a deeper knowledge of the entire process can help you in significant ways.
Abroad education loan for Bachelors studies is divided into two major categories, depending on the requirement of collateral. The two main categories of an abroad education loan for Bachelors studies are- secured loans and unsecured education loans.
Secured education loans require candidates to pledge some kind of property as collateral security against their abroad education loans. All major government banks mostly lend secured education loans to candidates who are capable of pledging collateral. Now, there are three different categories of assets that can be pledged as collateral security against a student loan for abroad studies. You can get to know all about the different kinds of assets in the 2nd episode of Loanflix.
Unsecured education loans or non-collateral education loans do not require pledging of collateral. NBFCs (Non-Banking Finance Companies) are the major providers of unsecured education loans in India. Since they are privately run organizations, their way of functioning is slightly different as compared to government banks.
Let’s take a look at the approach of both education loan providers towards abroad education loan for Bachelors studies.
Option 1: Non Collateral Abroad Education Loan For Bachelors Studies
Were you aware that a non collateral abroad education loan for Bachelors studies can be borrowed from both, government banks as well as private ones?
Government banks offer a maximum loan amount of Rs.7.5 Lakhs as unsecured education loans, while certain private banks offer up to Rs. 40 Lakhs. Given the number of education loan cases that turn into bad loans every year, private banks are more than apprehensive to lend an abroad education loan for Bachelors studies. Hence the loan amount limit has been set.
But before you jump and grab the next education loan offer from any of the private banks, take a look at the terms and conditions placed by them regarding the same.
- These banks offer unsecured education loans to fund Bachelors degree programs in certain streams only. STEM and management are the most commonly preferred streams by these banks.
- Getting an abroad education loan for undergraduate courses also depends on the world-wide ranking and the reputation of the university that you plan to attend.
- Due consideration is also given to the co-applicant’s income profile.
Now, here is one major hurdle that you may likely face while trying to apply for a non collateral education loan for Bachelors degree abroad. Before you apply for a non collateral education loan for undergraduate studies abroad, you need to keep in mind that the tuition fees charged by most top-ranked universities/colleges abroad go beyond Rs.40 Lakhs. So, even if you do manage to secure a non collateral education loan from any of the private banks, you also need to plan your finances well in order to cater for the remaining expenses. This is one of the drawbacks of availing an unsecured education loan for Bachelors studies. Now let’s take a look at another major source of non collateral education loans – NBFCs.
If you are looking for a non collateral education loan for Bachelors degree courses, then we can help you find the right one! Just request a callback today and we will get back to you at the earliest.
If you are not deemed eligible for an unsecured education loan from any of the prominent private banks in India, the next obvious option is to apply to any of the numerous NBFCs. The education loan terms and conditions of NBFCs are a bit more stringent as compared to those of government banks. Since NBFCs are heavily dependent on the financial support provided by their investors, their policies regarding education loans may seem a little less appealing to a lot of candidates. This is why very few of them promise to cater to the financial requirements of candidates who are in need of a non collateral education loan for Bachelors degree abroad.
Some of the basic factors considered by NBFCs for abroad education loans are as follows:
The Co-applicant’s income profile
If you plan on borrowing an unsecured education loan for undergraduate studies, one factor that plays a major role in deciding your eligibility is your co-applicant’s financial profile. As mentioned in the previous paragraphs, NBFCs lend unsecured education loans without asking their students to pledge anything. Hence, according to their lending policies, when they agree to lend unsecured education loans, they are taking a huge financial risk. NBFCs need some assurance from their students that the education loan will be repaid in full and within the stipulated time frame. This is why individuals who have a fixed source of income and those who are regular taxpayers are preferred by NBFCs as co-applicants for unsecured education loans.
Worldwide Ranking of The University/College & Nature of the Course
Your university/college’s global ranking plays an important role in deciding whether you get to avail unsecured education loans from NBFCs. Most of them maintain a list of universities which are well-ranked globally. If your college/university falls in this list, your chances of getting an unsecured abroad education loan for Bachelors studies, increases.
You may have observed that NBFCs mainly offer unsecured education loans for postgraduate courses. This is because postgraduate courses offer better chances of employment within shorter durations as opposed to undergrad courses. Hence, students get to start their repayment process earlier. However, many of these financial companies do provide unsecured education loans to students who wish to fund their Bachelors studies from well-ranked colleges/universities across the globe. Hence, the ranking of your stream as well as college/university is equally important in the unsecured education loan process.
Why Are Unsecured Education Loans Seldom Recommended To Fund Higher Studies Abroad?
- Certain terms such as the education loan interest rate, processing fees, etc. are way higher as compared to other lending options.
- NBFCs can only provide a maximum loan amount of Rs.50 Lakhs as unsecured education loan. The total expenses of most of the well-ranked colleges might go beyond this figure and students may need to cater for the remaining expenses on their own.
- The education loan repayment policies set by NBFCs require students to start their interest payment immediately in the month following their first disbursement of non collateral education loan for Bachelors studies. This can prove to be a burden further down the line as the duration of undergraduate courses is longer than that of post-graduation courses. Hence NBFCs always require co-applicants to have stable finances.
However, despite all of the above shortcomings, an unsecured education loan for abroad studies can be the only option of funding their higher education for some students due to a lot of reasons.
If you are looking for the right advice regarding the various non-collateral education loan options that can cater to your financial requirements of studying for Bachelors abroad, you may avail our assistance.
The financial team of WeMakeScholars has been able to help hundreds of students get their interest rates lowered by close to 2% with their expertise.
Another major option for students to borrow their education loans from are government banks. Here’s a brief description of how you can secure collateral education loan for abroad studies.
Option 2: Collateral-based Abroad Education Loan for Bachelors Studies
As described at the beginning, government banks are the major lenders of collateral education loan in India. For many of you, the thought of approaching government banks may seem scary given the pace at which they move the files is super slow and frustrating. However, the education loan schemes introduced by most government banks have some of the most student-friendly terms. Let us take a look at them.
- The maximum loan amount offered by one of the most prominent public banks in India, the SBI, is of Rs. 1.5 Cr. Other government banks also offer collateral education loan of similar amounts. So, the number one reason is the higher loan amount limit offered by government banks.
- The interest rates offered by most government and public banks is way less as compared to those levied by private banks and NBFCs. At any cost, the education loan interest rate of government banks does not go beyond 10%. Another point at which you get to benefit from collateral education loan for Bachelors courses abroad.
- The processing fees charged by government banks are fixed at Rs.10,000. They do charge additional money for your property evaluation by a valuator and for legal advice. However, these charges rarely go beyond Rs.18,000.
- Government banks offer an interest-free moratorium period. This is the biggest benefit of borrowing secured loans for undergraduate courses from prominent government banks.
- The government of India has introduced a couple of education loan interest subsidy schemes for students who belong to certain special sections of the society. Only those who borrow secured loans for undergraduate courses from government banks are deemed eligible to claim subsidy under this scheme.
For many students, borrowing an abroad education loan for Bachelors studies from government banks may seem like nothing short of a nightmare. However, if you happen to go about the entire process through the right medium, you may stand to save on your time and energy and even money!
At WeMakeScholars, our team takes every possible step to ensure that our students get the better end of any education loan scheme with the minimum amount of effort. So, request a callback today if you are facing any problems in your education loan process, or are looking for the right lender to borrow your education loans from.
Read More: Education loan interest rates – Comparison between public and private sector banks in India
Two Important Factors To Look For In An Education Loan Scheme
The 11th episode of the Loanflix web-series tells you about 7 very important factors that all candidates need to consider before deciding on a lender. Out of all the factors discussed in this blog, two are extremely crucial to the process of getting an abroad education loan for Bachelors courses.
The Loan Tenure
The loan tenure offered by any education loan scheme plays a very important part in deciding it’s flexibility.
Most government banks offer a 15-year loan tenure for education loans whereas, NBFCs grant a 10-year loan tenure.
The reason why you should pay close attention to the education loan repayment tenure granted by the lender is that most Bachelors courses abroad are at least three to four years long. So if your bank grants a 10-year loan tenure, your course duration takes up a significant portion of the tenure. Hence, you are only left with 6 years out of the total 10 years of your loan tenure. This is why it is extremely important to know the total loan tenure provided by your chosen lender before proceeding with the process for obtaining an abroad education loan for Bachelors studies.
The Maximum Loan Amount offered by your lender
Since the course duration of undergraduate studies abroad is relatively longer than that of postgraduate ones, the fee requirement will be higher. Hence, before agreeing to the terms and conditions of the abroad education loan for Bachelors studies offered by your lender, it is important that you learn whether the loan amount offered by them will cover all your expenses abroad.
The process of borrowing an education loan for undergraduate studies may seem like a long and tedious process. However, this need not be the case if you apply through the right medium. The financial team at WeMakeScholars always tries to provide you with the best of any education loan scheme; be it secured or unsecured. Once your application has been received by our team, you can rest be assured that your loan sanction will be done at any cost, within the stipulated timeline. So, if you are planning to fund your higher education abroad with the help of an education loan, do request a callback and let our team assist you in the process. Stay tuned for the next article which will tell you all about how you can secure education loans for pathway and foundation programs.
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