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Abroad Education Loan process might seem complicated for a freshman and terms used by the bank officials will only worsen this problem. To help students with this matter, WeMakeScholars team has launched a YouTube web series "Loanflix- Education loan Simplified" where we answer all the questions regarding abroad education loan process for Indian students. In the very first episode of Loanflix, we will be discussing hacks you could use to manage your expenses while studying abroad.
What is an Abroad Education Loan?
Education Loan is a type of loan that covers tuition fee, living expenses, travel charges, insurance, and textbooks and other related necessities. Typically this is the kind of loan taken by the students for their MS Education or any other abroad education.
Types of Abroad Education Loan
There are two types of foreign education loan:
A) Collateral or Secured student loan for abroad:
The student needs to place an eligible property, mortgage or other financial assets and take the loan against it. There are two types of assets that can be placed as collateral and they are:
- Immovable property: Flat, house, and non-agricultural land.
- Liquid Security: Fixed Deposits (FDs), Life Insurance Policy (LICs), and Government Bonds.
The Collateral loans are offered to abroad education Indian students by the National Banks like SBI, Bank of Baroda, PNB and many more.
B) Non-Collateral or Unsecured student loan for abroad :
- For this type of study loan for abroad, students do not need collateral. But, other factors like academic performance and the overseas university/country going to, matters. Co-applicant's financial position and their relationship to the student are also critical.
- Education loan for abroad studies without collateral are provided by the Non-Banking Financial Company commonly referred to as NBFCs. Some of the widely known NBFCs are HDFC Credila, Avanse etc.
Who is a Co-applicant?
The Co-Applicant who is also sometimes referred to as Co-signer or Co-borrower, is someone who can pay your study loan for abroad in case you couldn't. The Co-applicant can be either your parents, parents-in-law, sibling, or spouse.
Abroad Education Loan application process- Terms to know
- Moratorium period: If you go with a foreign education loan with collateral, then there is a period during which you need not pay anything to the bank. It is a grace period which is usually the duration of your Abroad Education course plus 6 to 12 months. Also, only the simple interest is calculated to your study loan for abroad. This feature is unique to Collateral Education loans.
- Processing fee: This is the fee all the banks take to process your abroad education loan application. There are several offers which come up from time to time like a full refund or partial processing fee waiver when you choose WeMakeScholars' education loan Services.
- Loan Insurance: Education Loan Insurance is referred to when an Insurance company has to pay the remainder of the loan in case of applicant's death, permanent disability or serious medical conditions.
Advantages of Abroad Education Loan
There is the misconception that education loans are more difficult to get than other loans like personal or home loans. But, this is just a misconception. There are several advantages to taking an education loan to fund your abroad studies like the following:
- Moratorium Period is only available for Education loan.
- Repayment Tenure is much longer for Education loan with time to repay the loan can extend to 12 to 15 years.
- Applicant and Co-Applicant will receive tax benefits in the form of tax exemption under section 80E of the Income tax act of 1961.
- The interest rate for an education loan is usually much lower than a personal loan.
If you have any other questions regarding an abroad education loan or any other related topic for that matter, feel free to request a call from WeMakeScholars support team to clarify those doubts. Our digital team is also very active online and would love to answer your comments on this topic and any issue specific to your student loan for study abroad. So, feel free to comment at the end of this article or on our YouTube page.
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.