All you need to know about Education Loan Transfer in India

While deciding on a loan provider, it is very important that you conduct thorough research of their terms and conditions regarding abroad education loans. 

But what if you end up borrowing an education loan from a lender whose interest rates are very high or if their education loan repayment policies are not convenient for you? If you are stuck in such a situation, there is a way out by transferring your education loan from one bank to another, known as an education loan transfer or education loan takeover.

This article aims to give you complete information about an education loan transfer/takeover and when you should consider switching your education loan lender.

Or better yet, hear all about it from Damini Mahajan, the co-founder of WeMakeScholars and the speaker for the 13th episode of Loanflix, ‘Education loan transfer: Things to know.

Education loan transfer includes an extended process of transferring debt from one bank to another. Most students prefer education loan transfer from one bank to another because of the higher interest rates, unfriendly repayment policy of the bank, etc. 

There are basically 4 types of Education Loan transfers/takeovers:

1. Secured to secured: In case of secured to secured loan transfer, wherein your existing loan is with collateral, the new loan will also have collateral security. In such case, you will not have collateral originals and hence the process will be done on xerox papers.
2. Unsecured to secured: Either due to time constraints or unavailability of mandatory collateral papers, most people consider an unsecured education loan from private banks or NBFCs. During the time of repayment, students realize their loan is very costly. With collateral security, students get a lower rate of interest in Government Banks.
3. Unsecured to unsecured: In the case of unsecured to unsecured transfer, it is more likely to take a loan from NBFCs and they prefer moving to a private bank because of the certain benefits like 80E, which will help them save tax on the interest.
4. Secured to unsecured: This is very rare as this includes giving upon lower interest rates for higher interest rates. This happens mostly when the collateral owner is willing to sell off the property and get released from the loan. 

Here’s how an education loan transfer from one bank to another works. Let’s assume that you took an abroad education loan from an NBFC because of their shorter processing time and later on you are not satisfied with their education loan repayment policy and would like to opt for a student loan refinance from a public bank.

In such a situation, you may apply for an education loan transfer from your NBFC to a nationalized bank. Here’s how it can be done.

1. Once you decide to opt for an education loan transfer, your old lender gives you a statement of the pending loan amount to be repaid.
2. This statement has to be submitted to the bank providing the student loan refinance.
3. Once the new bank receives this statement, they begin your education loan process as usual.
4. Once your loan is sanctioned, the new bank issues a cheque with which you can clear your pending dues with your former lender.

It is to be noted that when an unsecured education loan from a private lender is being transferred to a public bank, the collateral must be pledged if the loan amount that is being transferred is more than 7.5 lakhs. 

A loan applicant may opt for an education loan transfer from one bank to another only when-

Primary conditions:

• There are no more disbursements to be taken from their current lender, i.e students cannot demand any more disbursements on the remaining loan amount or borrow any money from the old lender.
• Repayment of your old loan must be started in the form of EMI and should be regular to avoid a low CIBIL score in the future.

Other terms

• As per the bank-laid norms, if your current loan is collateral-based, the new bank will take over your collateral under possession until the loan is repaid completely with interest.
• As per the bank-laid norms, if your loan is unsecured and you are transferring it to a Government Bank, you would need to arrange valuable collateral securities to get the loan against it. There will be no loan margin as the new bank will pay off the pending dues to your old bank and the loan amount on that collateral will be 100%.

The rest of the terms and conditions are similar to those of a regular abroad education loan. If you are still facing any doubt regarding your eligibility for a takeover loan, Please feel free to request our financial team for a callback, as our team has special expertise in processing huge volumes of education loan transfers. Our team will respond at the earliest.

A takeover of your education loan by another lender brings with it a lot of financial benefits. 

• Lesser interest rates: If you are switching to a government bank from a private lender, you are in for a treat! The biggest takeaway is that your education loan interest rate will be considerably lower than what would have been had you chosen to continue with your private lender.
• Eligibility for education loan subsidy under government schemes: If you qualify for an education loan interest subsidy under several government schemes, you can avail it when you switch your lender from a private one to a government lender. Watch the 13th episode of the YouTube web series, Loanflix to get a deeper understanding of these schemes.
• Longer education loan repayment tenure: Most NBFCs have limited the education loan repayment tenure to ten years. Public banks allow students to avail of a total of 15 years as repayment tenure. The other way to look at it is that the longer the repayment period, the thinner the initial EMIs.

1. Zero-Processing Fee: For the loan takeover cases, WeMakeScholars have secured approval from all the banks and NBFCs for the Zero Processing Fee. This means if you transfer your loan via WemakeScholars either there is no processing fee or it is 100% refundable.
2. Complete assistance for students abroad: In most situations, students studying abroad seek an education loan transfer in India. Applying via WeMakeScholars can help students to connect with our financial officers via WhatsApp calls or through other digital modes as well. The candidate’s parents will be allowed to carry out further documentation if in India and will receive assistance from the student's dedicated financial officer at each and every step. In case the candidate and the candidate’s parents both are abroad, the process can be done just by involving a local guardian.
3. No Pre-Payment Penalty: There will be no pre-payment penalty in any of the banks. This means even if you procure bulk payment and ought to close the loan on an immediate basis or within 6 months, there will be no charges for pre-closing the loan.
   Along with providing support for regular abroad education loans, our financial officers also help you with student loan transfers. Our team has processed close to 20,000 student loan applications in the past year. No one in the market has as much expertise as our team in the market, due to the large number of loan applications processed by us.

Our team's expertise is built on the knowledge acquired from processing huge volumes of education loan applications every year. So, if you are someone who is stuck with the wrong lender who is charging you a bomb in the name of interest, do approach our team to help you get an education loan transfer to a bank that charges a lower interest rate.

We hope this article helps you solve your doubts regarding education loan transfer. For any further assistance, feel free to contact the financial team at WeMakeScholars.