All you need to know about Education Loan Transfer in India

While deciding on a loan provider, you must thoroughly research their terms and conditions regarding education loans abroad. 

But what if you end up borrowing an education loan from a lender whose interest rates are very high or whose education loan repayment policies are not convenient for you? If you are stuck in such a situation, don't worry because there is a way out. You can transfer your education loan from one bank to another, this process is known as an education loan transfer or education loan takeover.

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

• You can transfer an unsecured education loan from a private lender to a public lender without pledging collateral.
• You can now transfer your education loan even while pursuing your course.
• You can now transfer your pending education loan even if you have any more disbursements to be taken.

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... 

Reasons for Education Loan Transfers

1. Higher Interest Rates:  The current lender has increased the interest rate significantly.
2. Inconvenient repayment policies: Your current lender's inconvenient repayment policies, including huge EMIs resulting from a hike in interest rates, relatively short tenures, and less flexible policies.

When to transfer an education loan?

• Transferring your education loan within the first six months of taking an initial disbursement is not advisable.
• Most private banks and NBFCs charge a pre-payment penalty if you close your loan with them within the first six months.
• But after six months, none of the banks have any problem with your education loan transfer.

There are 4 types of Education Loan transfers/takeovers:

1. Transferring a loan from secured to secured type of loan: In the case of 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. Transferring a loan from unsecured to secured type of loan: Due to time limitations or the lack of required collateral documents, many students opt for unsecured education loans from private banks or NBFCs. However, during repayment, they often realize the loan is expensive. Providing collateral allows students to secure a lower interest rate from government banks.
3. Loan transfer from unsecured to unsecured type of loan: 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. Loan transfer from secured to unsecured type of loan: This is very rare, as it involves exchanging lower interest rates for higher interest rates. It happens mostly when the collateral owner is willing to sell the property and be 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.

Note: You can use the Loan takeover calculator for a detailed understanding of your case. 

Primary conditions:

• The minimum loan balance required to transfer an education loan from one bank to another is 10 lakh rupees. Banks won't prefer to take up your case if it's anything less than that.
• Earlier, students could transfer their education loan only after the completion of their studies. This means that transferring an education loan was not possible if there were any more disbursements to be taken.
• But now, most of the banks do not require you to complete studies to transfer an education loan. This means you can take your 1st-semester fees from one bank and further disbursements from the new bank.
• Depending on the lender, your moratorium period will continue as usual after an education loan transfer. This means your repayment doesn’t immediately start after the transfer.

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.
• Before, you had to pledge collateral to transfer an unsecured education loan from private lenders to a public lender.
• Since SBI launched an unsecured education loan product, you can transfer your existing non-collateral education loan of up to 50 lakhs from a private lender to SBI without any collateral, depending on your university. 

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.

Note: To know whether your university is eligible for an unsecured education loan takeover by SBI, or how much you will be saving on the interest rate by doing so, talk to our dedicated education loan takeover team by requesting a callback.

1. Completely filled-in Loan Application Form
2. 2 passport-size photographs
3. PAN Card of the student and Parent/ Guardian / other co-borrower
4. Aadhaar Card of the student and Parent/ Guardian/ other co-borrower
5. Proof of Identity (Driving Licence/Passport/Aadhaar/ any other acceptable photo identity as per KYC norms)
6. Proof of Residence (Driving Licence/Passport/Electricity bill/Telephone bill)
7. bank account statement of the Student/Co-borrower/Guarantor, for the last 6 months
8. IT return/ IT assessment order, pertaining to previous 2 years, of Parent/ Guardian/ other co-borrower (if IT Payee)
9. Brief statement of assets & liabilities of Parent/ Guardian/ other co-borrower
10. Proof of Income (i.e. salary slips/ Form 16) of Parent/ Guardian/ other co-borrower

Student

• Photo ID proof
• Proof of residence
• Passport sized photograph
• Proof of admission
• Fee structure document
• Salary slips of experienced candidates
• Visa copy
• Academic documents

Co-applicant

• Photo ID proof
• Proof of residence
• Passport sized photograph
• Income-related documents

Collateral documents

• Property documents
• FD documents

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.
• Loan margin: There will be no loan margin in the education loan transfers, which means the new bank will sanction the full pending amount.
• Higher sanction limit: During an education loan transfer, you can also request a higher sanction limit to the new bank with a proper reason or justification.
• No need for collateral: Earlier, if you had to transfer your unsecured education loan from a private lender to a public lender, you had to pledge collateral. But now you can transfer your loan of up to 50 lakhs from a private lender to a public bank without any collateral depending on your university. 

1. Zero-Processing Fee: For the loan takeover cases, WeMakeScholars has secured approval from all the banks and NBFCs for the Zero Processing Fee. This means if you transfer your loan via WemakeScholars, there is no processing fee and even if there is, it will be less than five to ten thousand rupees.
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 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 every step. In cases where the candidate and the candidate’s parents are both abroad, the process can be done by involving a local guardian.
3. Interest rate Negotiation: You already know that you can get a lower interest rate by transferring your education loan to a different bank. Now, if you go through WeMakeScholars for your education loan takeover, our financial team can negotiate to further reduce the interest rate by 0.5% to 1%, this means you can obtain a lower interest rate.  
   Along with providing support for regular overseas 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 transferred to a bank that charges a lower interest rate.

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