Foreign students studying in Turkey. Image Source: IANS

Foreign students studying in Turkey.

Who doesn't like dreaming big? Studying abroad overseas might have been the motivating dream of your life. You may also be skillfully talented to achieve the same. But despite talents and dream, you find the prospect bothering because of lack of funds. It is here that education loans to study abroad pitch in with its necessary assistance.

Role of financial institutions in providing educational loans for overseas study

  • Much to the relief of aspiring students, banks & large scale financial institutions are coming up to provide monetary help to such students.
  • It is worth noting that such institutions have expanded their range and variety of educational loans.
  • Privately run overseas banks are even coming forward to grant financial assistance in forms of scholarships on counts of merit.
  • While nationalized banks impose variable rates of interests, privatized banks generally prefer fixed rates of interests on educational loans for overseas study
  • Certain Indian banks including the State Bank of India offers an option between fixed & variable rates of interest.
  • As far as the specific interest rate is concerned- it obviously varies from bank to bank. The sum and the kind of loan you have applied for also influence the interest rate.
  • For loans exceeding Rs. four lakhs banks require the guarantee of a security

Education Loans - Amount offered by banks and its use

  • The sum offered as loan & terms of repayment again vary from bank to bank
  • In general the maximum amount of education loan offered by banks is Rs.20,00,000 (20 lakhs)
  • The sum doled out as educational loan is supposed to take care of expenses on counts of tuition fee, hostel fees, examination fee, purchase of stationary, equipments, books &uniform, besides cost related to travelling.

Education Loan Eligibility & Application for Overseas Education Loans

  • In order to be eligible for loans for overseas study, you need to be the citizen/resident of India
  • Usually banks maintain an enlisted record of overseas courses, educational institutions and universities. Your admission to the course of study/college/university should tally with that of the list maintained by the bank
  • In order to apply for loans for overseas study, first and foremost step is to fill in the application forms meant for the purpose. Do not overlook its minor details
  • You need to enclose the mark sheet or pass certificate of the qualifying examinations.
  • You also need to attach proofs/testimonials validating your admission to overseas course. Besides enclosing two photographs of passport size; you also need to enclose certificate validating your age
  • If you are doing a job and qualify for the payment of income tax, you need to provide proofs for both- in forms of salary slips & income tax receipts
  • The bank in question will also ask for relevant statements as to your bank account, credit status, position of assets and associated liabilities.
  • It is important to bear in mind that bank/ or the financial institution also takes into account your or your family's ability for repayment.
  • The money provided by your family as the 'margin money' is also taken into account before sanctioning loans for overseas study

Choosing the best Education loan for Overseas Education

  • Go through the available options to see which offers the least possible rate of interest
  • It is also important to compare and contrast the benefits of your course of study with that of the money sought as loan
  • Consider the terms of payment as well.
  • See if you can defer its payment and if so the maximum time limit to which you can defer
  • Go through the possible options/ or option for delaying in case of a hardship

Repayment of education loans for overseas study

  • Repayment is evaluated in terms of 'EMIs' or- equated monthly installments
  • As far as the commencement of repayment is concerned, it starts following one year of your course completion.
  • There is another option for repayment as well. You can start repaying once you land yourself with a job- six months following your employment
  • It all depends on your luck and pluck, if you are lucky enough to get a job before the completion of the course; you can start paying before its completion. In case you don't; you have a year's time to wait for

Rates of interests of different banks on educational loans to study abroad

  • State Bank of India with its standardized benchmark usually charges 14.75% of floating interest for quantum equivalent to Rs.4.75 lakhs.
  • Punjab National & Allahabad Bank charge 1.50% & .75% on the borrowed quantum of Rs. four lakhs
  • Bank of Maharashtra imposes 12% of interest for quantum within four lakhs