Education quality and experience in foreign universities vary greatly from destination to destination. Majority of the students apply for abroad studies every year in pursuit of high-quality education, globally recognized degrees and higher paid employment. Estimated finance to be spent on abroad education for a post-graduate degree is approximately 35-45 lakhs, for post-graduate diploma it is around 15-20 lakhs and when it comes to an undergraduate degree it may be 75 lakhs or above. Not all families can cater to these financial requirements of overseas education. In such a tight situation, parents do recognize the need for a helping hand to fulfill their child’s dream. As such, many financial institutions offer education loan to students to help them achieve their academic ambitions. Here are some of the things that you must consider before applying for an overseas education loan.
- Types of Overseas Education Loan
Banks provide 100% funding to the eligible students. An education loan that involves mortgaging of personal property for disbursal is called ‘secured loan’ in banking terminology. A secured loan is provided by Nationalised and Private banks as well as by NBFCs. It is easier for banks to sanction loans because of the promises involved but it also consumes 20-30 days for a complete procedure to happen. Out the two kinds of overseas education loan, another type is an unsecured education loan which is comparatively faster to get without waging personal properties.
- Rate of Interest
Both secured and unsecured education loan under certain guidelines such as rate of interest, credit card score, account balance and academic history. The rate of interest is the percentage of amount that is applicable to the principal loan borrowed by the individual. Nationalized banks offer lower interest rates on education loan that is about 10-11%. Private banks levy 11-13 % rate of interest whereas NBFCs charge 13-15%. A low rate of interest implies that the individual is exempted from bigger repayment all at once. Consider, a student has applied for 34 lakhs of education loan at an interest rate of 10% for a tenure of 7 years. The EMI that the individual would be paying is 56,444 rupees per month.
- Marginal cost
PSBs like Bank of Baroda, Bank of Maharashtra, Central Bank of India, etc. has a margin of 10-20% which means 10% of the approved loan will be borne by the borrower itself while 90% is taken care off by the bank. Private banks and NBFCs cover 100% expense.
- Processing Fee
The amount paid by the loan borrower for the processing differs from bank to bank. It is 10,000 plus GST in case of nationalised bank like Bank of Baroda, about 15000+GST in case of Private banks like Axis bank and 1-2% plus GST in case of NBFCs.
Apart from all the above-mentioned things, an applicant should also take into account the income, moratorium period, mandatory collaterals and the CIBIL score. Nevertheless, you can seek assistance for overseas education loan process from an experienced loan advisor or wait for another article on the Loan Process. You can also reach out to abroad education consultants for more information on overseas education prospects.
Good luck with all your future endeavours!
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