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How to get an abroad education loan?: Education loans are often considered a secure investment due to their guaranteed returns. However, for many students and their families, the entire process of obtaining an education loan may initially appear daunting and time-consuming. Fortunately, over the years, significant efforts have been made to simplify this process, making it more convenient and user-friendly for borrowers and their families. With the provision of basic guidance and support at each stage, students can now navigate through the loan application, approval, disbursement, and repayment procedures without encountering unnecessary complications.
Though the specific steps involved in the loan process may vary among different financial institutions, most of them now adopt a straightforward approach accompanied by expert guidance to assist applicants at every stage.
Benefits of Education Loan
At times, the family’s income and resources may fall short in covering the expenses of a student’s education. In such situations, students can turn to banks or other financial institutions to obtain a student loan (NBFC). This student loan can be used to cover either all or a part of the education expenses. Opting for a study abroad education loan ensures that the student can complete their degree program without facing any financial challenges.
Loans are often perceived as bad debt, indicating that the borrowed money is used for something whose value diminishes over time. However, an education loan stands apart from other types of loans as it represents an investment in the borrower’s future. It is an investment that is expected to yield substantial returns, enabling the borrower to earn far more money in the long run than the amount borrowed.
How to get an abroad education loan? Step by step guide
Step 1: Estimating Education Costs and Loan Amount
To begin the process, first, assess the total expenses you anticipate during your study period, covering items such as tuition fees, books, accommodation, food, transportation, personal expenses, and more. You can easily find this information on the university’s website or by contacting the student office. Your admission offer letter may also specify the yearly/semester costs for your course. Once you have a clear picture of the education expenses, you can determine the appropriate amount for your education loan.
Step 2: Comparing Education Loans from Different Lenders
After establishing the required loan amount, the next step is to find a suitable lender. Numerous banks and financial institutions in India offer education loans for both domestic and international studies. Reach out to them and inquire about their education loan products. Some lenders even offer doorstep service and customized education loans to simplify the process for students and their families. Consider factors like interest rate, processing fee, income tax benefits, collateral requirements, margin money, disbursement, and repayment terms before making a decision that aligns with your specific needs.
Step 3: Applying for an Education Loan
Once you’ve selected a lender, they will provide you with an application form. Most lenders offer online application forms for student convenience. It’s crucial to fill in accurate information, as any discrepancies may result in loan rejection. The application form typically covers details about your academic qualifications, the course you’ve applied for, family income, co-borrower’s earnings, and credit profile.
Step 4: Reviewing and Signing the Loan Document
If your loan application is approved, the bank or financial institution will issue a loan document outlining all the essential elements of the education loan, along with its terms and conditions. This document includes information such as the approved loan amount based on applicant and co-applicant profiles, disbursement details to the educational institution, interest rate, loan tenure, moratorium period duration, repayment amount, EMIs, and repayment terms. It’s highly advisable to thoroughly read this document and seek clarification on any doubts before signing it.
Step 5: Disbursement and Repayment
Once you have signed the loan document, the bank will disburse the appropriate installments directly to the educational institution as per the fee schedule. The loan sanction letter can serve as proof of funds for securing admissions in foreign universities and applying for a student visa. In cases of overseas education, banks may charge a remittance fee for paying in the receiving country’s currency.
Repayment typically begins after the moratorium period, which varies among banks and can range from six months to one year after course completion. Repayments are made through Equated Monthly Installments (EMIs), which consist of a portion of both the principal and interest amount.
The education loan process has been simplified due to the abundant online information and the expert guidance provided by education loan specialists at various banks and financial institutions.
During the loan process, it is crucial to consider the following points:
- Check the eligibility of your course for an education loan. Courses with higher employment prospects have a better chance of loan approval, and the reputation of the college or university also influences the decision. Keep in mind that not all banks offer financial aid for diplomas and vocational courses.
- Education loans obtained from gazetted banks and financial institutions are eligible for tax benefits under Section 80E of the Income Tax Act of India, 1961. Request the Gazette Certificate from the financial institution to verify eligibility for income tax rebate.
- Different banks provide varying coverage for education expenses. Some may cover the entire cost, including tuition fees, books, equipment, library and examination fees, one-time travel expenses for foreign education, and personal expenses, while others may only cover a portion of it.
- Various types of collateral are accepted by most banks, such as residential property (house/ flat/ bungalow), fixed deposits, life insurance, and non-agricultural land.
- Allocate sufficient time to research, analyze, and compare different education loan products to avoid last-minute rush and complications. Starting the process early is advised for a smoother experience.
We hope this article has provided you with insights on how to obtain an education loan for studying abroad. For similar content, you can follow freshernsow.com.