An education abroad, which was once a privilege, has become a sought-after choice for students worldwide. The superior quality of education, life experiences, and career opportunities has led to a surge in pursuing higher education abroad. When the financial aspects become daunting, education loans come in and make international study more accessible.
But what happens when circumstances change, and students no longer need these loans? Education loan cancellation becomes crucial in such scenarios. Whether due to receiving a fully funded scholarship, acquiring sufficient self-funding resources, visa rejection, or planning to change their country or university, students may find themselves in a position to cancel their loans.
To help in understanding the intricacies of overseas education loan cancellation, our latest article acts as a guide for all loan applicants. Keep reading to find out all the essential information regarding this process.
Students can apply for an overseas education loan cancellation at different stages of application. Let’s take a look at these stages:
Overseas Education Loan Cancellation after Approval
Students can cancel their loan after it has been sanctioned if the funds are not disbursed to the university’s account. At this stage, the decision must be quick, and the borrower should immediately inform the bank or lender about their decision.
To communicate this the borrower must submit a written formal request in person or via email to explain the situation. They should provide relevant documents stating the reasons for the cancellation.
Overseas Education Loan Cancellation after Disbursement
Students can also cancel their loan after disbursement but the process for this is complex as lenders disburse the loan amount directly to the university’s account. Cancellation at this stage becomes tough, time-consuming, and costly for the lenders.
If the borrower decides to cancel the loan at this stage, they should know that the charges like processing fees do not get refunded. This cancellation criteria for education loans applies to all financial lenders. Additionally, the borrower must return the principal amount with interest to process their cancellation.
The ideal time to cancel the loan is during the free lock-in period offered by banks. This period is for the borrowers to review the loan’s terms and conditions. It may differ depending on the bank.
Apart from these situations, students can also cancel the loan if they decide to drop out of the university. The loan will also be canceled in case the borrower dies before the debt is paid in full, the insurance company will make the settlement directly.
These are the situations where study abroad loans can be canceled at different stages. Now let us look at how they can start the cancellation process.
Canceling the loan is a multi-step procedure. Students can cancel their study abroad loan by following this step-by-step process:
Step 1: Review the Terms:
The first step of the cancellation process is to read and understand the terms of the loan and cancellation policy.
Step 2: Reach out to the Lender: After reviewing the terms, the borrower should reach out to the lender. This is important to stop the further processing of the loan. The bank or financial institution can be reached through multiple channels like phone, email, or an online portal.
Step 3: Submit a Cancellation Request:
The borrower can submit a formal request for loan cancellation through online or offline channels. They must make sure to include all details requested by the bank.
Step 4: Request Confirmation:
After sending the cancellation request, it is important to have the official confirmation that no further action is required.
Step 5: Check for Refunds:
If the borrower has paid any non-refundable fees or deposits, check for the refunds or if they are non-recoverable. Some lenders may offer refunds for certain fees.
Step 6: Document Collection for Secured Loans:
If the student chooses to cancel a secured loan after the disbursement has been done, then the mortgage fees that are paid to the government as stamp duty will not be refunded. Also, the original property documents need to be released from the bank and reassigned again in the co-borrower’s name.
This is how borrowers can cancel their education loan in India for study abroad in 6 steps.
As we've explored, education loan cancellation is a multifaceted process that requires careful consideration and timely action. The growing trend of international education underscores the importance of financial literacy in this area.
While cancellation can provide relief in changing circumstances, it's equally important to secure favorable loan terms from the beginning.
Experts at Élan Overseas Education Loans can offer invaluable expertise in seeking the lowest interest rate on education loans. Our overseas education loan advisors assist students in finding optimal loan options, understanding cancellation procedures, and making informed financial decisions. Connect with us today!
Does loan cancellation impact the credit score?
No, the cancellation would not impact the credit score of the borrower.
What is the locking period for an education loan?
The locking period or tenure of an education loan is generally up to 15 years including the moratorium period.
Can the overseas education loan be foreclosed?
As per RBI norms, after the commencement date of university till the first 6 months student can't close the loan account.
Is it possible to take 2 education loans at once?
No, it is not possible to take 2 loans at once as, if the borrower tries for the second loan the bank will be able to track the first loan and deny the request for a second one.
Can the education loan be shifted from one bank to another?
Yes, the loan can be transferred from one bank to another. But for doing this the current bank may charge a refinancing fee.
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