An Insight into Overseas Education Loans 

Education loans have become the most reliable source of funding higher education overseas for many aspirants over the years. The exorbitant cost of global quality education can be seldom met with scholarships or personal savings. Taking an education loan to pursue higher studies abroad usually becomes a highly sought-after alternative.

So if you are planning and thinking about how to get an education loan for study abroad, then this article is for you. Keep reading to have an insight into taking an overseas education loan. Let’s first talk about the advantages of taking an education loan.

Advantages of Overseas Education Loan

There are numerous advantages of taking overseas education loans like

• 100% Funding
• Pre-admission Loan
• Income Tax Benefits

Let’s check this out in detail.

100% Funding

All the NBFCs (Non-Banking Financial Corporations) provide 100% funding up to Rs 50 lakhs in the form of unsecured loans.

In case you want to approach a nationalized bank then Bank of Baroda is the only bank which provides 100% funding even up to Rs 1.5 crores. But do keep in mind that they do it only for the universities under their listing.

If you want to get an overseas education loan from an international lender, then you can consider MPOWER Financing, Prodigy Finance or Leap Finance. These international lenders provide 100% funding as well. 

So, if you are able to get 100% funding for your overseas education, your sponsors are relieved of the initial financial burden of arranging the sponsor’s sharing.

Pre-admission Loan

This is a great advantage for all the students aspiring to study in the US as the pre-admission loans are sanctioned only for this topmost overseas study destination.

The possibility of getting the pre-admission loan depends on the following factors and these are mandatory for consideration.

• Parent’s Annual Income - More than Rs 5 lakhs
• Standardized Test Scores (whichever is applicable)

1. GRE - above 300 points
2. TOEFL- above 90 points
3. IELTS- more than 6.5 bands

Income Tax Benefits

The interest paid on an education loan is allowed as a deduction under the Income-Tax Act, provided the loan is taken for higher education in India or abroad. The deduction is available for regular as well as vocational courses.

You just need to ensure that you obtain the interest certificate from the bank/ lending institution to claim the benefit.

You also need to keep in mind that the Income Tax Benefit can be claimed only if the loan has been taken from a bank, approved financial institution or an approved charitable institution.

Other Essential Aspects of Overseas Education Loans

Quantum of Finance

The quantum of finance up to which the financial institutions sanction the secured loan for Overseas Education is up to Rs 1.50 Crores. But the time for processing takes longer than unsecured loans and only 75% of the amount will be sanctioned against the valuation of the property.

If you want to opt for unsecured loans then International Lenders provide up to Rs 75 lakhs. NBFCs and only a few Private Banks offer up to Rs 50 lakhs whereas Nationalized Banks provide unsecured loans only up to Rs 7.5 lakhs.

Expenses Covered

Most of the financial institutions sanctioning education loans for abroad studies cover expenses like

• Tuition and examination fees
• Library and laboratory charges
• Purchase of books, laptop, equipment, instruments, uniforms, etc.
• Any other expenses like study tours and project work
• On-campus or off-campus accommodation charges
• Travel expenses
• Insurance premium for the student borrower

Loan Tenure

The tenure of overseas education loan generally ranges from 10 to 15 years for loans above 7.5 lakhs, giving the student enough time to repay in smaller instalments.

A longer tenure can reduce your EMIs, making repayments comfortable; while opting for a shorter tenure increases your EMI but you’ll be paying the interest only for that span of time instead of the full tenure.

By and large, the repayment starts one year after the course completion or six months after the student is employed - whichever is earlier.

Rate of Interest

Overseas Education Loan interest rates vary from 9.5% to 14% depending on the kind of financial institution.

Servicing of monthly interest during the study period and moratorium period is optional for students.

Few Nationalized Banks offer a 1% concession on the interest rate, if the student starts paying the simple interest during the study period and moratorium period.

Concession on Rate of Interest (Based on the Financial Institution)

Some of the popular concession options for students are enlisted below.  

• Getting admission in top rated Premier Institutions
• 0.50% Concession on Providing 100% Collateral Security 
• 0.50% Concession for Webometrics University Rankings under 1000
• 0.50% Concession for Students Studying Medical, Engineering and Management Courses
• 0.25 - 0.10 % Concession for Meritorious Students Based on their Previous Academic Performance
• GRE Top Scorers Concession
• 0.50% Girl Student Concession
• Existing Home Loan Customers

Contemplating how to apply education loan for abroad studies? Well, Education loan advisors from ÉLAN are at your service. With industry expertise and training, the loan advisors will assist you with their comprehensive services. So, if you want to fund your overseas education with minimum hassles, approaching ÉLAN is the most optimal solution for you. 

Contact our Education Loan Advisor for in-depth guidelines.