All you need to know about education loan for your abroad studies

• Feb 21, 2024
• 0 Like
• 10 Share
• Bookmark

It's not as tough as you would imagine to apply for a education loans for abroad studies. Both before and after you, other people have done it. Let's learn about the fundamentals of obtaining an education loan without worrying too much, see what other students are doing, determine how much money you would need to borrow and from whom, and determine which kind of loan is ideal for you.

The tough part is finished once we finish this. Then, all you have to do is submit an application for a loan, provide financial documentation to your school, and request a student visa!

Do I require a education loan for abroad studies?

Several variables affect the answer to this question. such as your intended education location, your savings amount, whether you have any liquid assets, and how you intend to handle your finances while studying abroad.

But let's not consider everything at once. It's best to proceed cautiously -

1. Selecting a course must be done first.

2. Narrow down the country you wish to study in.

3. Locate a few universities with a decent return on investment 

You will be able to determine how much money you will need to spend while studying abroad after you have reached this stage of the process.

Once you have this money in your possession, you should determine if you and your parents have enough funds to pay for more than half of your educational costs. If not, you will require an education loan to pursue studies overseas.

It will also frequently occur that even if you have this quantity of money, you will still require a loan. Let's investigate why.

Why do I require a education loans for abroad studies?

When you apply to and are accepted into institutions overseas, the university will ask you to submit documentation proving you have the financial means to pay for your education. Depending on the country you have applied to, you will need to provide a specific set of documents as verification.

For instance, in the US, you can only submit bank statements for cash savings, fixed deposits, and receipts for education loan for abroad studies.

Similar to this, the US embassy simply requests verification of liquid assets, such as gold, equities investments, provident funds, etc., from accepted students. This implies that proving that you are a homeowner is completely irrelevant.

You will therefore need to take out a loan if the liquid assets that you and your parents own don't meet the requirements of the university and the embassy.

How do I choose the amount I should borrow?

Thankfully, there are many options for paying for your education on your own. such as academic part-time work, graduate and teaching assistantships, and internships. About half of your overall expenses can be readily covered by these sources.

But let's pretend you won't have any of these sources of income to be on the safe side (like the visa officer who will be interviewing you). Here is how to figure out how much money you need to borrow:

1. Begin with the sum you determined for your study abroad expenses.

2. Take your savings out (including the ones your university and embassy are ready to accept, like gold, fixed deposits, equity investments, etc.)

3. Subtract the amount you got in grants, fellowships, and scholarships.

You will be required to borrow this amount when requesting an education loan to pursue studies abroad.

Be aware that the maximum amount of education loan for studying abroad that should be taken into account is no higher than their expected starting salary to ensure that it is a suitable amount.

Therefore, you should aim to maintain your overall education loan debt at no more than 50% of your beginning wage for the first year.

Whether that's not the case, consider if you can lower your debt burden by applying for scholarships to study abroad.

Which bank offers the best education loans for abroad studies?

This question does not have a single correct response. Your unique financial condition will determine which bank you choose. However, let's examine your options:

1. Public Banks

Low interest rates are available from public sector banks, or PSBs, like SBI. They are a fantastic option if you need to request a secured loan. But keep in mind that their processing time for documents is longer than the alternatives. So, it would be better if you submitted your application for a loan here at least 20–25 days beforehand.

2. Private Banks

The benefit of private banks like HDFC and Axis is that they provide larger unsecured loan amounts than PSBs. Their strict acceptance standards and slightly higher loan rates come as no surprise. It also helps to know that they digest information more quickly than PSBs do.

3. NBFCs

If you want to obtain an unsecured loan quickly, NBFCs are a fantastic choice. They have far simpler documentation than the others, and your co-income applicant's and CIBIL score are the sole factors used to authorize them. But bear in mind that they charge greater interest rates than the others.

Collateral and non-collateral education loans, often known as secured and unsecured loans, are the two main types of loans you can apply for. Each has advantages and disadvantages, so you must decide which is ideal for you. 

What exactly is a collateral loan or secured loan?

Banks and NBFCs typically request collateral in the form of real estate, fixed deposits, or other investments and savings when someone requests a significant loan. If you are unable to repay the loan, the bank has the right to keep the collateral as a form of security.

Yes, this does imply that you must provide the bank with evidence of the collateral you intend to post. The good news about these loans is that their interest rates are reasonable. Yes, it is even less expensive than a personal loan's interest rate!

What is a non-collateral loan?

Sometimes just letting a bank know that you are enrolling at an international university for your studies is sufficient. Once you graduate and begin working, they trust you to repay the loan amount (plus interest) without asking for any collateral.

Documents that demonstrate your skill are taken into consideration rather than collateral. such as your college credentials, standardized test results, university admissions, and the course you intend to enroll in. They will approve your loan after they are confident that you are fully capable of pursuing your studies overseas and finding employment. If they are still dubious, they will ask you to provide documents that will demonstrate your parents' ability to repay the loan on your behalf.

The main advantage of taking out an unsecured loan is that you will have more time to start repaying it once you graduate and find a job.

Is there a better lending choice?

Oh, we didn't think you'd ever ask. Yes, there is a better choice, of course. An education loan for studying abroad will certainly have high interest rates in your country. The best approach to get around this problem is to find a family in the country of travel and persuade them to sponsor your loan. In this manner, you would only be spending 4-5 percent in interest as opposed to paying exorbitantly high rates (such as 8–12 percent) (when it comes to the US, at least).

How can I apply for a education loan to study abroad?

It is simple to determine which loan and which bank is appropriate for you once you have considered your financial status and all the benefits and drawbacks of these loans. And I have the solution for you, so stop worrying about the following step—applying for an education loan for studies abroad.

To apply for a student loan fast and efficiently, see our Beginner's Guide to Applying for Student Loans and go through the processes one at a time.

Additionally, feel free to leave a comment or get in touch with us if you run into any problems or have any queries. We'd be delighted to assist you!

>

>

>

>

>

>

>