Indian students are becoming more and more interested in studying abroad. Many students after graduation consider attending a university abroad for post-graduate courses. However, due to the high cost of education abroad, many people may find it financially challenging to pursue their dreams of enrolling in a reputable institution. Foreign education is highly expensive as one must purchase dollars with Indian rupees, and each dollar costs about Rs 82 in the foreign exchange market.
But, parents and students need not worry as banks and other lenders provide education loans for studying abroad. The loans also come with tax benefits and a moratorium period. Further, such loans cover the cost of airfare, lodging, tuition, and many other expenses related to education abroad.
Few important things to look at while taking an education loan for studying abroad are – the final rate of interest, other costs, what all the loan covers, documents required, eligibility, and any other term and conditions of the bank.
Let’s look at the education loan provided by a public sector bank, Union Bank of India.
Union Bank of India Loan Scheme for Abroad Studies is called Union Education Premier Abroad. Some of the world-famous global universities where you can apply with the UBEP loan include Harvard University, Stanford University, MIT, University of California Berkeley, and the University of Oxford
Amount and Margin of Education Loan Abroad
The loan amount could be between Rs.7.50 lakh and Rs.1.5 crore with no margin requirement up to Rs 4 lakh. For loans between Rs.4 lakh and Rs.40 lakh, one needs to provide a margin of 15%. For loans between Rs.40 lakh to Rs.1.5 crore, no margin is required if a minimum 100% collateral security is offered by the borrower. In all other cases, 15% margin and minimum 50% collateral security shall be obtained from the borrower. Any scholarship received by the student is to be treated as a margin and the borrower has to deposit the scholarship amount in the bank account.
Interest Rate On Education Loan Abroad
The interest rate on education loans for studying abroad is linked to the bank’s External Benchmarks Lending Rate or EBLR. As on June 11, 2023, the Union Bank of India EBLR was 9.30%.
The final education loan interest rate is determined by the loan amount and collateral. The most effective and the best offer on loans is for loans up to Rs. 40 Lakh along with 100% collateral. The interest rate in such a case is the bank’s EBLR which currently is 9.3%.
Education loan abroad – What it covers?
It is important to find out from the bank what all expenses are covered in the foreign loan. Tycpailly, tuition fees, Hostel charges, Examination/ Library/ Laboratory fee, Insurance premium for the student borrower, Caution deposit, refundable deposit supported by Institution bills, travel expenses for studies abroad, purchase of books and other related materials, and any other expense required to complete the course like study tours, project work, thesis, etc. are covered.
Eligibility Criteria for international education loan
- Must be a citizen of India
- A parent or guardian must be an applicant
- A letter of acceptance from a reputable overseas university is required
- For the loan to be disbursed, the borrower’s financial situation must be steady
Which Courses Are Eligible?
Given that the course is offered by an approved institution or has a high reputation, students can apply in nearly any course they want to.
- PhD courses
- Graduation/PG degrees offered by reputed institutions/universities
- Certified degree courses offered by CIMA, London, CPA, USA, and others
Documents required to apply for an Education Loan Abroad
When applying for an education loan, the student must provide the following documents:
- Educational certificates
- KYC documents
- Admission letter
- Fee Structure
- Income proof and KYC documents of co-applicant
Also, if you have already begun the classes at the international university, you can still claim the loan. If the student has paid the first term fee for securing admission in the university and approaches the bank for a loan along with reimbursement of the fee paid, then the same is permitted within 6 months of securing admission.
