A hike in tuition fee here, a hike in tuition fee
there, and a hike in tuition fee everywhere! Every year as Unis around the
globe increase their tuition fees, you can’t help but cringe — given our
current exchange rate. But let that not demotivate you! When there are ways to
overcome these obstacles and live your study abroad dream, why stop now? What
you need to remember is that you are making a lifetime investment with your
study abroad experience. So let’s have a look at how to make your dream a reality
through the educational loan.
Now, don’t go dismissing the idea of applying for an
educational loan just because you nailed a scholarship. Sure, your hard-earned
scholarship will come to your rescue but it will most definitely not cover the
overall cost of your education abroad. So you most definitely will have to
consider applying for an educational loan. We know you feel educational loans
are complicated monsters, but we assure you they are nothing to be scared of.
So wondering what kind of coverage the education
loan will offer? It will basically cover your tuition fees, book and any
supplies fees, room and board fees, transportation fees, health insurance fees,
and also your living expenses. It should take care of all your
education-related expenses. The bank won’t actually hand you the money but will
generally credit it into the Uni’s account at the start of each year or
semester as required. Interesting? Read on for more…
To help you get started, we want to spell it all out
for you — the basics of the educational loan…
Once you receive the offer letter from your dream
Uni, apply for an educational loan right away. To be able to do this, you must
research your loan options thoroughly during the lull after you’re done with
your Uni applications and are awaiting your offer letter anxiously. Make use of
this in-between time period effectively. This is definitely not the time for
you to take a break!
As
you run a research on loans from leading banks, you will find that they offer loans with varying
rates of interest. We recommend you to take your time to compare the different
kind of loans that are on offer and run a thorough comparison. A helpful tip:
state-run banks have lower interest rates in comparison to private ones (if you
didn’t know that already).
Don’t set all your hopes on just one though — we
think it’s best for you to apply to multiple banks, in case your loan
application were to get rejected by one.
Let’s have a quick look at study abroad loan details
from some of our country’s top banks, shall we?
·
Bank of Baroda offers
loans of up to Rs 20 lakhs with a rate of interest per annum of 12% for loans
above Rs 4 lakhs.
·
Canara Bank offers up to
Rs 20 lakhs with a rate of interest per annum of 12% for loans between Rs 4 and
7.5 lakhs and 9.5% for loans greater than Rs 7.5 lakhs.
·
Axis Bank offers up to
Rs 20 lakhs and its rate of interest per annum ranges from 13.75% to 15.75%.
·
Credila (of the HDFC
Bank Company) offers up to Rs 20 lakhs and its rate of interest per annum is
13.5%.
·
ICICI Bank offers up to
Rs 20 lakhs and has an annual interest rate of 15%.
·
Indian Overseas Bank
offers up to Rs 40 lakhs and charges an annual interest rate of 15%.
·
State Bank of India
offers up to Rs 30 lakhs with an annual interest rate of 13.75% for amounts
between Rs 4 – 7.5 lakhs and 11.75% for amounts above Rs 7.5 lakhs.
For more details, approach the bank or visit their
website online. The current interest rates fall on an average between 11% to
14%; however most of these are offered on a floating rate basis. In other
words, be prepared to face increased or decrease rates later. Be careful, you
don’t want the bank to spring any last-minute surprises on you, so read through
all related info with utmost care.
The first thing you should check as you begin to
shortlist banks is the eligibility criteria. Most banks offer educational loans
for long-term programs by reputed institutions. Short-term ones (such as
English language programs) are usually not covered. For those planning to study
vocational courses at a TAFE institution in Australia — educational loans don’t
cover these either. So be well read, it really helps to know all the teeny
weeny details here.
In general, when your student loan exceeds Rs 5
lakhs, you will be required to have a cosigner. A cosigner is a person (mostly
a parent) who has to sign the loan with you, agreeing to pay your debt, in case
you fail to do so. Your cosigner will be on the hook for your debt and so this
is a very big commitment and not to be taken lightly.
·
You will have to provide
the bank, margin money for student loans exceeding Rs 4 lakhs which is usually
15% of the loan amount.
·
For student loans about
Rs 7.5 lakhs, you will generally have to offer the bank an LIC policy or a few
documents of immovable property in your name.
·
Be prepared for a
slightly lower loan amount at the time of disbursement, as it may be affected
by the exchange rate at the time of disbursement.
·
Your loan will have a
moratorium period or holiday period, only after which you will be required to
start with your EMIs. This period could last up to the duration of the course
or up to the time period till you find employment and varies from bank to bank.
·
Completing your KYC or
(Know Your Customer) is an important part of the loan-process.
·
This will help the
loan-provider feel assured that the student has the ability to repay and that
documents provided are accurate.
Get in contact with the bank and obtain a checklist
from them beforehand to have all documents and papers ready and be prepared for
application. Also check to see if the Uni has any tie-ups with banks for
educational loans — if so, it could expedite the whole loan process.
Run a check to see if you have these. You will be
needing some of these listed below.
·
Driving license
·
Passport
·
Pan card
·
Voter's identity card
·
A signed verification
letter from a recognized public authority or public servant for your identity
and residence.
·
Aadhar card
·
Passport
·
Bank account statement
·
Ration card
·
Aadhar card
·
Voter’s ID card
·
Telephone bill/ water
bill/ electricity bill
·
Allotment letter issued
by a government department
·
The banker’s signature
verification
·
Driving license
·
PAN card
·
Passport copy
We urge you to take your own time to really go
through the loan agreement’s fine print before you sign it. Keep your eyes open
— a few things you should be checking for include the interest structure,
pre-payment details, or if there is any option for you to extend it in case you
are unemployed after graduation. If you have any questions, you should get in
touch with the bank advisor. Be clear of the whole loan process and understand
its clauses.
These are just a few facts you should be aware of,
while approaching a bank for a loan. And that said, we hope you have a better
picture of how to secure a loan. Do you? Share your comments and views with us!
We would be happy to hear from you.
And also, if you are looking for any other kind of
assistance to get into your dream Uni, don’t hesitate to get in touch with us.
We, at Hotcourses India, would love to be of help!