Tuesday, February 27, 2024

An essential guide to education loans for studying abroad

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Today, every student desires to complete their education at a prestigious institute. However, the tuition fee and other expenses may be quite expensive for students. Education loans can become a great choice here, especially when it’s about giving meritorious students access to financial aid, which helps them achieve their dreams. Similarly, organised players of the industry are responsible for administering in selecting and comparing banks and their interest rates to get a loan. Here, we’ll look into the different education loans and provide a checklist of all integral documents required to apply for an abroad loan application.

Exploring different educational loans for overseas education
There are several education loans categorised as per different education programs. Whatever the course is, there are student loans for every field of study. In the following section, we have mentioned the types of abroad education loans based on collateral loans.

1. Based on collateral
A collateral is a type of secured loan where the borrower deposits valuable assets to the bank to avail of the loan. There are two types of collateral loans:

l Secured education loans: In this type of loan, the applicant has to show tangible or intangible security. The deposit submitted to the lender can be Fixed Deposits, LIC Insurance, Policy, etc. This loan generally takes longer to approve as the bank has to verify all the documents related to collateral security. Further, this loan has low-interest rates, longer repayment periods, and no need to repay during the study.
l Unsecured education loans: This loan is suitable for individuals who have no security to offer to the bank. It should be noted that this type of loan usually charges a high rate of interest and is hard to get approved. Unsecured education loans don’t have a longer repayment period, even though some payments have to be made during the study. In addition to this, to get a loan without collateral, applicants have to submit proof of minimum co-applicant income in their house.

2. Based on location
You can also find education loans based on the geographic location of your study program. If you’re applying for courses outside your country, then the following loan type is suitable for you.
l Study abroad education loan: This loan is appropriate for candidates planning to pursue studies in a recognized foreign university. Also, the borrower should have an offer letter from the institute to approve the loan.

3. Based on the course of education
Banks and non-banking financial companies (NBFCs) to pursue introductory degrees and professional courses abroad offer course-based educational loans.

l Under graduate student loans: This financial aid will be provided to students who desire to continue their further education after school from a foreign university. To avail of this loan, students must’ve passed his/her 12th grade.
l Post graduate student loans: This loan is for two-year courses that help students begin their master’s course in their field of interest from a foreign institute. So, the students must hold a Bachelor’s degree before applying for the loan.

4. Based on security collateral
and guarantee
Collateral-based loans are generally secured since you can take a loan by keeping an asset as security. Thus, the following education loans are available based on the type of security you can provide to the lender.

l Loan against property: They are often called mortgage loans and can be availed against residential, industry or commercial property.
l Loan against deposits: Here, education loans can be taken against recurring deposits, fixed deposits, or gold deposits.
l Loan against securities: The borrower can take an education loan with any investments in equity shares, bonds and debentures.
l Third-party guarantee: A third party can be any relative or friend of the borrower. Anyone with a good credit score and repayment record can be your guarantor. It means that he/she will be the one who repay your outstanding debt if you fail to do it timely.

Expenses covered under
education loan
l Fee amount to the educational institutes.
l Examination/library/or other activities charges.
l Travel expenses, or visa fees for studies abroad.
l Insurance premium (If applicable).
l Purchase of books, supplies, etc.
l Purchase of a computer or laptop at a reasonable amount.
l Caution deposit, accommodation expense, or other institute bills.
l Additional expenses, such as study tours, master thesis, project work, etc., during the course.

Documents required from
students for education loan
l Any proof of identity.
l Proof of residential address, such as Passport for study abroad.
l Academic records: 10th or 12th result, Graduation result (if applicable).
l Standardized exam results, such as GRE or GMAT.
l English proficiency test results. E.g. IELTS or PTE.
l Offer letter from your applied university.
l Statement of your tuition fee as given by the institute.
l Two passport-size photos.
l Account statement for the last 1-year of the borrower.

Conclusion
Education loans are for all aspirants who dream of pursuing their studies at a foreign institute but they can’t afford to pay their tuition fees at once. The best loan not only provides you with an opportunity to study abroad but also gives you a kick-start to your amazing educational journey. Likewise, organised players assists in both secured and unsecured loans to finance students’ education. Be it the tuition fee or additional expenses, an education loan can be a wonderful solution to seek higher studies from abroad.

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