Education loans to study abroad have been a popular source of finances to cover the educational expenses of study abroad. However, due to the complex documentation and verification involved, the education loan process creates anxiety among international students and their families.
The education loan process can take anywhere between one and three months. However, with a little diligence and minor attentive measures, students can ensure faster processing of their education loan applications.
Five ways to make the education loan to study abroad process easier and faster have been discussed below. Additionally, tips to ensure fair agreement terms have also been mentioned.
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Education Loans to Study Abroad
Education loans are funds loaned, against a mortgage or guarantee by financial institutions to students for their education. Studying abroad is an expensive affair and many universities in the UK, US, Canada, and Australia, charge double or triple tuition fees to international students in comparison to domestic students.
Average Tuition Fee to Study Abroad
Study Abroad Destination |
Average Annual Tuition Fee (in INR) |
|
Bachelors Courses |
Masters Courses |
|
US |
8,00,000 - 20,00,000 |
25,00,000 - 35,00,000 |
UK |
10,00,000 - 40,00,000 |
15,00,000 - 55,00,000 |
Canada |
7,00,000 - 18,00,000 |
9,00,000 - 38,00,000 |
Australia |
10,00,000 - 25,00,000 |
15,00,000 - 30,00,000 |
New Zealand |
12,00,000 - 18,00,000 |
15,00,000 - 24,00,000 |
Students from comparatively humble backgrounds (middle class and lower middle class) cannot afford an education at such rates. Financial institutions and banks offer education loans to students to ensure that finances do not become a hindrance to their education, future, and goals.
Benefits of Education Loan to Study Abroad
Education loans can prove to be extremely beneficial for international students. Here are some of the benefits of taking education loans:
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The financial burden of studying abroad will lessen, as students can easily pay their tuition fees with the help of a loan.
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Students tend to study more responsibly as they have to repay the borrowed money after completing their studies.
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They can avoid the fear of lack of finances, complete their studies and graduate successfully.
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While repaying the loan, students can claim tax relief.
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Loan covers can be extended over to all educational expenses, including study material, hostel accommodation expenses, collateral education fees charged by the university, etc.
Education Loan Process to Study Abroad
The education loan process can be slightly tedious. Since the cover amount of an education loan for study abroad is huge, the application and approval process is also lengthy.
Application Process for Education Loan
The general application process for an education loan to study abroad requires the following steps:
Step 1: Application has to be filed with shortlisted financial institutions for an education loan. All the documents mentioned by the bank have to be submitted.
Step 2: The bank or financial institution will verify the documents submitted.
Step 3: The bank or financial institution will stipulate the terms and conditions of an education loan to study abroad. These include the cover amount, interest rate, loan duration, etc.
Step 4: Students and their parents or guardians will sit with the agent of the bank or financial institution to finalise the terms and conditions of the education loan for study abroad.
Step 5: The bank or financial institution will sanction the education loan to study abroad for the international student.
Documents Required
The documents that may be asked for by the bank or financial institution to sanction the education loan to study abroad include:
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Student’s personal details and Bank Statement,
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Acceptance Letter of the University,
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Details of the course,
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Schedule of tuition fees and other educational expenses,
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Passport and Student visa application details,
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Guarantor’s personal details, relation with the student, and bank statement,
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Guarantor and student’s ITR and KYC,
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Mortage Asset’s fair value, market value, and ownership documents.
Note: This list is not exhaustive and banks or financial institutions may ask for fewer or additional documents.
Ways to Make Education Loan Process Easier to Study Abroad
Although the application process for education loans to study abroad cannot be shortened, it could be made faster and easier by using the following ways.
Applying to Reputed Institutes
Students are advised to apply to reputed and top institutions, especially the ones with higher employability rates. The reputation of the institution will push the financial institution to process the loan faster. They will be able to believe easily that the student will end up as a highly qualified and easily employable person on completion of the chosen course.
Reputed institutions have high employability rates and also offer clear statistics on the starting salaries of all the courses offered by them. It becomes not only easier to understand the probable income of the student on graduation, but it also becomes more reliable as there are numbers to refer to. The education loan process gets easily processed when the repayment seems more positive and probable.
Generally, institutes with an employability rate of 70% and above are considered good at the time of processing education loans to study abroad.
Loaning from Financial Institutions Other than Banks
Students opting to study abroad tend to find banks, private or public, as easily accessible options to apply for education loans. Although there is nothing wrong with banks, there are various other financial institutions that also provide education loans at discounted interest rates. Students can not only approach financial institutions of their home country but of their study abroad country as well.
Students must ensure precaution by confirming that the financial institution is authorised by the authorising financial head, such as RBI in India.
Good Credit Score
A good credit score can prove to be a saving grace for students applying for education loans. By maintaining a good credit score, they will be able to convince the financial institution about their credibility and reliability.
To maintain a good credit score, students and guardians must ensure that even the smallest borrowings are paid timely. They can use KYC, ITRs, and other relevant documents to prove that they can be relied upon.
Combining with Scholarships
Many foreign universities provide various scholarship programmes for international students. Students should apply to all those scholarship programmes they are eligible for. If the student is a receiver of any scholarship, then financial institutions process their education loan application faster. They find it easier to believe that the students will complete their education sincerely.
Proper Documentation
Students are advised to ensure proper documentation, including the format in which they are being submitted to the financial institution. Students and their guardians should not try to negotiate for the type of document submission, as far as reasonable. Hesitancy in providing recommended documents, like original, could lead to suspicion and trust-related issues for the financial institution. The education loan process may get lengthier due to it.
Tips to Apply for Best Education Loans to Study Abroad
The best education loans to study abroad can be applied for by keeping the following tips in mind:
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Just like customers, banks and financial institutions also have a reputation on the basis of their past transactions. Students must ensure to check how the institution has dealt with education loans in the past before applying.
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Although every loan is subject to negotiation, banks have certain education loan schemes with fixed cover, interest, and duration. Students must research them and check their benefits.
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Ensure to apply for all shortlisted banks and financial institutions. The final decision must be made according to the terms and conditions negotiated.
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Students are advised to enquire the applied institutions for other alternative schemes and various relevant terms and conditions. They must not hesitate in asking questions at all.
As education loans have proven quite helpful for international students to successfully complete their higher studies and achieve their dreams, the source remains popular. In fact, more and more students from humbler backgrounds can now ensure a life different from the ordinary. Moreover, even students from solid financial backgrounds can apply for education loans. The additional features, such as tax relief and driving the economy, only make studying abroad easier. Students are, however, advised to follow caution and attention during the process, so that education loans to study abroad can remain a benefit for them.
You can also consult our study abroad experts about finance-related questions while studying abroad. Write to us at abroad@collegedekho.com.
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