Taking an education loan for abroad studies is a difficult choice to make. This guide will tell you how an education loan can help, what’s the right amount to borrow, what types of loans are there, and much more. Read on!

1. All about education
loans for studying
abroad

2. Introduction:
Studying abroad to get a degree and recognition is something many students
dream of. However, accumulating the resources and funds to study abroad can be
a difficult task. But does that mean you give up your study abroad dreams? Not
necessarily, no.
When it comes to tuition fees and paying for education abroad, some students
opt for funding their education with their family’s aid. But there are many others
that decide to apply for a student loan. Student loans provide you with a way of
paying up these fees for tuition so that you don’t spend crucial years waiting to
gather it all.
What are student loans?
A student loan is a payment option that is available for all students who wish to
borrow money from organizations to pay for their education. These organizations
allow students to borrow specific amounts of money for a fixed duration at
defined interest rates.
While there are many other conditions involved, the main principle is that
students are allowed to borrow the money and start paying it back after a certain
fixed duration. This allows students to complete their education, secure a job, and
start gaining income that will easily help them pay off their loans.
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3. You need to have a university admission confirmation before you can get a
sanctioned student loan.
Student loans have various types that cover different levels of expenses. Student
loans don’t automatically cover every cost while studying abroad.
Usually requires a co-applicant as well as a guarantor.
There are several organizations that offer student loans. Most commonly divided
into 2 types- Banks and NBFCs (Non-Banking Financial Companies).
Most student loans are offered against a substantial collateral of equal or higher
value.
How do student loans work?
Your college tuition fee isn’t the only expense of studying abroad. Other factors
such as food, accommodation, living, traveling, etc. are also some other major
costs that need to be considered. So, how do you pay for everything if you have
limited funds? This is where student loans come in.
There are many types of student loans and the amount of study abroad costs that
they cover. Most student loans cover tuition and college expenses only. But, there
are others that also cover living and flight costs. Students need to think carefully
and decide which type of loan they want to opt for.
Here are some prominent things you should know about student
loans:
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4. Filled application form
Photographs: Passport size photographs of the applicant and the co-applicant.
Photo ID: Photo ID of the applicant and the co-applicant. It can be a PAN card,
driving license, Voter ID card, Aadhar Card, or Passport.
Residence proof: Resident proof of the applicant and the co-applicant Academic
documents.
Mark sheet and certificates of the applicant
Score Reports of GRE, GMAT, TOEFL, IELTS, etc. whichever is applicable
Admission proof: Admission letter shared by the university or college.
Bank statements: Last six months bank statements of the co-applicant
Income proof: Income proof of the co-applicant
In case of collateral (immovable property), it can be flat, home, or non-agriculture
land the following documents are required
Property title deed
NOC for a mortgage from builder or society
What’s the best way to pay for college using student loans?
Many students have financial problems and require financial aid to study abroad.
In such cases, iSchoolConnect recommends a combination of funding methods
that help students maintain a balance of costs. Therefore, the best option to pay
for universities abroad is to follow these steps:
1. Determine the amount of funds you are willing to use from your personal
savings or family assistance.
2. Find out if you are eligible for any scholarships, grants, or any other type of
financial aid.
3. Once you've used multiple methods to reduce your overall expense of
studying abroad, consider the different student loan options.
4. Start your student loan applications.
Documents for student loan
Before you start your student loan application, it's important to gather all the
documents required. Here's a detailed list of documents required:
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5. Proof of Identity
Proof of Residence/ Address
2 passport-size photographs
If any previous loan from other Banks/Lenders, then Loan A/C statement for last 1
year
For Income Proof for Salaried Co-applicant/ Guarantor: Salary Slip or Salary
Certificate of last 3 months
Copy of Form 16 for last 2 years or a copy of IT Returns for the last 2 financial years,
acknowledged by IT Dept.
Bank account statement for the last 6 months (of Salary Account)
Business address proof (If applicable)IT returns for last 2 years (if IT payee)
TDS Certificate (Form 16A, if applicable)
Certificate of qualification (for C.A. / Doctor and other professionals)
Bank account statement for last 6 months
For Co-applicants:
For Income Proof for Self-employed Co-applicant/ Guarantor:
Who gives student loans?
Student loans are granted by several financial organizations. Unlike loans such as
a home, car or a personal loan, an education loan doesn't need to be serviced
from the very first month it is availed. The equated monthly instalments (EMIs) do
not begin immediately but at a later date when you finish the course and start to
earn. Most popularly, these organizations are divided into 2 types:
1. Banks
Banks customarily function by borrowing money from it's consumers (fixed
deposits and savings accounts) and giving them profitable interest rates on
those. In order to get an education loan from a bank, students have to submit an
application after which the process involves approval and disbursal.
2. NBFCs (Non-Banking Financial Companies)
As the name itself explains, NBFCs are private financial institutions that offer
various loans to respective clients. Since, NBFCs lend and make investments,
their activities are akin to that of banks. However, unlike banks, NBFCs offer a
wider range and amounts of loans at higher interest rates.
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6. The primary differences between banks and NBFCs are as
follows:
NBFCs
Banks
Factors of
differentiation
Higher in NBFCs
Min. 5 working days
1-2% of loan amount
Loan granted
regardless of course
Interest rates
Processing time
Processing rates
Course selection
Lower in banks
Min. 15 working days
Low to none
Loan depends upon
course selection
No tax benefits
Tax benefits Income tax benefits
Provide loans
without collaterals
Collateral
requirement
Mostly do not provide
loans without collateral
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7. Make a calculated analysis of all the assets which can be used to
dissolve/liquify/sell to compensate for the expenses.
Calculate the actual student loan value by comparing interest rates commonly
known as APR (Annual Percentage Rate).
Or you could consult with an education loan expert or a study abroad education
counsellor. Why don’t you speak to our counsellor to get an estimate? Your first
session will be free of charge. Just log onto iSchoolConnect and book a slot with
us.
How to apply for student loans? Here's a step-by-step guide:
Step 1: Applying to FAFSA
FAFSA or the Federal Application of Federal Student Aid is a government
organization in the U.S that selects students based on their financial status and
provides them with grants and scholarships from the government. While FAFSA
generally provides these grants and scholarships to their citizens only, there are
many universities in the U.S that use their analysis to determine the financial
status of the student applying. So this may help you get scholarships and grants
from the college directly.
Fill out an application with them. The application dates generally range from
January 1st to June 30th. The FAFSA asks questions to determine the student’s
level of financial need and establishes the amount of money the student or their
parents are expected to pay out of pocket for the student’s college expenses.
Step 2: Contacting the Financial Aid Departments of Universities
Connect with the Financial Aid Departments of the various universities that
you’ve gotten into and inquire about the various aids they offer. A general rule of
thumb is to complete your scholarship applications a year prior to which you
plan on getting enrolled. This is because most colleges decide to give their
grants and scholarships early on, making it much tougher to get them afterward.
Step 3: Estimate of the amount of student loan for studying abroad
required
The pointers that you must take care of whilst calculating the funding required
to study abroad to determine the amount of student loan debt that you’ll need
to take on are listed below:
Once you do this, you finally have an estimate as to how much it is going to cost
you. Now let’s see how you go about applying for student loans.
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8. Check if the selected university/college/institution is on the bank list of colleges it
provides education loans for studying abroad.
If it’s not, don’t worry the student loan will still be processed (at a higher interest
rate) if your application is credit-worthy.
Check the list of permitted courses from the banking institutions list to find your
prospect course there.
Get a letter of acceptance (conditional admission offer) from your institution’s
admission office.
Check the value of your assets that you are willing to put as collateral and the
required documents for their validation as requested by the bank.
Once you do this, you’ve finally got the necessary information and the education
loan eligibility settled. All that’s left is to go to your selected banks and follow the
procedure to apply for a student loan.
Step 4: Creating a Study Loan Application
Before applying for student loans, you must know the different types of loans
that you can get. Broadly, education loan for studying abroad can be divided into
two types:
Unsecured Student Loans: The loan doesn’t need to be protected by a guarantee
and no collateral is needed to be put on the loan.
Secured Student Loans: The loans that do require collateral to be submitted
against the loan taken.
Now that you’ve figured out a list of colleges that you want to apply to and you’ve
spoken with their respective Financial Aid departments, you must do the
following to make sure you’re are eligible for the student loans:-
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9. and universities based
on your scores and
expectations.
Counselors
at iSchoolConnect assis
t you every step of the
way and help you find
the program you are
passionate about. Book
a consultation today
and gear up to pursue
your degree of dreams
in the country of your
choice. Select the
country and the
Statement of Student Loan application: You must submit all the related
documents such as your application form, related personal documents, and your
financial and academic documents.
Approval of Loan: The approval of the loan takes place based on your credit
history, post-qualification repayment capacity, collateral strength, and bank
policies. This process generally takes 2-7 days.
Negotiation of Interest Rate and Additional Charges: This is where your sales
skills are put to the test. You can negotiate with the bank for the
reduction/discount on the interest rate. You can mark-up charges like
‘Origination fees’, ‘Processing Fees’, ‘Forex Charges’, ‘Deed Writing Charges’, etc.
Confirmation and issue of Loan Conditional Offer: Finally, you’ve got your loan.
You can present this to the immigration and visa offices as proof of funds. This
also acts as an unconditional offer of admission for academic institutions.
Step 5: Study Loan Application and Finalisation
The application process for getting a study loan to study abroad is mentioned
below:-
Conclusion:
Once your student loan has been approved, you’re free to pursue your study
abroad dreams and fly overseas. All these steps of getting a student loan for
studying abroad may seem daunting right now but trust me, studying abroad on
a tight budget is possible. All it requires is a little perseverance and I’m sure you’ll
be flying abroad closer to your dreams, in no time.
For help with any questions regarding studying abroad, please feel free to
contact us at iSchoolConnect. Happy studying!
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