Student Loans Guide 2023: Eligibility Criteria, Application Process & Repayment Period

Going abroad to study is a great opportunity to further your career and goals, as the quality of education abroad is incomparable. But many Indian students shy away from considering this opportunity as the tuition fees and the living expenses in foreign countries are very high. It's important to not just consider your career, but also your personal goals while studying abroad.

All banks, both public and commercial, provide student loans for international studies to help students get out of this bind. It's simple to obtain a student loan; all you need to know is the application procedure. Here is everything you need to know before submitting an application for a student loan. Check: Public v/s Private Education Loan Providers

Note: This information is generic and the particulars may differ from bank to bank. Please check with the bank of your choice.  

You will be considered the borrower and your parents or guardians will be considered co-borrowers when you apply for a loan. Each bank has a different loan amount and set of stipulations. Currently, Indian banks would grant up to Rs 1.5 Cr (SBI, HDFC) to students who want to study overseas. It includes:

• Fees due to the hostel and the college
• Examination, library, and lab costs
• Acquisition of books, tools, and instruments
• Building fund, refundable deposit, and caution deposit
• Travelling costs
• Buying a laptop (if required for the course)
• Life Insurance premium for student borrowers (if applicable)

Student Eligibility Criteria

The first thing is to be aware of whether you are eligible to apply for the loan or not. The general eligibility criteria that are followed by all the banks are –

• You and your co-applicant (if any) should be a citizen of India.
• You need to have a good academic history.
• You need to be applying for admission to a professional or technical programme. Banks assert that the chosen course of study should be career-focused.
• You must already be a student at an international institution.
• You must be older than 18 to apply for a loan; otherwise, your parents must do so.

Eligibility for Course

• For Graduation: Job-oriented professional or technical courses offered by reputed universities
• For Post-graduation: MCA, MBA, MS or equivalent diplomas

Providing security means you are surrendering some form of investment to the bank. If you cannot pay back the loan, the bank has the right to sell these assets and recover the money you owe them.

Banks accept security in the form of:

• Government securities/public sector bonds
• Immovable property like land or building
• Units of UTI, NSC, KVP, LIC policy, gold, shares/debentures
• Bank deposit or fixed deposit in the name of the student, parent/guardian or any other third party with a suitable margin.

Check more at: Eligibility Criteria for Education Loan

Guarantor/Co-obligant

The guarantor will be required by law to make payment in the event of your default. Having a guarantor makes the student or his parents morally obligated to repay the loan, which is why it is necessary. The parent's assurance may also serve as the guarantor. The bank may request a third-party guarantee in lieu of security if the loan amount is between Rs 4 lakh and Rs 7.5 lakh. A student guarantee is required wherever a loan is approved in the parent's name.

The acceptance letter you received from the institution confirming your enrollment in the course and outlining the cost plan is the major document you must provide. To demonstrate a high academic record, you will also need to present the mark sheet from the most recent qualifying exams.

Note: All banks have different requirements for documentation, so you need to confirm with the bank first.

Repayment starts only after the end of the course. If the student gets employed within one year after the completion of the course, the repayment will start immediately after one to six months from the date of employment (time varies from bank to bank).

If you are unable to secure a job within a full year of completing the course then repayment starts, irrespective of your employment status.

Read More: Indian Banks offering Education Loans for Studying Abroad: Interest, Eligibility, Documents

How to apply for the Loan?

Lenders have various demands placed on the application profile. They also offer several lists of universities and nations where a borrower can apply. It takes more than a month to get loan conditions and interest rates for repayment, and several papers must be supplied at various stages. In case you're finding it difficult to apply for an education loan, you may also apply for loan through Shiksha website. Let's examine the normal application process used by banks and NBFCs when requesting an education loan.

Banks: Different requirements are made on the application profile by lenders. To find out more about the loan application procedure, you may apply online or go to the relevant bank. When the loan offer is accepted, the bank will begin the process by gathering your paperwork, evaluating the course of study you wish to utilise the money for, and keeping you informed. Over a month is often required for Indian banks to react with a loan offer with standardised interest rates. Following loan approval, funds are disbursed in instalments, and it is your responsibility to remit tuition and housing fees to the international university you have applied to.

NBFCs: The NBFC industry seems more modern. They have a shorter application process than banks, but their standards are much more stringent because they don't require collateral before authorising a loan. The bulk of applications are done offline, and you frequently have to wait more than 30 days after the process of submitting your documents to obtain the loan offer and interest rates you need to accept. As a student, you currently occupy a dangerous position on the ledge without knowledge of your interest rates or loan amounts. Once more, the loans include high-interest rates, high processing fees, and variable rates.

Maximum Repayment Period of Loan

Within 5-7 years of the start of repayment, student loans are meant to be repaid. A maximum of two years of additional time may be given to the student to finish the course if they are unable to do so in the allotted period. You typically have up to 15 years to pay back the entire loan.

Step 1: Check whether your desired course or institute is recognised by the bank

Step 2: Determine how much loan you would need

You should make a rough estimation of your loan requirement and discuss with your family how much they can afford. Then figure out the amount you require to take as a loan.

Step 3: Look for various loan options

Research online, call or visit all the banks of your choice and get all the details about the loan options. This is a great opportunity to clarify all your doubts and questions regarding the loan process of each bank.

Step 4: Figure out the best one by comparing the different options

Ensure that you are clear with all the terms and conditions stated by the bank before you opt for an education loan. Make sure you are clear about these things:

• Which bank offers the lowest interest rate?
• For how long will I be paying the loan?
• How long can I defer payments while studying?
• Is there any option for deferring payments if I’m facing a financial problem?

Step 5: Apply for the loan after clarifying all your doubts

The following documents are required for Loan Application:

1. Completed education loan application form
2. All academic records and mark sheets of last qualifying examination
3. Proof of admission, scholarship etc.
4. Expense sheet of the specified course, provided by the university
5. Passport-size photographs
6. Borrower's bank account statement for the last six months
7. Income tax assessment order, of last 2 years
8. Statement of assets and liabilities, of the Co-borrower
9. Proof of Income (salary slips/Form 16)

Read: Indian Banks Offering Education Loans for Studying Abroad

Get in touch with India’s top-rated loan providers and apply for an education loan through Shiksha Study Abroad