You have received the big letter – Congrats!
What is next?
Apply for your study abroad loan, and get it sanctioned!
Education loan is a support system for your study abroad package – covering your tuition fees, accommodation charges, food costs and your travel expenses. Know about the popular banks that provide education loans, and some of the myths surrounding a loan.
You should know when is the right time to apply for an education loan, unless you are opting for a need-blind admission or a scholarship. In addition to this, you should be aware of the preliminary tidbits before you apply for a loan.
We have been guiding you at every step of your study abroad journey; you just need to do a thorough research before jumping into any conclusion.
Reasons for the rejection of your study abroad loan could be –
Collateral means a security source that is offered to the bank to avail a loan. Banks usually ask for some assurance so this is done to curb the future risk of non-repayment by the student. Make sure you know in & out about such policies.
Collateral is of two types:
- Movable – Fixed deposit. Make sure you show your savings while approaching for an education loan.
- Immoveable – A property mortgage like a flat, house, agricultural land, etc.
Collateral is needed for loans above INR 7.5 lakhs whereas for loans between INR 4 and 7 lakhs, a third-party guarantor is always needed.
Notable exceptions are a few banks that offer loans without collaterals:
- HDFC bank – collateral not required up to INR 7.5 lakhs
- HSBC bank – collateral not required up to INR 5 lakhs
- SBI bank – collateral not required up to INR 4 lakhs
- IDBI bank – collateral not required up to INR 4 lakhs
- Punjab and Sind bank – collateral not required up to INR 4 lakhs.
Note: Please cross-verify with the banks mentioned above, to know more about the collateral policies.
Indian banks give great importance to a family’s financial standing so they will scrutinise each detail to find out if your family (parents or spouse) is capable of repaying the remainder sum of the loan money, once you go abroad.
3. CIBIL score
The CIBIL score plays a crucial role in determining a study abroad loan. Ideally, 79% of loans are sanctioned if the CIBIL score is above 750. So, higher is the CIBIL, higher are the chances of getting a loan.
Banks also consider the CIBIL score of parents or guardian since they are guarantors. Make sure you have all answers ready before you apply for the loan.
4. Loan size
Almost all banks refuse to cover the full cost of attendance; in that case you need to make sure you have some additional funding to cover the initial amount of the loan.
If you get admission through some quotas, no way banks are going to approve your loan because they might think you will not focus on your studies in future and eventually never repay the loan on time.
It rests on you how you convince them to get the loan sanctioned.
6. College you apply at
Banks mostly consider colleges or universities which are high-ranking, not the ones that they never heard of or the ones that have below-average rankings.
7. Course you apply for
Some banks might consider courses like Engineering, Science and Management to be potential money-making subjects, and subjects like Arts, History and English as some humdrum subjects.
In such circumstances, you need to ensure that you have enough knowledge in your field so that no one can make you feel dejected.
You should be careful with your documents; never, never produce fake documents before the banks or else you might face some serious legal actions.
9. Other reasons
Check the service area of the bank where you have applied for a loan (check the RBI guidelines too). Needless to say, if you are not an Indian citizen, your loan will be rejected. Moreover, some banks do give preference to the age limit (sounds unusual huh!).
10. The key!
Last but not least, if you do not have the admission offer letter, forget about an education loan.
In addition to the above information, following three websites will lead you to the right track:
- Pradhan Mantri Vidya Lakshmi Karyakram (PMVLK)
- The Paras Education Foundation
Before any bank gives you a facepalm, you should always ask them to provide legit reasons if they reject your education loan. Do not take anything for granted, and never accept something without receiving a proper explanation.