In India the organised sanction of study loans by banks to students aspiring to complete their higher studies abroad began in 2001. A number of things have changed since the early beginnings in 2001.
The global economy has witnessed one of its worst down-turns; the U.S. dollar has hit a new low and then regained to bounce back and global crude oil prices are at an all-time high. In addition to all this the Indian economy is battling against a number of factors that make the disbursal of education-loans a very choosy affair. This has been actually caused by a majority of the students becoming loan defaulters and the banks classifying the loans granted to them as bad-debts.
Things look slightly better now with the Reserve Bank of India announcing welfare measures, which include the speedy disbursal of loans to deserving and meritorious students. This article looks at some of the top Indian banks, which offer study abroad loans.
|Name of Bank||Loan Amount||Rate of Interest per Annum|
|Axis Bank||Up to Rs 20 lakhs||13.75% to 15.75%|
|Bank of Baroda||Up to Rs 20 lakhs||10% for loans up to Rs 4 lakhs and 12% for higher amounts|
|Up to Rs 20 lakhs||11% for loans up to Rs 4 lakhs, 12% for loans between Rs 4 lakhs and Rs 7.50 lakhs and 9.50% for loans greater than Rs 7.50 lakhs|
|Credila (HDFC Bank Company)||Up to Rs 20 lakhs||13.5%|
|ICICI Bank||Up to Rs 20 lakhs||Up to Rs 4 lakhs no interest above Rs 4 lakhs 15%|
|Indian Overseas bank||Up to Rs 40 lakhs||Up to Rs 4 lakhs no interest above Rs 4 lakhs 15%|
|State Bank of India||Up to Rs 30 lakhs||Up to Rs 4 lakhs - 13.50%, between Rs 4 lakhs and Rs 7.50 lakhs - 13.75% and above Rs 7.50 lakhs - 11.75%|
Disclaimer - Please contact the concerned bank for specific details of loan eligibility, rates of interest and repayment terms and conditions.
Recently one of the students who approached Hotcourses India for study abroad guidance was granted a loan for INR 2,00,0000 by Credila and will be now flying to the USA to complete his studies.
Some Points to be Noted
1. Family comes First:
Remember if you can get your parents to support you by being a joint-borrower it may help you. See the financial capabilities and liabilities of your family and then opt for this feature.
2. Knowledge is Power:
When you plan to buy a new mobile phone, you spend a lot of time researching on the features and value for money and the credibility of the brand. This is all for a phone that in all due probability like all other modern technology will be obsolete in a couple of years. Now an education loan is an investment; a few lakhs more and 0.5% less interest and a longer repayment period may help you a lot. So please take your time; research thoroughly; ask for quotes from multiple banks and then select the most favourable bank.
3. Read the Fine-print:
‘The Devil lies in the details.’
Be sure to read the fine-print and get clarity on the rate of interest that will be levied, if the rate will be impacted by the base rate (determined by the RBI), the tenure of the loan and when repayment should begin and any pre-payment charges. Be sure to check if there is a provision for extension of the tenure in case there is an unforeseen delay in the completion of the course and your ability to secure a job.
4. Benefits for the Economically Weaker:
The government-managed banks offer some benefits in the form of interest-subsidy for students coming from the economically weaker strata of society. Please check with the bank if you are eligible for any additional benefits.
What does an Education Loan Cover?
Typically an education-loan covers the following expenses:
Accommodation charges, expenses related to the purchase of books and equipment, examination and library fee, travel expenses, and insurance premium for the student.
Note - The bank does not pay you any money; the loan amount is credited directly into the institution’s account at the beginning of each semester or year as stipulated by the institution.
Courses for which Loans are Offered
Students aspiring to study all regular undergraduate, postgraduate and doctoral programmes offered by reputed institutions are eligible for an education loan. Usually short-term courses in soft-skills, catering, animation, English-study, etc, are not considered for education loans.
Most banks also do not offer loans for those students who want to take up a vocational course - this is very important as a number of Indian students plan to complete a vocational course in a TAFE institution in Australia and then progress to a full-time degree. Please double-check and confirm with your bank if the course that you aspire to study will be covered by your bank loan.
Remember the education loan has to be paid back with interest; so focus on your studies to get a good academic score; secure a relevant job and be honest and pay back your loan on time. If you default on your loan your credit-ratings will take a hit, which will have a negative impact in the future. Also remember to apply to relevant scholarships; whatever money that comes that way will be an additional support to meet your academic expenses.