stduy abroad education loan
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CAREERS360
KNOW ALLABOUT
EDUCATIONLOAN How to take education loan Eligibility Criteria Application Checklist
Education Loan Interest Rate Education Loans from Different Banks & more...
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A Career is a Life KNOW ALL ABOUT EDUCATION LOAN
Introduction 03
How much education loan should you take? 04
Interest rate of education loan 05
Default on education loan repayment 06
Document checklist to apply for education loan 07
Eligibility criteria to take education loan 09
Steps to take education loan 10
Education loan from State Bank of India 11
Education Loan from Punjab National Bank 13
Education loan from Canara Bank 15
Education loan from Credila 17
Other Useful Resources 19
CONTENTS
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A Career is a Life KNOW ALL ABOUT EDUCATION LOAN
An education loan can be a saving grace. However, high
interest rates and the cumbersome process could
come as a dampener. Read on to find out how to get
the best deal?
The first thing that comes to a students mind while arrang-
ing funds for his education abroad are Scholarships and
Financial aids. However, given the huge crowd and competi-
tion in international education it is not always possible to
secure such benefits.
As such, Education loans to study abroad become an easier
way to secure funds. The following points helps you gain
some insight into why exactly you should consider applying
for an education loan for studying abroad:
1. Education loan is one of the priority sector under which
banks are required to lend by the Reserve Bank of India.
2. Students applying for education loan for education
abroad can avail tax benefits under section 80 (E) of
Income Tax Act 1961. Some of the highlights of this Act
are:
l Loan should be taken from approved financial insti-
tution
l Loan should be for full-time studies for any graduate
or postgraduate course
l Deduction is allowed for a continuous period of eight
years
INTRODUCTION
Most banks are into lending of education loans. In fact,
study loans are categorised as priority sector lending for
public sector banks. But again, it does not mean that lending
institutions are quick to disburse loans to all kinds for all pro-
grammes and for all institutions. In this E-Book, we discuss
about all that you need to know about taking an education
loan to fund your studies.
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A Career is a Life KNOW ALL ABOUT EDUCATION LOAN
This question may haunt you if you are dont do cost
benefit analysis. The maximum loan that lenders dis-
burse for studies in India is Rs. 10 lakhs and for over-
seas, Rs. 20 lakhs. Credila provides loan above Rs 20 lakhs.
The education loan you should take would depend on the
course fees and your capacity of generating down payment
(payment from own pocket) towards it. For a loan above Rs.
4 lakhs, one has to generate minimum down-payment of 5%
for studies in India and 15% for studies abroad. For a loan
HOW MUCH EDUCATION LOAN SHOULD YOU TAKE?
below Rs. 4 lakhs, one can get the entire fees as loan, as the
banks claim. But you can pay the down payment or the mar-
gin money piecemeal. Allahabad Bank, for instance, takes the
margin money on year-to-year basis and disbursements are
made on a pro-rata basis. Though a student may be eligible
for uppermost loan limit he should exercise prudence while
filling the loan amount. If the course for which the loan is
being taken enables better earnings then it may more than
justify the loan.
Loan
amount
Moratorium-
period
Loan
repayment
period
Interest
rate
Loan
amount
after
moratorium
EMI Gross
Salary
Net
Salary
50% of
Net
Salary for
servicing
debt
Amount
left in
hand
after
paying EMI
500,000 3 7 11% 657,500 11,085.89 25,000 22,000 11,085.89 10914.11
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A Career is a Life KNOW ALL ABOUT EDUCATION LOAN
Interest rate of education loan depends on whether you
are studying in India or abroad, the course that you are
applying for, your loan amount and the tenure. Students
getting admission to highly rated institutions are offered
loans with a lower rate of interest. There have been talks
that IBA will soon come up with comprehensive ratings of
the institutes to guide banks in making right decisions while
granting educational loans. From a students perspective, the
irony of it is that they will have to shell out more for Equated
Monthly instalments (EMI) due to high interest rates in case
institutes have been rated on the downside. On the other
hand its likely they would be placed at lower packages from
such institutes! Special concessions on interest rates of 0.5
percent are available for women students.
Two types of interest ratesThese comprise fixed interest and floating interest rate.
Usually, nationalised banks offer variable interest rates for
student loans, while private and foreign banks offer fixed
interest rates. Interest rates vary between 12 to 16 percent.
Considering the present macro-economic environment it is
advisable to go for floating interest rate loans. SBI is the lead-
ing player with 25 percent share in education loan segment.
Simple vs. compound interest
Simple interest is to be charged during the study periodand up to commencement of repayment. There have been
complaints that banks charge compound interest. Servicing
of interest during the moratorium period is optional and
students can avail one percent rebate on interest rate if they
decide to pay.
INTEREST RATE OF EDUCATION LOAN
EDUCATION LOAN RECKONER
l Education loan procurement is easy if the pro-gramme is recognised and the college/ universityis government affiliated/ approved. Education loansanction is easy for job-oriented professional/tech-nical courses. Students applying in private collegeswhich have good placement record are entertained.
l Banks lend up to Rs. 10 lakh for studies in India andRs. 20 lakh for education overseas.
l Banks provide loans only between 75 to 90 per centdepending on the total cost of the course and therest of the fund percentage you have to generatefrom your own sources. Credila, however, providesloans above Rs. 20 lakhs and without any marginmoney
l Education loan interest rate varies from bank to
bank, which could be anywhere between 11-14%
l Banks may claim to offer loan up to Rs 4 lakh withoutcollateral, however, thats usually on paper. Banksask for collateral.
l Collateral includes assets like national securitycertificates, insurance policies, bonds and propertypapers.
l How much credit to take? Check the placement re-cord of the institution and do a rough calculation onthe expected monthly income you are likely to drawas fresh employee. Dont forget to take into account
the running expenses.
l A few banks allow a moratorium on interest payment,but under this option, the interest is compoundedquarterly and added to the principal sum for repay-ment. Banks offer lower interest rates (usually onepercent if you start repayment during the morato-rium period).
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A Career is a Life KNOW ALL ABOUT EDUCATION LOAN
The education loan repayment period is between five
and seven years and it starts from one year after the
course completion or six months after securing a job,
whichever is earlier.
Considering that the default is unintentional, when a stu-
dent foresees hiccups arising in loan servicing then he/she
should request the lender to re-schedule the payoff before-
hand. If the lender agrees - as they did in quite a few cases
in early 2009 when the employment markets was adversely
hit - then it is fine. Otherwise there is no real option. In case
the student is not able to pay education loan, the default
will be reflected in his credit information report. Default
gets reported in the Credit Information Bureau Limited
(CIBIL) as well, which can affect the credit history of the
student. Legal proceedings take place in case of defaults.
Also, the collateral can be confiscated in case of the default.
If students are regular in servicing the loan then access to
DEFAULT ON EDUCATION LOAN REPAYMENT
future loans like auto Loans, housing loans can be negotiated
at competitive rates, based on the good credit history. So,
follow the golden rules and approach your dreams in good
faith. Set off now.
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A Career is a Life KNOW ALL ABOUT EDUCATION LOAN
lA completed and signed application form
l Two passport size photographs applicant
l Photo id of the applicant. The applicant can submit one of
the following
a) Passport
b) Pan card
c) Voters ID card
d) Driving license
e) Employee ID (if working)
f) Defence ID card
g) Aadhar Card
h) Photo ID issued by central or state government
i) Bank passbook with photograph of the account attested
by the bank
l Residence proof of the applicant
a) Passport with address
b) Driving license with address
c) Bank statement with address
d) Ration card (except Maharashtra)
e) Aadhar card
DOCUMENT CHECKLIST TO APPLYFOR EDUCATION LOAN
f) Telephone/ electricity/ water bill not older than three
months
g) Voters ID card
lAdmission documents
a) Printed admission offer letter from the university/insti-
tute. The letter must be on their letter head and must be
signed by the authority
b) I-20 form for students going to the US for higher studies
c) Fee details of the institute/ university
lAcademic documents
a) Mark sheets and certificates of Class 10 and Class 12
b) Mark sheets and certificates of graduation (if the candi-
date is going for post graduate studies)
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A Career is a Life KNOW ALL ABOUT EDUCATION LOAN
c) Documents of scholarships (if the candidate obtained
one)
d) Documents of any entrance exam take- GRE, GMAT,
IELTS, TOEFL
l Income proof of the applicant
a) In case of a salaried employee:
i. Salary certificate on employers letterhead or latestthree months salary slip
ii. Last two years Form 16 from the employer
iii. Last two years Income Tax Returns
iv. Any other valid income proof
b) In case of self employed person
i. Last two years Income Tax Returns
ii. Last two years Certified Financial Statements or
Provisional Financial Statements Duly Certified by
CA
iii. Proof of office
iv. Any other valid income proof
l Income proof of the guarantor if the applicant is notemployed. The same documents mentioned above is
required for guarantor also
l Declaration/ affidavit confirming that the candidate has
not obtained any other loan from other banks
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A Career is a Life KNOW ALL ABOUT EDUCATION LOAN
l The candidate must be a citizen of India
l The candidate must have obtained a place to study in one
of the recognised universities/ institutes abroad
l The candidate must be aged between 16 and 26 years old
l The candidate must have good academic record
l The candidate must submit all the required documents for
education loan
l The co-applicant/ guarantor must be either primary
(parents, spouse, siblings) or secondary (father-in-law,
mother-in-law, brother-in-law, paternal/maternal uncles/
aunts)
ELIGIBILITY CRITERIA TO TAKE EDUCATION LOAN
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A Career is a Life KNOW ALL ABOUT EDUCATION LOAN
The State Bank of India is one of the top education
loan providers in India. Every year the bank grants
loans to the students who secured admissions in
various recognized universities in India and abroad with no
processing fee. Here are the details of obtaining a studentloan from SBI.
Eligibility to get education loan from SBIThe candidate must be a citizen of India
l The candidate must have obtained admission in any of the
recognised universities in the world
EDUCATION LOAN FROM STATE BANK OF INDIA
l The candidate must have obtained admission to one of the
following courses:
a) Job oriented professional degree courses
b) Job oriented professional diploma courses
c) Job oriented technical degree coursesd) Courses conducted by CPA (Certified Public Account-
ant) in USA and CIMA (Chartered Institute of Man-
agement Accountants) London
Education loan amount given by SBISBI provides education loan for upto Rs. 30 lakhs for stu-
dents who wish to go abroad for higher studies. The expenses
covered in the student loan are:
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A Career is a Life KNOW ALL ABOUT EDUCATION LOAN
l Tuition fee payable to the university/ college
l Examination/ library fee
l Caution deposit/ refundable deposit
l Travel expenses
Documents required to takeeducation loan from SBI
l Completed application form
l Two passport size photographs
l Letter of admission from the University
l Documents on the cost of studies
l PAN card of the candidate
l Proof of identity (any one)
a) Passport
b) Driving license
c) Voters ID card
d) Aadhar card
l Proof of residence
a) Passport
b) Driving license
c) Voters ID card
d) Electricity bille) Telephone bill
l Student/ co-borrower/ guarantors bank account state-
ment for the last six months
l Statement of assets and liabilities of student/ co-borrow-
er/ guarantor
l Student/ co-borrower/ guarantors proof of income
Security needed to take education loan from SBIIf the candidate is taking a student loan up to four lakhs,
the only security needed is the parent or guardian as the
co-borrower. If the loan amount is between 4 lakhs and 7.5
lakhs, the candidate must provide parent or guardian as the
co-borrower and collateral security in the form of the details
of the Gross Annual Income of the parent or guardian. If the
candidate is applying for an education loan above 7.5 lakhs,
the parent or guardian must be the co-borrower and the can-
didate must show tangible collateral security.
Repayment of education loan from SBI
The candidates who take educational loan upto 4 lakhs or
between 4 lakhs and 7.5 lakhs will get 10 years to repay the
amount. The repayment period for the loan amount above
7.5 lakhs is 20 years.
The rate of interest of education loan is given below:
Loanamount
Above BaseRate
CurrentRate
Upto Rs. 4 lakhs 3.50% 13.50%
4-7.5 lakhs 3.75% 13.75%
Above 7.5 lakhs 1.75% 11.75%
* Girls will have 0.50% concession
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A Career is a Life KNOW ALL ABOUT EDUCATION LOAN
The Punjab National Bank provides various schemes
to issue education loan for the students who want to
go abroad for higher studies. The educational loan
to study abroad by the PNB is called PNB Saraswati. The
bank provides education loan for upto Rs. 20 lakh for stud-ies abroad.
Courses covered for PNB education loanThe Punjab National Bank provides student loan for the
below given courses:
l Job oriented professional courses offered by reputed uni-
versities
EDUCATION LOAN FROM PUNJAB NATIONAL BANK
l Job oriented technical courses offered by reputed univer-
sities
l Post graduation courses such as MBA, MCA and MS
l Courses conducted by CIMA- London and CPA in USA
l Diploma and degree courses such as pilot training, ship-
ping, aeronautical etc. Provided by recognised regulatory
bodies abroad. The diploma courses other than these will
not get an education loan from PNB
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A Career is a Life KNOW ALL ABOUT EDUCATION LOAN
Eligibility to take education loan from PNBThe eligibility criteria for education loan from PNB are:
l The candidate must be an Indian citizen
l The candidate must have obtained admission in a reputed
university/ institute abroad
Application checklist for educationloan from PNB
l Completed application form
l Passport size photograph
l Proof of address
a) Passport
b) Driving license
c) Voters ID card
d) Electricity bill
e) Telephone bill
l Proof of age
lAcademic transcripts and certificates of the latest degree
l Prospectus of the university/college the applicant is going
to join which explains the tuition fee, examination fee and
hostel fee
l Information about the assets and liabilities of the parents
or guarantor
l Copy of passport and visa
Expenses considered for the educationloan from PNB
l Fee payable to the university/ college
l Examination fee
l Travel expenses from the home country to the host country
l Caution deposit
l Purchase of books etc.
Security needed to take education loan from SBIThere is no security needed to take education loan for upto
Rs. 4 lakh. However, the guardian or parent must be the co-
borrower. The candidates taking loan between Rs. 4 lakh
and Rs. 7.5 lakh must provide collateral security in the form
of suitable third party guarantee. For the loans above 7.5
lakh, the candidate must provide tangible collateral security
suitable value acceptable to bank along with the assignment
of future income of the student for payment of installments.
Interest rate for education loan by PNB
Amount of Loan Repayable inless than 3 yrs
Repayable in3 yrs & above
Upto Rs 4 lakh BR+3.00%(13.25%)
BR+2.50%+TP (13.25%)
Between Rs 4 lakhand Rs 7.50 lakh
BR+4% (14.25%) BR+3.50%+TP (14.25%)
AboveRs 7.50 lakh
BR+2.00%(12.25%)
BR+2.00%*(12.25%)
Loan repaymentThe students who are taking the loan upto Rs. 7.5 lakh will
get 10 years repayment period. The repayment period of
the education loan above that is 15 years. The moratorium
period to start repaying the loan is six month to one year after
completing the course or getting a job (whichever is first).
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A Career is a Life KNOW ALL ABOUT EDUCATION LOAN
Canara Bank offers various educational loan schemes
for the students doing higher studies in India and
abroad. The bank provides upto Rs. 20 lakh loan to
the students who go abroad for higher studies.
Eligibility to apply for education loan fromCanara Bank
l The candidate must be a citizen of India
l The candidate must have obtained admission in a reputed
university/ institute abroad
l The candidates must be going abroad to study:
a) Job oriented professional courses
b) Job oriented technical courses
c) Post graduation courses such as MBA and MCA
d) Courses conducted by CIMA- London and CPA in
USA
EDUCATION
LOAN FROM
CANARA BANK
e) Diploma and degree courses such as pilot training,
shipping, aeronautical etc.
The processing charge for the loans to study abroad is 1% of
the loan amount. In case the sanctioned loan amount is taken
by the candidate, the amount will be reimbursed.
The education loan amount will be directly disbursed to the
university/ institute. There is no margin for the candidates
who take education loan for upto Rs. 4 lakh. The margin for
the candidates who take loan for above Rs. 4 lakh is 15%.
Documents checklist for educationloan from Canara Bank
l Completed application form
l Mark sheets of all qualifying exams
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A Career is a Life KNOW ALL ABOUT EDUCATION LOAN
Cedilla is a HDFC Limited Company that provides
education loan for students. Credila provides loans in
Indian rupees that can be converted to the currency
of the country the student goes for higher education. The
repayment of the loan will be in Indian rupee. Credila loans
start from Rs. One lakh upto Rs. 20 lakh.
Eligibility to get education loan from Credila
l The candidate must be an Indian citizen
l The candidate must be above the age of 18 years
l The co-borrower must have a bank account in one of the
Indian banks with cheque writing facilities
l The candidate must have obtained admission in a recog-
nised university abroad
Co-borrowers eligibility
l The co-borrower must be an Indian citizen
l The co-borrower must be a relative of the applicant such
as father/ mother/ brother/ sister/ spouse (for married
candidates)
l Co-borrowers has co-extensive liability with the candi-
date
l The co-borrower must provide valid proof to establish therelationship with the candidate
l In case the collateral security cannot be provided by the
relatives mentioned above, the candidate can also bring
father-in-law/ mother-in-law/ sister-in-law/ brother-in-
law/ maternal or paternal uncle/ aunt/ grandparents/ first
cousins
EDUCATION LOAN FROM CREDILA
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A Career is a Life KNOW ALL ABOUT EDUCATION LOAN
Education Loan:The Myths
Study abroadEducation loan:
How it works toyour advantage
Educationloan FAQ
OTHER USEFUL RESOURCES
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