Applying for Education Loan to Study in New Zealand

Studying abroad in top international universities is on the bucket list of most of the students. However, the budget is the deciding factor. If you need financial assistance, you can take an education loan to finance your studies abroad. Applying for an education loan to study abroad, requires careful research and planning to select the best possible terms.

If you are looking to study in New Zealand you would most likely need an educational loan to cover up the expenses. Not every student is lucky enough to get a scholarship for higher studies in NZ, so they apply for student loans. Applying for a study loan is not complex, if you have all the required documents and you fulfil eligibility.

Several private and government banks offer education loans to meritorious students for higher studies in India or abroad. To select the best education loan for abroad studies, you need to understand factors like the loan amount, rate of interest, EMI, repayment options, and other terms and conditions. The next step is to apply for a student loan with the required documents. This article will be helpful for those students who have plans to borrow study loans and have less information about the application process.

Check: Student Guide to New Zealand (NZ)

How to Apply for an Educational Loan

To avail education loan aspirants need to meet some eligibility criteria:

Eligibility Criteria for Student Loan

• Candidates seeking an educational loan should be an Indian national
• The student should have secured admission to professional/ technical courses through the entrance test/selection process
• The student should have secured admission to a foreign university/institution

Documents Required

Before applying for an educational loan, candidates must keep the following documents in place:

• Mark sheets of the last qualifying examination for school and graduate studies in India
• Proof of admission to the course
• Scheduling of expenses for the course
• Copies of the letter confirming the scholarship
• Copies of foreign exchange permit, if applicable
• Two passport-size photographs
• Bank statement for the last six months of the borrower
• Income tax assessment order not more than two years
• Brief statements of assets and liabilities of the borrower
• If you are not an existing bank customer you would need to establish your identity and give proof of residence

Check out: Cost of Living in New Zealand

Student Loan Collateral

For granting loans to students, banks demand the following security/ collateral security. However, the requirements vary from bank to bank.

• Loan up to Rs 4 lakhs - No collateral security
• A loan above Rs 4 lakhs to Rs 7.5 lakhs - Security in the form of a satisfactory third-party guarantee
• A loan above Rs 7.5 lakhs - Collateral security of suitable, Co-obligation of parents/ guardians/third Party along with assignment of future Income of the student for payment of Installments

Rate of Interest

An education loan interest rate is the percentage charged by the banks or NBFCs for borrowing money to finance your education.

• The rate of interest is 10.75 % for up to Rs 4 lakhs and it does not exceed the Prime Lending Rates (PLR)
• For a loan above Rs 4 lakhs, the interest rate is 11.75 % and it will not exceed PLR plus 1 per cent
• However, the rate of interest is subject to changes as per the specifications of RBI or the concerned bank.

Education Loan Repayment

Students can repay the loan in a time period of 5-7 years. Repayment of both principal and interest will start after one year after completion of the course or six months after getting employment, whichever is earlier.
Interest will be charged on a simple basis during the period of study/moratorium period. At the commencement of repayment, the accrued interest is added to the principal amount and Equated Monthly Installments (EMIs) are fixed on the total outstanding amount. After the commencement of repayment, the benefit of simple interest would be discontinued.

Read More: How to Repay Student Loans Faster?

Disbursement

While applying for an education loan, in the case of a normal course, a candidate's future income prospect is taken into account. If needed, the means of your parent or guardian can also be taken into account to evaluate re-payment capability. The loan is sanctioned as per the delegation of powers preferably by the branch nearest to the place. No application for an educational loan received is rejected without the accord of the next higher authority. The loan is disbursed in stages as per the requirement or demand directly to the institutions/vendors of books/equipment/instruments to the extent possible.

Check Funding Sources to Support Studies in New Zealand.

Follow-up

The bank from which the candidate has availed the loan can contact the college/university authorities to send them the candidate's progress reports, at regular intervals.

Capability Certificate

Many foreign universities require the candidates to submit a certificate from their bankers about their solvency/ financial capability. This is done with a view to ensuring that the candidate's sponsors are capable enough to meet the expenses till the completion of studies. Consequently, the branches can also issue the capability certificate. For this, students would have to present financial and other supporting documents, if required.

Lastly, candidates would have to choose the right bank to provide a suitable educational loan scheme. Factors to evaluate the alternatives are many. For instance, whether the bank provides loans for the course candidates are opting for and if yes, then up to what extent, the margin and security requirements, the rate of interest etc.

The option is all yours after a detailed analysis.

Note: Details given can change from time to time. So students are advised to get the right information from the banks concerned.

Read more at Cost of Studying in New Zealand