Arranging Finances for International Education during the Lockdown Period
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In this time of distress, study abroad aspirants and international students are also waiting for what future holds for them. In our survey with study abroad aspirants, we have found that approximately 72% of candidates still want to achieve their dream of studying abroad. All those who are thinking about whether they should apply for September 2020 or not should read our post clearing and clear their doubts. Many candidates are facing financial constraints and looking to arrange finances. However, due to the current lockdown, they are not able to move ahead with their plans. In this article, experts from top education loan providers of India, HDFC Credila, ICICI Bank, and Awanse answered all your queries related to student loans.
Topics covered
- What is the impact of the current situation on the study abroad loans?
- Factors on which banks approve a student loan
- What is the process of applying and getting a student loan?
- When and how the disbursement happens.
- How loan requested can be fast-tracked?
How the current situation has impacted getting education loans?
Even as the lockdown continues, financial institutions are continuing with their work. For current loan disbursements, banks and Non-Banking Financial Companies (NBFCs) are also waiting for some clarity from universities abroad and students are waiting for visa approval. However, financial institutions are encouraging students to apply for education loans online. Meanwhile, the banks are also suggesting students to collect whatever documents they can. Also, banks are issuing loans to students who secured admission in late 2018.
Q. What factors does the bank take into consideration before approving an education loan?
A. Banks consider multiple factors while sanctioning a loan like
- Academic background
- The country where a student is planning to go
- Course student going to study
- The quality of education of the university selected
- Employability factor
Also Read
- Indian Banks offering Education Loans for Studying Abroad
- Step by Step Guide to Education Loans
- Education Loan for Studying in Canada: Everything You Need to Know
Q. What is the role of a co-borrower in getting an education loan?
A. The co-borrower is mandatory, so the profile of the co-borrower is also checked. Usually, banks allow only parents as co-borrower, but HDFC Credila permits any other blood relation relative to be a co-borrower that makes it easy for a student to get a loan. Collateral is not mandatory in every case, banks do an overall assessment of the candidate's profile and usually do not follow a one-size-fits-all approach.
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Q. Is it possible to get a full or 100% amount as an education loan?
A. The applicant should meet the credit criteria set by Awanse. They also look for the course and country which student has chosen, if the student meets the criteria they give the entire loan amount else, a student has to bear some cost on its own. However, students with excellent profiles and going to top universities can get a full amount of loan but it is not possible in every case.
Q. If a student has taken a loan in the past, or currently a student loan is going on, how does it affect the loan approval?
A. Banks check the credit history and repayment obligations of the applicant and not just for the student loan case, but for types of loans they give. So, it impacts the current loan approval process.
Q. Is collateral mandatory? What kind of collaterals are accepted by the bank?
A. It is always good to add collateral as it can help you increase the loan amount. If based on your profile and other factors you are getting a loan of INR 10 lakh but adding collateral can give you a loan of INR 20 lakh. Also, in some cases, it also impacts the interest rate as well.
ICICI offers loans up to INR 40 lakhs without collateral (unsecured) and with collateral, a student can take a loan up to INR 1 crore. Properties that cannot be mortgaged cannot be used as collateral.
Q. What is the range of rate of interest?
A. ICICI: Recently revised their rate of interest and are passing the benefits of the repo rate announced by the RBI to customers. Their rate of interest starts varies between 10.99 to 12.25%.
HDFC Credila: Their rate of interest vary between 10.5 to 12.5%.
Note: Rate of interest should not be the sole criterion for selecting a loan provider. Also, you can ask about the tax benefits that you can avail under section 80E as in lieu of an education loan you can claim the benefit for the entire interest amount.
Q. When a student should start applying for an education loan?
A. Students should start researching about the education loan at the time of the application process only, as various universities require you to show appropriate funds for giving admission. So, in that case, students need a sanction letter from the bank stating that their education loan is approved. Sanction letter also acts as a solvency letter in many cases it acts as proof of funds
Q. What is the total time taken for the whole process from applying to approval for an education loan? Can a student get an education loan even without having an offer from any university?
A. It depends from organization to organization, with ICICI Bank, usually, it can take up to 15 days of time, but in various cases, it can be even faster. Students can even get the loan approved before getting an offer letter from any university. In this case, a student needs to have his test scores and the list of universities where he is going to apply.
Q. When the disbursement starts happening and in what way the money is paid to the student?
A. Loan disbursement usually happens after securing a valid visa. It also depends on the country to country like ICICI Bank gives pre-visa disbursal for countries Canada, Germany, Australia as in these countries students need to show the tuition fee and living expenses in their account for getting the student visa.
Q. When do students need to start repaying their EMIs? What is the moratorium period?
A. Usually, the student start repaying the EMIs six months after completing their course, however, in certain cases banks encourage students to start paying the interest amount (on the amount disbursed and not on complete loan amount) from starting, in order to make student habitual to it, also, it helps them in paying less amount later. However, this is not the standard practice; it is up to the bank and the student if they want to start repaying their EMIs after finishing their studies (generally six months grace period).
Q. How the interest amount is going to be charged?
A. Is the interest is going to be charged on the entire amount or the reducing balance as it can help you save up to five to seven percent.
Q. What advice would you give to students who are desperately trying to arrange a loan in the current situation? Is there any way to fast track the process of getting an education loan?
A. Financial organizations are working and accepting applications for education loans. Students can submit their application in the online format. Right now students can apply with the soft copies of the documents and once the situation allows then you can submit the hard copies of the documents.
Q. Because of the current situation, many international students are not able to manage their finances, so, can students get an education loan if they are already studying abroad?
A. Banks are also offering education loans to students who are already studying abroad. Students just need to follow the process and apply for the loan. They can authorize their parent to do the formalities on their behalf and complete the KYC process as well.
Q. Public vs private vs international players, which player to select for getting a student loan?
A. Look at all the aspects while looking for an education loan like
- Who is covering the total cost?
- Better rate of interest
- Time taken to process the loan
- Who is providing you tax benefits
Always consider all the aspects and not just one factor while selecting the loan provider. See, the one who is not just giving you a loan but also understanding your needs as various countries may have a different set of rules. Like in some countries, you need to show the funds in your account before securing admission. Consider all these factors before selecting the loan provider.
Students can also apply for an education loan directly from Shiksha Study Abroad’s website where they need to fill their details then our partners will get in touch with them directly.
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Aishwarya is a professional Writer currently working as a Study Abroad Expert in the Editorial Team at Shiksha. She has over 5 years of experience and is skilled at creating Online Content with leveraged knowledge i... Read Full Bio
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