Finance is a big part of an Indian student who wishes to study abroad. Your overseas education depends on whether you have the financial means or not. In most cases, when you are financially unstable to meet the expenses of studying in your dream university, you can resort to study abroad scholarships or education loans. Education loans are a match for you if you can pay your tuition fees and other costs in instalments. What are the expenses covered in an Education Loan? Read on to know!
This Blog Includes:
- What is Education Loan?
- Types of Education Loan
- Features and Benefits
- List of Expenses covered under Education Loan
- What expenses are not covered under an education loan?
- Factors to consider when calculating Expenses covered in education loan
- Educational Loan Eligibility
- Documents Required
- How to get an Educational Loan?
- How does an Educational Loan work?
- Top Education Loans for Indian Students
- Leverage Finance
What is Education Loan?
An education loan is the type of loan that usually covers tuition fees and living expenses for a student that are mandatory to purchase while they are pursuing an academic course. An education loan can be granted to a student who is pursuing their graduation, post-graduation, professional, vocational, or technical courses from a reputed and recognised institution. In terms of foreign institutions, the candidate is required to secure admission first from their target institution and then apply for a student loan. The amount of loan can differ on the basis of the banks who are providing it and many other factors.
Types of Education Loan
You can classify the types of education loans based on location, courses and collateral.
|Based On||Types of Education Loan|
|Location||Domestic – If you are applying for a loan to study in India.|
|International – If you are applying for a loan to study abroad.|
|Course||Undergraduate – Loans for undergraduate courses.|
|Postgraduate – Loans for postgraduate courses.|
|Professional – Employees who pause their career to study more development courses.|
|Collateral||Loan against property, deposits and securities.|
|A third-party guarantee is like a guarantee letter from the bank.|
Expenses covered in Education Loan differ depending upon what type of loan you are applying for.
Also Read: Types of Education Loan for Indian Students
Features and Benefits
Here are a few common properties of an average student loan that is applicable for study abroad purpose:
- In terms of domestic students, the monetary amount of a student loan ususaly ranges around INR 50,00,000 and goes upto INR 1,00,00,000 when the student aims for a foriegn university.
- There can be conditions upon whose fulfillment a student loan covers 100% expenses of the student.
- Other than, tuition fees, a student loan also covers travelling and other such expenses.
- In terms of international disbursements, student loans are often delivered through preferential forex rates to lower the conversion rate.
- It is important to note that, repayment of student loans extends to a maximum of 12 years tenure after 6 months of graduation.
- It is always goof to add your parents as joint borrowers for stduent loans to minimise the repayment burden.
Also Read: Everything About Education Loan for MS
List of Expenses covered under Education Loan
A general education loan for Indian students cover the following list of expenses:-
- Tuition Fees
- Cost of Living
- Exam and Studies-Related Costs
- Air Travel Tickets
- Health Insurance
Your tuition fees form the largest part of your expenses and therefore are covered in all types of education loans. All lenders will cover the tuition fee which is the basis of your education abroad. Even the smallest education loans primarily cover tuition fees.
Cost of Living
Your living expenses when you are in UK, USA, Australia, Canada, etc are sometimes higher than the living expenses of your entire family in India. This is because of the exchange rate of the local and foreign currencies. Rent, food, local travel, etc are all the expenses covered in Education Loan. To what extent they are covered depends upon the bank or lenders.
Library fees, books, laptops, examination fees, extracurricular activities charges and other studies-related costs are the expenses covered in Education Loan. Some banks are only allowed to cover these expenses in the education loan if they do not exceed 20% of the total loan amount.
Air Travel Tickets
Even travelling from India to London or Toronto one way can be expensive. Air travel tickets can be anywhere from INR 50,000 to INR 1 lakh. So high chances are that the Air travel may be covered in Education Loan. Whether it is included or not depends on the request of the student.
Only a few banks allow health insurance to be an expense covered in Education Loan. You have to request your bank in case you want them to cover health insurance.
What expenses are not covered under an education loan?
Movie tickets, personal travelling and other such entertainment expenses are not covered under education loans. Even in the expenses covered in Education Loan, only tuition fees are default in all education loans by various banks. Other expenses like the cost of living, air travel tickets, etc are either covered to some extent like 30% or 40% or not covered at all.
Factors to consider when calculating Expenses covered in education loan
Before you approach the banks or other lenders for education loans, ensure that you have a rough figure of the expenses that you estimate will occur while you study abroad. Let’s know the factors to consider when calculating expenses for education loans:-
- Cost of accommodation near the university you have been accepted
- Cost of food, depending upon whether you can cook or not
- Cost of transportation including public transportation and fuel prices
- The part-time jobs near your accommodation so that if your visa allows you can work.
Educational Loan Eligibility
The eligibility criteria for an education loan may differ from one individual to another. In terms of mentioning the most common criteria that can be applicable for a majority of students, here is a detailed list.
- Indian educational loans are applicable for Indian nationals only.
- The aspirant needs to already have a secured admission or an offer letter from the approved university before applying for a student loan.
- To get a student loan for graduate or postgraduate courses, it is necessary for the student to complete 10+2 standard.
- Students need to enrol in approved courses by recognised universities to get a student. Loan.
Also Read: Best Education Loan in India
After you get your acceptance letter from the institution you were targeting, you can start applying for your loan by collecting the following documents first:
- Academic Transcripts of 10th, 12th, graduation and entrance exams
- Acceptance Letter from the University
- The University’s Fee Structure
- A detailed list of your accomodation and living cost
- Your valid passport in terms of a foriegn university
Additional documents may be requested in study abroad cases.
How to get an Educational Loan?
The usual process of getting an Educational Loan is pretty much the same for all its varieties.
- You can start by enquiring a bank of your choice and get a detailed review about their loan procedures
- The above task can also be initiated online in the bank’s main website
- Once you are done filling the loan application, submit it to the bank.
- The bank authorities will start verifying your documents,
- This will be followed by a proper evaluation of the course that you want to pursue
- They will also go through what kind of collateral you can provide
- After that the bank authorities will notify you regarding your loan disbursement.
Also Read: Kotak Mahindra Bank Education Loan
How does an Educational Loan work?
Here’s how an education loan work:-
- Once you are accepted by a university abroad, you can go to your local bank or any other bank with education loan schemes.
- You can set up a consultation meeting and understand the entire loan process of that particular bank or lender and know the details such as interest rate, monthly instalments, expenses covered in education loan and documents required for the same.
- Once the paperwork is done, a bank in India takes a minimum of 15 working days to reach out to you with the result.
- If your loan has been granted, the tuition fees are directly paid to the university or academic institution concerned either in full or instalments depending upon the fee schedule.
- You have to submit the loan certificate while you apply for the student visa as well.
- You are given 6 months to 1 year by the bank as a moratorium period before you start the repayment.
Top Education Loans for Indian Students
Here are the famous education loans for Indian students along with their interest rates:-
|Banks||Interest rate per annum|
|State Bank of India||6.85%|
|Bank of Baroda||6.75%|
|Central Bank of India||6.85%|
|Bank of India||6.85%|
The interest rates are subject to change depending upon the bank’s announcements.
One thing that Leverage Edu didn’t want the Indian students wanting to study abroad to do is do rounds of different banks to know which education loan is the best for them. Therefore, we introduced Leverage Finance that becomes the one-stop for all student finance needs. Once you are associated with Leverage Finance, you:-
- Don’t have to pay service fees
- Connect with an education loan expert
- Choose from the multiple loan providers
- Compare various education loans
- Choose an education loan with the best interest rates
Leverage Finance makes the tedious paperwork of education loans fun and a memorable part of your application journey!
Not only education loans, but Leverage Edu also guides you throughout the application journey- choosing the correct course, university, applications, scholarships and much more. All you have to do is call our experts at 1800-572-000 and book your first counselling session for absolutely FREE!