Students can avail an education loan to study abroad from almost any bank. Basically, what banks check is whether the co-applicant is capable enough to repay the loan.
Here are the documents that you will need to apply for an education loan to study abroad:
- Identity proof
- Admission proof
- Valid passport
- Address proof
- Statement of cost of study
- Passport-sized photographs
The Govt. of India, Finance Ministry, Dept. of Economic Affairs (Banking Division) has accepted the model scheme prepared by IBA. However, it is subject to the following modifications:
- The condition of minimum qualifying score in the last exam may be dropped
- There are no margins for education loans of up to 4 lakhs. However, for larger loans, there is a margin requirement of 5% for domestic studies, and 15% for studies overseas.
- No security is needed for education loans of up to 4 lakhs. However, for higher amounts, the bank may need collateral security of a suitable value. Or the bank may need the co-obligation of your parents or guardians along with assigning your future income for the repayment of the instalments.
- Education loans for up to 4 lakhs may be advanced at an interest rate. However, it cannot exceed the PLR of the bank. The interest rate for loans above 4 lakhs is PLR+1%.
Rate of interest
Up to Rs 2 lakhs: PLR
Above Rs 2 lakhs: PLR +1%
The interest is debited on a quarterly/ half-yearly basis during your moratorium period.
A penalty of 2% is charged for amounts exceeding 2 lakhs for the overdue amount and the overdue period.
The moratorium period or repayment holiday is your course period plus one year or six months after getting employed, whichever is earlier.
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