The escalating cost of education in the global market has given birth to the necessity of external funding as most of the Indian families earn moderate income. Quite noticeably, after the launch of the Education Loan Model scheme, more and more students have leapfrogged pursuing higher education abroad. A brief account of the different aspects of overseas education loan to study in the United Kingdom is given in this article.
First and foremost, a prospective student should know about the education cost along with the living expenses that would be required. Once it is known, a student can then assess how much self-funding is within capability. Considering both the factors, an overseas education loan can be borrowed as the desired bank.
Kinds of Education Loan
For a basic understanding, education loan has been divided into secured and unsecured loan based on the loan amount requirement. There are two types, one is the secured education loan and another one is an unsecured education loan.
Secured overseas education loan: Supposing that upon self-assessment student decide to borrow a loan amount greater than 7.5 lakhs and approaches a nationalised bank for the approval. In such a scenario, the bank asks to mortgage collateral as security. This is referred to as secured education loan.
Unsecured Education loan: When a student need not pledge any collateral that is the tangible asset like the property, the education loan borrowed is termed as unsecured education loan.
The UK immigration visa officer accepts both unsecured and secured loan. Astudent should display the mode of financial assistance such as the education loan borrowed, and the scholarships granted during the visa application process.
Which bank to approach for the overseas education loan?
A list of the financial institutions pre-approved by UK immigration is given below:
- Scheduled Commercial Banks – India
- American Express Bank Ltd
- Allahabad Bank
- Andhra Bank
- Axis Bank Ltd
- Bank of Baroda
- Bank of India
- Bank of Maharashtra
- State Bank of India
- The HDFC Bank Ltd and many more are there in the list which you can browse or ask an experienced loan advisor.
In addition to the kinds of loan, a student must be aware of certain technical things like the rate of interest, moratorium period, marginal cost and the CIBIL score. It is important to note that the moratorium or grace period is not offered to international students disbursing unsecured education loan from NBFCs.
An example of a reputed nationalised bank; Bank of Baroda, where student has applied for a secured education loan has been given below:
Quantum of finance:
Loan amount up to 80.00 lakhs may be approved but as such there is no limit if cost of education programme is more than that.
Marginal cost:
A certain portion of education loan is required to be borne by the applicant or the co-applicant. It is generally 10% – 15% in case of Nationalised banks.
Rate of Interest:
If the admission has been confirmed in the premier institutions, then the rate of interest is 9.40%. In case of non-premier institutions, it is 10.15%. A girl child receives concession of 0.50% as per the Government norms.
Tenure:
The repayment period is 15 years for the student. EMI starts after the grace period.
Income Tax Benefit:
A student may file for deduction under section 80E for payment of simple interest on the education loan.
This was a bit about the education loan for higher studies in the United Kingdom. You may read more about the listed institutions as per the bank where you’re eligible to get a loan. To get assistance in the process of online loan application for abroad studies, please consult a recognised loan advisor or studies abroad consultant.
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