Majority of the students willing to study overseas opt for student loans for studying abroad due to the increasing cost of education. In India, banks are divided into two broad categories i.e., private and government banks. State Bank of India and Bank of Baroda falls in the category of government banks whereas Axis Bank and ICICI Bank comes under private banks. The best bank for foreign education loan depends on what a student is looking for as all the banks have pros and cons. Let us look at the factors that will help you decide a suitable bank for your education loan.
Government Bank vs Private Banks
• Quantum of Finance: The overseas education loan has two categories, Secured Education Loan and Unsecured Overseas Education Loan. SBI offers a loan amount of up to 1.5 Crore whereas Bank of Baroda offers an education loan amount of up to 80 lakhs. Private banks like Axis Bank and ICICI Bank offers the overseas education loan amount of up to 75 lakhs and 1 Crore respectively. For unsecured education loan, the private bank offers up to 40 lakhs whereas the nationalized bank offers up to 7.5 lakhs.
• Interest Rate: The interest rate offered on the education loan by SBI and BOB is 9.30% and 9.0% respectively. These banks also offer a special concession to the girl child. Axis Bank and ICICI banks offer an interest rate of 9% to 10% on secured education loan whereas 11% to 13% on unsecured education loan.
• Processing Time: The processing time for an overseas education loan in a government bank is of 3 weeks and in private banks, it is of 10 days.
• Processing Fees: The processing fee in a government bank is 10,000 + GST whereas at private banks it is 1% of the total loan amount.
• Tax Benefits: Loans availed from both financial institutions i.e., private and government are eligible for the tax benefits under section 80E.
• Repayment Tenure: For the repayment of an overseas education loan, applicants are given the time span of 15 years at both government and private banks.
• Moratorium Period: The moratorium period for the State Bank of India and Bank of Baroda is 6 to 12 months whereas for Axis Bank and ICICI Bank it is of 6 months only.
• Disbursement: Government and private banks remit the tuition fees directly to the university account whereas the living expenses are transferred to the Forex card of the respective bank.
• Serving Simple Interest: Serving simple interest is optional in government banks whereas for private banks, it is compulsory to pay the simple interest once the loan is disbursed.
• Age Limit: To avail an overseas education loan from government and private bank, student must be in the age bracket of 18 to 35 years of age.
Both private and government banks have their own pros and cons of an overseas education loan. Hence, it is advisable for the applicants to decide on what financial institution is suitable for them for their foreign education loan. You can also consider visiting ELAN Loans and our financial experts will assist you with the right education loan for yourself.
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