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Navigating Student Loans for Studying Abroad- 2025

In today’s day and age, when everything is global, studying abroad is also becoming extremely viable. Studying abroad is indeed a transformative experience. The experience of studying abroad gives worldwide exposure and makes this entire journey of studying abroad enriching and fruitful.

However, the financial burden of studying abroad does lead to students thinking about ways to finance their dream of studying abroad. Student loans are considered to be one of the most viable options to fund your dream education.

Overview of Study Abroad Loans in India

According to recent statistics, the cost of studying abroad varies significantly depending on the country, institution, and program of study. As of 2023-24, the average student loan amount taken by Indian students studying abroad is approximately ₹25 lakhs to ₹35 lakhs. This amount varies from student to student depending on the financial ability of the family and also the university and programs that the student has opted for.

In India, the term of student loans for studying abroad typically varies between 5 to 15 years. The terms of the loan depend on the lender, the borrowed amount, and also certain other factors like financial capabilities, etc. Most banks offer a moratorium period (a grace period ), which can last from 6 months to 1 year after completion of the program. This time gives students to find suitable jobs and get financial stability before repaying the loan amounts in installments.

Avenues for Getting Study Abroad Loans in India.

  • Nationalized Banks
  • Private Banks
  • NBFCs

1. Nationalized Banks

Some of the well-known nationalized banks giving study abroad loans are as under :

  • State Bank of India (SBI): The "SBI Global Ed-Vantage" loan is specifically designed for students aspiring to study abroad. This loan provides amounts ranging from ₹20 lakhs to ₹1.5 crores with flexible repayment terms.
  • Bank of Baroda: The "Baroda Scholar" loan scheme is designed for students seeking education abroad. It offers attractive interest rates and a simple application process.

Students can research by going through their websites and meeting with the concerned official to find out all the details as required by them.

The advantages of taking a Student loan to study abroad from Nationalized banks have the following advantages :

  • Low Interest Rates: Nationalized banks have lower interest rates compared to private banks or NBFCs, making them a more affordable option for many students. Current rates typically range from 9% to 12%.
  • Flexible Repayment Options: Many nationalized banks provide flexible repayment plans and longer moratorium periods, allowing students to manage their finances better post-graduation.
  • Government Schemes: To lower the financial burden, students can take advantage of several government schemes and subsidies while taking loans from nationalized banks. Some of the prominent government schemes are as under :
  1. Dr Ambedkar Central Sector Scheme
  2. Vidya Lakshmi Portal Education Loan
  3. Padho Pardesh Scheme
  4. Education Loan Scheme of the NBCFDC.
  5. Gujarat Government Education Loan for Studying Abroad.

Visit the link for all the further details related to government subsidies etc

https://www.myscheme.gov.in/schemes/dacssiselosobcebc

Disadvantages:

  • The Approval Process is lengthy: The time taken by a nationalized bank to approve a student loan abroad is indeed time-consuming. The process in terms of paperwork and adhering to the bureaucratic procedures, can be stressful, especially when timelines for admission are close. It is highly recommended to start the process of getting a loan way in advance just to avoid stress at the end moment.
  • Strict Eligibility Criteria: Nationalized banks often have stricter eligibility requirements, in terms of paperwork, criteria, collateral requirements, strong academic conduct, etc. which restricts some students from getting loans at a lower rate of interest.

2. Private Banks

Some of the leading Private banks giving study abroad loans are :

  • Axis Bank: Axis Bank offers a variety of options for education loans with competitive interest rates and flexible repayment options. Their loan covers a wide range of expenses, including tuition, accommodation, and travel.
  • ICICI Bank: ICICI Bank is one of the leading banks that give study abroad loans at very competitive rates with amazing payment options to choose from. The loan amount applicable is also in line with the student's expectations and budget.

You can visit their website or visit their branch for a detailed understanding.

Advantages :

  • Fast Approval: The process of loan approval is faster in Private banks compared to nationalized banks. This quick approval helps students to be comfortable with strict deadlines for admission which in turn gives them peace of mind.
  • Higher Loan Amounts: Private banks can offer higher loan amounts compared to nationalized banks making it a better choice for students who are applying for expensive institutions or programs.
  • Less Stringent Requirements: Private banks have more relaxed eligibility norms compared to nationalized banks, the criteria are liberal thus giving a chance to more students to avail loans. The paperwork is also simple and less time-consuming.

Disadvantages:

  • Higher Interest Rates: The private banks charge a higher rate of Interest compared to nationalized banks thus making the total loan cost expensive. The interest rate can range from 12% to 16%. Though they have a less complicated process along with the offering of more loan amounts, the rates of interest can be a cause of concern for students who have limited budgets.
  • Fewer Government Benefits: Unlike nationalized banks, Private banks may not offer the same government schemes and subsidies which can potentially lead to more financial burden.

3. NBFCs

Non-Banking Financial Corporations also are major players when it comes to Study abroad loans.

  • HDFC Credila: This NBFC specializes in education loans for international studies. They offer customized loan solutions with quick processing and minimal documentation.
  • Avanse Financial Services: This company offers competitive rates of interest for study abroad loans. The loan amount is also big and the processing time is also very low.

You can visit their websites for a detailed understanding of various options as per your needs.

Advantages:

  • Competitive Interest Rates: The interest rates on student loans are extremely competitive. They are usually between those offered by a Nationalized bank and a Private Bank.
  • Fast process: The time it takes NBFCs to process loans is much lower than that of banks. In some cases, it's less than five working days, which is extremely fast.

Disadvantages :

  • Lesser Branches Compared to Banks: The number of branches that banks have even in rural areas outnumbers the branches that an NBFC may have. As a result, the population that banks can cover is much larger.
  • Trust Factor: In a country like India, people trust banks more than any other financial institution because they are governed by the RBI. In the case of NBFCs, the holdings could be private, which people may not trust completely.

Common Eligibility criteria for education loans

  • Indian citizenship
  • An age limit of 18 plus
  • A confirmed admission letter to a foreign institution/university.
  • A strong academic record ( most lenders require a minimum percentage or CGPA for students ) to be eligible for a loan.
  • A co-applicant, like a parent or guardian, is required to co-sign the loan.

Documents required :

  • Proof Of Admission
  • Identity Proof
  • Address Proof
  • Academic Records
  • Income Proof Of Co-Borrower.
  • Other specific documents as required by your loan financier.

Factors to Keep in mind before selecting your financial partner for a Loan.

Evaluate your options in depth before you take a final call regarding student loans. Below are some of the factors that one needs to keep in mind:

  • Evaluate Your Financial Needs: As a student who plans to go abroad for education, you need to find out certain expenses related to tuition fees, Cost of living, insurance cost, etc. plus keep some amount as an emergency fund This will help you determine how much you need to borrow.
  • Research various options available for loan: Take your time to research all possible options available for your loan needs. Compare interest rates, repayment terms, and other fees from all the avenues.
  • Evaluate Government Schemes: Try and understand each government scheme that can benefit you in getting subsidies or grants which will surely help you to lower your financial burden.
  • Read all the details, even the Fine Print: Be alert and understand all the details of the loan documents including the fine print. Each clause needs to be read and understood so no issues crop up later, especially the clauses related to penalties and repayment schedules, etc.
  • Consider Future Income: Evaluate your future average salaries that you might get after your program is completed. This can help you in planning for the repayment of the loan and keeping in mind the terms and conditions of the loan.

Conclusion

Studying abroad is an experience of a lifetime. The experience can be a memorable one with a great future depending on how well you manage your financial challenges. Understanding each aspect in detail along with its long-term implications is a must. Ensure that you do all the research without stress and with adequate time to examine all possible avenues.

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