Education Loan to Study in India vs. Education Loan to Study Abroad

Is overseas education on your mind?

If it’s a yes then even before you apply for an education loan online or offline, it is important for you to know the eligibility criteria and the documents required to be submitted. The first step concerning your overseas education loan is that some documents are assessed by the banks.

1.      The application form that you’ve filled

2.      Passport-size photograph of the applicant and the co-applicant

3.      Identity proof such as PAN card, Aadhar card, Voter Id etc

4.      Percentage: An applicant must have secured at least 60 % in the previous qualifying examination with fewer backlogs

5.      Entrance Exam Score

6.      Admission Letter

7.      Bank Statement

8.      Collaterals

As you all know there are 2 kinds of overseas education loan available to study abroad. Given in this article is a comparative analysis of education loan for higher studies in India and abroad.

Take a look at the major differences below.

Coverage of Education loan

The education loan covers tuition fee, living expenses, laptop and study material costs if you’re studying in India. But a lot of other factors should be considered when studying overseas. Hence, in addition to these, banks provide airfare, insurance premium and visa expenses as well under overseas education loan.

Rate of Interest

Depending upon the bank the rate of interest varies. It is different for Nationalised, Private and NBFCs. Rate of interest is same whether you’re applying for education loan for studies in India or abroad. It is 10-11% in nationalized bank, 11-13% in private and 13-15% in NBFCs.

Marginal Cost

The marginal cost that should be borne by the applicant/co-applicant for studies in India is 5%, only. Given the higher cost of the loan amount borrowed for education overseas, the marginal cost is also higher. It is 15% in this case but may vary from bank to bank.

The marginal cost is applicable for loan above 4 lakhs. Suppose an overseas education loan of 20 lakhs is taken by the applicant at the marginal cost of 20%, then 4 lakhs should be borne by the borrower.

Repayment and Moratorium Period

Under the Central Sector Interest Subsidy Scheme, full interest concession is applied on education loan borrowed by the students belonging to the economically weaker sections. It is granted during the moratorium period to students pursuing technical or professional courses in India. The moratorium period is of 6 to 12 months after the graduation period is over and till the student is employed. The annual income of the family should be less than 4.5 lakhs to be eligible for this scheme.

Only the interest payable during the moratorium period is borne by the Government. A maximum of 7.5 lakhs is sanctioned by the government under this scheme.

On the other hand, girl child, an employee of the bank and exceptional students enrolled in the premier institutions abroad are offered certain concession on the rate of interest. It is 0.5% to 1% concession on the rate of interest. Government of India has launched a few scholarship schemes like ‘Padho Pardesh Scheme of Interest Subsidy on Education Loan for Overseas Studies’, ‘National Overseas Scholarship for Scheduled Caste Students’, etc. offering subsidies on the rate of interest on overseas education loan.

There’s no change in the length of moratorium period whether you’re studying in India or abroad.

The cost of higher education in private universities in India varies between 8 and 25 lakhs depending upon the course of study. On the contrary, studying abroad can cost nearly 1 crore for under-graduation. To cater to the financial needs of the students, a secured overseas education loan of up to 1 Crore and more than that in some cases, might be sanctioned by the bank to the eligible student.