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Getting through some of the top-notch colleges in the UK has never been rare in India. Students apply in the UK universities as they get a range of opportunities, besides a high degree of specialization and standardization. But, several bright ones get left out of the race because they can't afford it. Despair no more if you can't source the funds yourself. There are several other ways to get there: sponsorship, education loans and scholarships.

Getting an education loan sanctioned from a bank is not difficult today. That's why, a degree from abroad is not confined to the kith and kin of the nawabs. So, if you thought that going abroad was a Mission Impossible, then you are in for a pleasant surprise. With generous aid schemes and loans the number of students going abroad is also rising exponentially.

An education loan is a form of financial support from any bank or financial institution that enable a student for Study in UK. A comprehensive educational loan scheme was framed with the consultation of Government of India with reserve bank of India and Indian bankers association. Availability of the education loan, at the appropriate time will help millions of deserving bright young Indians to achieve their dreams come true. All graduation, post-graduation and professional courses from foreign universities are eligible for a loan. One can get loans up to Rs.15 lakh for studies abroad. These figures are not stable in nature for banks. State bank of India is availing an upper limit of 20 lakhs and in recent days. Indian bank has upgraded its maximum limit to 15 lakhs for education in India and 25 lakhs for abroad studies.

Before giving the loan, banks study the viability of the borrower based on personal discussions with the student, family's assets and annual income, the nature of the course and reputation of the institute. In most banks for loans up to Rs. 4 lakh no collateral or margin is required and the interest rate will not exceed the Prime Lending Rates (PLR). For loans above Rs. 4 lakh the interest rate will be PLR plus 1 percent. PLR is a term used to refer the interest rate of the bank and it may vary with each bank. Some banks offer lower rates to women students or those from specified institutions. Security to the loan depends on the amount. Security is some form of investment (i.e. bank deposits, house property etc) that is surrendered to the bank while taking the loan. Security is not needed for loan amounts up to Rs. 4 lakes. Instead of security, some bank may ask for a third party guarantee (guarantor) for higher loan amounts. There is no need to repay the loan while studying. The repayment starts after you have finished the course or started working. The repayment cannot be delayed for years after the completion of course. The loans are to be repaid over a period of 5 to 7 years with provision of grace period of one year after completion of studies.

All the details given below will change time to time and students are advised to get right information from the banks concerned.

The eligibility criteria of the bank to obtain an educational loan from any bank of India: -
  • The student who is seeking for educational loan should be Indian national
  • The student should have secured admission to foreign university/institution

Take a peek into other important points of consideration that the comprehensive educational loans: -

Salient Features
The loan would cover fee payable to:
(However this may vary from bank to bank)
  • Institution Fee
  • Hostel Fee
  • Examination Fee
  • Library and Laboratory Fee
  • Purchases of Books
  • Equipment and Instruments
  • Caution or Refundable Deposit

Travel Expenses

You need to keep the following documents in place before applying for an educational loan:
  • Mark sheets of the last qualifying examination for school and graduate studies in India.
  • Proof of admission to the course.
  • Scheduling of expenses to the course.
  • Copies of letter confirming the scholarship.
  • Copies of foreign exchange permit, if applicable.
  • Two passport size photographs.
  • Bank statement for the last six months of the borrower.
  • Income tax assessment order not more than two years.
  • Brief statements of assets and liabilities of the borrower.
  • If you are not an existing bank customer you would need to establish your identity and give proof of residence.

If the course cost is up to 4 lakhs, nil for both studies in India and abroad. If the course cost is above 4 lakhs, 5% for inland studies and 15% for studies abroad.

Banks have the following security/collateral security requirements for granting loans to students. However, the requirements differ from bank to bank. Loan up to INR 4 lakhs.No collateral security. Loan above INR 4 lakhs and up to INR 7.5 lakhs. Security in the form of Satisfactory third party guarantee.Loan above INR 7.5 lakhs.(a) Collateral security of suitable (b) Co-obligation of parents/guardians/third Party along with assignment of future Income of the student for payment of Installments.

Rate of interest
The rate of interest is 10.75 % up to INR 4 lakhs and it does not exceed the Prime Lending Rates (PLR). For a loan above INR 4 lakhs, the interest rate is 11.75 % and it will not exceed PLR plus 1 percent. However, the rate of interest is subject to changes as per the specifications of RBI or the concerned bank.

Repayment holiday
Loans are repayable in 5 to 7 years. Repayment of both principal and interest will start after one year after completion of the course or six months after getting employment, whichever is earlier. Interest will be charged on simple basis during the period of study / moratorium period. At the commencement of repayment, the accrued interest is added to the principal amount and Equated Monthly Installments (EMIs) fixed on total outstanding amount. After commencement of repayment, the benefit of simple interest would be discontinued.

Processing fee
Most of the Indian banks do not charge any processing fee or upfront charges. The State Bank of India accepts a deposit of INR 5000 for education loan for studies abroad, which is adjusted in the margin money.

Credit delivery
You can avail the loan from the branch nearest to the place of your permanent domicile.

Disbursement The loan is sanctioned as per delegation of powers preferably by the branch nearest to the place of domicile. No application for educational loan received is rejected without the concurrence of the next higher authority.

The loan is disbursed in stages as per the requirement/demand directly to the institutions/vendors of books/equipments/ instruments to the extent possible.

Follow up
The bank from which you have availed the loan can contact the college/university authorities to send your progress reports, at regular intervals.

Capability Certificate
If you are going abroad to study, some of the foreign universities require you to submit a certificate from your bankers about the sponsor's solvency/financial capability with a view to ensure that your sponsors are capable of meeting the expenses till completion of studies. Accordingly branches can also issue the capability certificate. For this financial and other supporting documents may be obtained from you, if required.

Finally, you need to hit on the right bank with the right educational loan scheme to suit your needs. Parameters to weigh the alternatives are many; as in, whether the bank provides loan for the course you are opting for and if yes, then up to what extent, the margin and security requirements, the rate of interest, proximity of bank to your residence, et al. The discretion is yours after a through analysis.

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