Weighing the Risks & Rewards - Ixorainternational

Weighing the Risks & Rewards

Worried about the costs of international study? Discover how student education loans from banks, NBFCs, and other lenders can be the key to making your dream of studying abroad a reality.

Before applying for a student loan, students must understand the process. These loans, whether from private lenders or government banks, help fund education in the US or abroad. The borrowed amount is repaid according to the agreed terms after completing the education. These loans support various study programs, covering tuition and living expenses. While abroad education loans offer life-changing opportunities, finding the right one requires meeting eligibility criteria and submitting the necessary documentation.

When applying for a student loan, whether from the Indian government or another lender, it’s crucial to conduct thorough research. Compare interest rates, terms, and conditions, and carefully weigh the pros, cons, and available alternatives before submitting your application for approval.

Different Types of Lenders

The Indian Lenders

Indian lenders, including public and private banks, as well as non-bank financial companies (NBFCs), are recognized for providing education loans for overseas studies. They adhere to the regulations set by the Government of India and the Indian Central Bank. These lenders offer both secured and unsecured education loans, granting borrowers benefits such as interest rate discounts. Students can approach institutions like HDFC Bank, ICICI Bank, AXIS Bank, and Federal Bank for private banks or Bank of Baroda, State Bank of India, Bank of Maharashtra, and Union Bank of India for public banks. Education loans are accessible for students seeking admission to colleges and universities approved by AICTE, UGC, and IMC in India.

The International Lenders

Students can seek educational loans from international providers, primarily designed for higher education abroad. These loans become accessible after completing the necessary paperwork. Particularly beneficial for those pursuing job-oriented graduate and post-graduate programs like MS, MCA, MBA, or study programs facilitated by CIMA – London and CPA – USA, international lenders offer low-interest rate education loans.

Regarding the loan amount, students should be well informed to enhance study abroad planning. Typically, the amount is determined by tuition and study expenses. Students can borrow up to Rs.75 to 80 lakhs in educational loans for overseas education, varying by the chosen lender. Banks usually cover 85-90% of study abroad expenses, while NBFCs cover the entire 100%.

Procedure of Loans

Loan approval hinges on meeting eligibility criteria, providing documentation, selecting a course and university, and considering factors like location. Interest rates, ranging from 7.5% to 11% annually, vary among banks. The sanctioned student loan is transferred to the specified account or directly to the university’s account.

Educational loans, unlike some other types, offer a moratorium period. Typically lasting 5 to 10 years, the loan duration can be extended at the lender’s discretion. Repayment begins after completing the course, done through Equated Monthly Installments (EMIs).

For any loan amount, a guarantor or co-borrower with a good credit record is required. Collateral, such as land, house, or jewellery, is needed for amounts exceeding Rs. 7,00,000. Students should carefully review the terms and conditions of student loans, seeking relevant information before applying for overseas education financing.

Advantages & Disadvantages of Education Loan

There are various advantages of student loans. They include tax benefits, credit score improvement, low interest rates, discounts, simple online application, convenient EMI repayments, minimal documentation, quick processing, coverage of essential expenses, secure and unsecured options, enhanced career opportunities, and assistance in obtaining a student visa through a moratorium period post-course completion.

However, a few of the disadvantages are failure to repay your student loan which can lead to significant consequences, such as increased penalty interest for missed payments, negative effects on your credit score, financial challenges for your family, limitations on purchasing essential items, and the inability to switch study programs.

Keep education loans at arm’s length


In the previous section, we aimed to summarize the benefits, drawbacks, alternatives, and considerations for students seeking loans to study abroad. We explored various borrowing options from Indian and international lenders. Students must weigh the pros and cons of these loans and alternatives to pursue their overseas education dreams. Some lenders offer unsecured education loans, while others require collateral. Ixora Global recommends careful consideration of lenders before applying for education loans and suggests gathering information about special offers from government and private banks regarding interest rates and repayment terms.
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