A Guide on How to Compare Education Loans for Study Abroad

The cost of pursuing higher education abroad has significantly increased in the last decade. This is why most students rely on abroad education loans for studying abroad. However, many students are unable to choose the right loan, as different lenders offer varying terms for study abroad loans. Comparing the terms of the lenders offering study abroad loans can help you get the best education loan for studying abroad.

In this article, we will explore the lenders offering foreign education loans, along with why comparing their student loans is important. We have also covered a step-by-step guide on how to compare education loans for abroad studies from different lenders.

Understanding Education Loans for Abroad Studies

Before learning how to compare education loans for abroad studies, let’s first understand what they are. As the name suggests, these are the abroad education loans offered to students for studying in foreign countries. These loans enable aspiring students to pursue their higher education at recognized foreign universities. 

They make abroad education affordable by helping students cover various expenses associated with studying abroad, including the tuition fees, living expenses, cost of study materials, and course-related equipment. Education loans for abroad are mainly divided into two types based on the collateral requirement of the loan: collateral and non-collateral loans.

Collateral Education Loan for Abroad

A collateral or secured education loan is a loan that requires applicants to offer collateral for the loan. Collateral refers to the property of the applicants that is pledged as security for the student loan amount. 

• To get a secured education loan, you have to pledge an acceptable property as collateral security, according to your lender.
• Most lenders accept immovable properties and liquid securities as collateral for education loans.
• These loans are known for offering higher amounts at lower interest rates.

Non-collateral Education Loan for Abroad

A non-collateral education loan, also known as an unsecured education loan, doesn’t require any collateral or security. This means applicants can get an unsecured education loan without having to pledge their property as collateral. 

• These loans are given based on the income and creditworthiness of the co-applicant.
• Since there is no collateral involved, these loans are typically processed way faster than secured education loans.

Why Education Loan Comparison is Important?

Comparing education loan offers from different lenders helps you get the most suitable student loan that satisfies all your requirements. Here’s why comparing education loans for abroad studies from different lenders is important.

1. Assists Decision Making: Comparing education loans from different lenders assists your decision-making. It helps you understand the loan terms of the different lenders to choose the right education loan that suits your needs.
2. Obtain Favourable Loan Terms: By comparing the student loan terms of these lenders, you can get favourable terms such as lower interest rates and higher loan amounts for your overseas education loan.
3. Manage Repayments and Avoid Defaults: Choosing the right repayment plan is essential for avoiding any missed or late payments. Comparing the repayment terms of different lenders helps you manage your student loan repayments and ultimately avoid defaulting on the loan. 

Lenders Offering Abroad Education Loans for Indian Students

1. Public Banks:

   In India, Public banks like SBI, BOB, and PNB provide education loans for abroad studies. These banks primarily offer secured education loans to students. They also offer unsecured education loans of up to ₹7.5 Lakhs under the CGFSEL Scheme. However, SBI offers an abroad education loan up to ₹50 lakhs without collateral, depending on the student’s university.
   Public banks are known for offering higher amounts and the lowest interest rates for education loans. 

2. Private Banks:

   Prominent Private banks such as ICICI Bank, Axis Bank, and IDFC Bank offer abroad education loans in India. Although private banks offer both secured and unsecured education loans, they are more specialized in unsecured loans. Private banks can offer relatively higher loan amounts than public banks for education loans without collateral. 

3. Non-Banking Financial Companies(NBFCs):

   NBFCs refer to the private financing companies that offer education loans in India. Prominent NBFCs offering study abroad loans in India include Credila, Avanse, Incred, and Auxilo. These NBFCs primarily provide unsecured education loans to students. They offer high loan amounts and competitive interest rates for eligible students.

4. Foreign Lenders: 

   Foreign lenders refer to the private financial institutions outside of India, such as Mpower and Prodigy Finance, that provide student loans to Indian students for studies abroad. They are known for offering student loans without a financial co-applicant and collateral. These lenders offer loans based on the future earning potential of the students. They offer student loans in foreign currency, eliminating currency conversion charges.

How to Compare Education Loans for Abroad Studies?

The following is a step-by-step guide on how you can compare education loans for abroad studies from the above lenders.

1. Understand Your Requirements: The first thing you should do before you start comparing abroad education loan offers from different lenders is understand your requirements for the loan. You should determine how much you would need to borrow for the student loan. Consider all your educational expenses, including your tuition fee, the cost of living in the country you are going to, travel expenses, etc. You should also consider the collateral availability and your co-applicant’s income and CIBIL before approaching a lender.
2. Understand the Collateral and Co-applicant Requirements: After determining your student loan requirements, you should understand the collateral and co-applicant requirements of the lenders. To get a secured education loan from a public bank, you need to pledge collateral accepted by your bank, and the collateral value should match your loan amount. 
   And private lenders have minimum income and credit score requirements, according to which they offer unsecured education loans. The collateral and co-applicant requirements vary from lender to lender. Shortlist lenders based on the type of loan you're planning for.
3. Compare Loan Amounts and Interest Rates: Subsequently, you should compare the loan amounts and the interest rates offered by the lenders. The loan amount and the interest rate offered for an education loan depend on several factors, including the loan type and the co-applicant’s income and CIBIL score.
   Through public banks, you can get a secured education loan of up to ₹3 crores for abroad studies with interest rates starting as low as 9.15%. And private banks can offer an unsecured education loan of up to ₹1 crore with interest rates starting from 10%. According to the type of loan you are going for, choose a lender offering a low interest rate and a loan amount satisfying your requirements.
4. Compare Processing Times: It is one of the important factors to consider while comparing abroad education loan offers from different lenders. The processing time for a study abroad loan varies, depending on the lender and the loan type.
   Secured education loans from public banks can take 15 to 20 working days to be processed. Unsecured education loans, on the other hand, can offer a swift processing time of 7 working days. The above-mentioned processing times are applicable after all the required documents are submitted.
5. Consider the Moratorium Period and Repayment Terms: You should also consider the moratorium period and the repayment terms of the lender you are taking an education loan from. The moratorium period is a repayment holiday that provides financial relief to students.
   Banks typically offer a moratorium period of the course duration plus 6 to 12 months for education loans. During this period, the repayments, i.e., the EMIs of the student loan, don’t start. And, abroad education loans are generally offered a repayment period of 10 to 15 years. 

Education Loan Comparison of Different Lenders

The table below contains the important loan terms of lenders offering study abroad loans. This helps you compare education loan terms offered by these lenders:

Obtaining an education loan to pursue higher studies abroad can be quite challenging, with different lenders offering varying options. Contact WeMakeScholars, an organisation partnered with over 15 public and private lenders. When you apply for an education loan through us, our experienced team will help you find the most suitable loan for your higher studies. Request a callback today to contact our team.

How to Get the Best Education Loan for Abroad Studies with WeMakeScholars

WeMakeScholars is an organisation that provides expert abroad education loan support to students. Being partnered with over 15 public and private banks, our team offers the best study abroad loan deals for students.

Our experienced team of financial officers carefully analyses the profile of each student to provide personalised guidance to them. Here’s how our team can help you get the best education loan for abroad studies:

1. Expert Guidance: When you apply for a foreign education loan through us, one of our dedicated financial officers analyses your profile and connects you with the best lenders, as per your requirements and eligibility. They guide you at every step of your education loan process so that you can have a smooth and stress-free student loan journey.
2. Swift Processing Time: We offer a quick process time of sanctioning within 6-7 days through a private bank or NBFC, and around 15-20 days to get your education loan sanctioned from a public bank. The above-mentioned processing time is applicable after all the required documents are submitted.
3. Lower Interest Rates: Your financial officer will negotiate with your lender on your behalf to get you the best education loan for abroad studies with low interest rates.
4. Simple Application Process: You can simply apply for education loans by filling out our application form online or request a callback now, and one of our dedicated financial officers will get back to you at the earliest.
5. Complete Support: Our support and guidance don’t just end at the sanction of your loan; we provide our support and assistance till the repayment of the last EMI of your student loan. Your financial officer will contact the bank on your behalf to resolve any issues you face in no time. 
6. Free-of-cost: Since we are funded and supported by the IT Ministry under the Digital India Campaign, all our services are free of cost for students.

So what if you face any issues while studying abroad? You don’t have to worry and bother your family or friends to contact or visit the branch in such a case. Your financial officer can get it resolved, as they are already handling your application. To get a stress-free student loan, get in touch with our experienced Financial Officers by requesting a callback now.

Conclusion

Comparing education loan offers for study abroad can help you find the most suitable student loan option for yourself. It assists your decision-making and repayment planning for your student loan. You should consider several important factors, including the loan type, interest rates, loan amounts, processing times, and repayment terms, while comparing the study abroad loan offers of different lenders. 

Contact WeMakeScholars for an effortless student loan journey. When you apply for a study abroad loan through us, our team compares the student loan terms of different lenders and connects you with the best lenders, according to your eligibility and requirements. Get in touch with us today and get the best study abroad loan for you.