• Education Loans

Foreign Education Loan Approval Factors: Program Type and Country

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  • read time3 min Read
  • By:CANAM Group
  • Updated On:Feb 28,2024 01:25 PM IST

An education loan covers various costs for a student such as tuition fees, travel expenses and other education-related expenses. Deep dive into this article to know some important details about overseas education loans such as the documents required, eligibility criteria for education loans, the education loan process and how the type of program and country students choose can affect their overseas education loan approval. 

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A lot of international students prefer taking education loans to fund their abroad studies because they get a higher loan amount and longer repayment tenure. Also, today there are many banks which provide study loans to pursue foreign education without collateral. This article is for all those who have many questions in their mind regarding foreign education loans. 

Read this article to learn what is an international education loan, its types, eligibility criteria for foreign education loans, factors affecting overseas education loan approval, documents required to get an education loan, foreign education loan process and how the type of program and country can affect the foreign education loan approval. 

What is an International Education Loan?

An international education loan or an overseas education loan helps students cover the costs associated with studying abroad. They are usually provided by banks or credit unions and cover various costs like tuition fees, travel costs and living expenses. The repayment time for these loans is longer and one can repay them after graduation. 

Eligibility for Foreign Education Loan

Students looking for foreign education loans must know that meeting eligibility criteria is one of the best ways to secure an international education loan. Here is a list of eligibility criteria students must fulfil to get a foreign education loan.

• Applicant must be a resident of India to be eligible for an education loan. 
• Students must have a strong academic record to facilitate speedy approval of education loans. 
• Candidates must have received a confirmation letter from a recognized foreign university for an applied program. 
• The applicant must be going for a graduate/postgraduate degree or a PG diploma.
• To get an education loan the age of students must be between 18 and 35 years.

Foreign Education Loan Documentation

Besides fulfilling the eligibility criteria students would be required to submit various documents to apply for an overseas education loan such as age proof, residence proof and identity proof. Following is the list of various documents one must keep handy. 

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Types of International Education Loan

There are various types of loans available in the market depending upon the needs of individuals. The loans can be categorized based on location and course of education. In this topic let's learn about types of foreign study loans based on collateral.

Secured Education LoanA secured education loan is a type of loan where a borrower needs to provide collateral to banks such as fixed deposits or property to secure the loan. If the borrower fails to repay the loan the bank can use the collateral to get money back. A secured education loan for foreign education comes at a lower rate of interest. 
Unsecured Education LoanAn unsecured education loan is a loan where a borrower doesn’t need to provide any collateral to the loan provider. Due to no security, the interest rates of unsecured loans are higher than secured education loans. 

Factors Affecting Foreign Education Loan

Foreign education loan helps individuals to study abroad after 12th in countries like the USA, UK, Canada and Australia. Before taking an international education loan a student must know some factors which can affect their loan approval. Given below is a list of factors which can affect the approval of foreign education loans.

Credit HistoryA good credit history can help students to get foreign education loans faster. Students can show a good CIBIL score for their co-applicant. If the CIBIL score shows that the previous loans taken were paid on time, it will increase the chances of getting loan approval. 
High Earning PotentialStudents may get quick approval of their overseas education loan if they choose a high-earning potential course. The courses like medicine, management and engineering have a great earning potential. Therefore, it's important that students choose their program carefully as banks don’t sanction part-time, correspondence or distance courses. 
Academic RecordThis is good news for all the high achievers. A good academic record can increase the chances of getting a loan approved. It doesn’t mean that average students won't be able to get education loans. An average student who enrolled in a premier academic program will have a higher chance of getting an education loan. 
Institutional AccreditationStudents applying for foreign study loans should be aware of this thing that banks decline the education loan if the student is applying to an unrecognized institute. Hence a student must apply to a recognized institution to have a higher chance of getting an education loan. 

International Education Loan Process

After knowing about what is an international education loan, types of education loans and eligibility criteria next step is to know about the international education loan process. Following is the step-by-step process of getting an international education loan for abroad studies

• To apply for a foreign study loan for abroad studies, a student must be an Indian citizen, having secured admission into a recognized college/university.
• A student must have a co-applicant to execute the loan process. (Parents, Siblings, Spouse)
• For the loan amounts ranging between 4-7.5 Lacs, one needs to have a third-party guarantor.
• For loan amounts above 7.5 Lacs, collateral is mandatory. (Example-Property, Fixed Deposits)
• Once the loan application is approved, the banks disburse the required amount directly to the college/university as per the given fee structure.
• The loan is repaid by the student. Generally, the repayment starts when the proposed course is completed. There are some banks that even provide a relaxation period of 6 months after getting a job or a year after the completion of studies for repayment.
• The banks use the Marginal Cost of Funds based Lending Rate (MCLR), plus an additional spread to set an interest rate for education loan.

How does the program type and country affect International Education Loan Approval?

Foreign study loan approval depends on various factors such as credit history, earning potential of the program, academic record and institutional accreditation. Two factors which can affect international education loan approval are as follows:

Type of Program

The approval of an education loan depends on the type of program students are applying for. If students are applying for a program which doesn’t have a high earning potential, then most banks will decline loan applications. On the other hand, courses like medicine, engineering and management that have earning potential then the banks may quickly approve the education loan. If a student is planning to pursue any course from a well-known institution, then it also adds weight to the application.

Further, the approval of overseas education loans will also depend on the cost of the program. If the program is very expensive then the banks may reject the application due to the risk associated with it. The duration of a program is also a crucial factor impacting loan approval. The longer courses with a duration of 4 years will have less chance of approval as they are seen as riskier by the banks while shorter courses such as certificate or diploma courses. The approval of study loans can also be affected by post-graduation opportunities offered by the program. 

Type of Country

Another factor which affects the approval of an overseas study loan is the type of country the applicant chooses. The developed countries have higher approval rates due to factors such as stable political systems, well-renowned institutions and strong economies. Such countries are the USA, Australia, Germany, Canada etc.

On the other hand, developing countries have lower approval rates due to factors including quality of education, political uncertainty and economic instability. Loan approval also depends on the living expenses of the country. A lower cost of living will be seen as less risky by loan providers and may result in faster loan approval. Government policies are another factor which can impact the study loan approval. the banks may approve study loans if a student is going to study in a country where the government offers scholarship programs or loan schemes to foreign students.

Conclusion


This article would have definitely helped students who came here while exploring international education loans to study abroad. After reading this piece of content our readers now know what is an overseas study loan, types of international education loan, eligibility criteria for foreign education loan, factors affecting overseas education loan approval and foreign education loan process. They also know how the type of program and country they choose will impact their study loan approval. for further queries they can connect with canam experts. 

FAQ

To be eligible for a foreign education loan student must be a citizen of India. 
Some of the best banks for foreign education loans are Axis Bank, HDFC Bank and ICICI Bank. Students can connect with Canam to get education loans at affordable rates from these banks. 
Yes, if you are eligible you can get 1 crore to fund your foreign education from ICICI Bank. Connect with canam experts for an easy foreign education loan process. 
Some common reasons for rejection of student loans are insufficient credit history, inadequate income, inaccurate application and lack of collateral.
Yes, in today’s time, it’s very easy to get an education loan for abroad studies. Our readers can also take the assistance of Canam experts to get a higher loan amount at an affordable interest rate.

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