Embarking on the educational journey often involves financial aspects, and for many, loans become an essential tool. In this blog, we delve into the varied realm of education loan providers, exploring the different types of lenders that significantly influence students’ academic paths. From conventional banks to specialized financial institutions, gaining insights into the diverse options enables students to make educated choices regarding their educational funding. Join us as we navigate through the intricacies of various lenders, illuminating their distinct features and advantages in the domain of education loans.
Meaning of education loan
Education loans serve as a supportive tool for students aspiring to study abroad. Banks and financial institutions extend these loans with favorable interest rates, easing the financial burden for students pursuing quality education.
Attending renowned universities, especially in a foreign country, presents numerous opportunities but often comes with a hefty price tag. Education loans for studying abroad are crucial in making these opportunities accessible. They bridge the financial gap, enabling students from diverse backgrounds to pursue their aspirations at top-tier global universities.
Amidst the array of options provided by various banks and lenders, selecting the right education loan can be perplexing. This is where GyanDhan steps in to offer assistance. We help students identify the optimal education loan for studying abroad, ensuring it aligns with their unique requirements. Our aim is to simplify the loan approval process, making it an easy and stress-free experience for students.
Types of lenders providing education loan for study abroad
1. Government student loans for study abroad
Government banks in India, often referred to as public-sector banks, extend education loans for students aspiring to study abroad, primarily relying on collateral as security. Students can avail of unsecured loans ranging from INR 7.5 Lakh to INR 1.5 Cr. Collateral is a requisite for obtaining education loans from public banks. Notably, public-sector banks typically offer more favorable interest rates compared to private lenders. Additionally, education loans from government banks offer tax benefits under Section 80E. Key public-sector banks facilitating abroad education loans include – SBI, UBI, BOB, and more.
2. Private Bank student loan for study abroad:
Private banks in India cater to students aspiring to pursue studies abroad by offering both secured and unsecured loans. The approved loan amount depends on various factors such as the chosen country, course, the applicant’s profile, and the financial standing of the co-signer. Despite generally having higher interest rates than government banks, private-sector banks are more competitive than Non-Banking Financial Companies (NBFCs) and international lenders. The Rate of Interest (ROI) typically starts at 11% per annum. Notably, education loans from private banks qualify for tax benefits under Section 80E, and processing times are typically faster than those of government banks. Key private-sector banks in this domain include: ICICI Bank, Axis Bank, IDFC FIRST Bank, and more
3. NBFC student loan for study abroad:
Non-Banking Financial Companies (NBFCs) provide both secured and unsecured education loans for students pursuing studies abroad. The sanctioned loan amount is determined by factors such as the chosen country, course, the applicant’s profile, and the financial standing of the co-applicant. Interest rates on NBFC education loans tend to be higher compared to private and government banks, typically ranging from 11.50% to 13.75% per annum. Unlike education loans from private banks, NBFC loans do not offer tax benefits under Section 80E. However, the processing time for education loans from NBFCs is generally shorter than that of government banks and private banks. Some prominent NBFCs in this sector include: HDFC Credila, Avanse, InCred, Auxilo, and more
Indian government schemes for education loans
Dr. Ambedkar Central Sector Scheme
- Aimed at easing the financial burden for meritorious students pursuing approved Masters, M.Phil, or Ph.D. courses abroad.
- Offers interest subsidies on education loans.
- Eligibility criteria include belonging to the Economically Backward Class (EBC) or Other Backward Class (OBC).
- Family income limits are INR 8 Lakh per annum for OBC and INR 2.5 Lakh per annum for EBC.
- While the loan amount is unspecified, the scheme prioritizes financially disadvantaged students, emphasizing support for higher education.
Central Sector Interest Subsidy (CSIS)
- Introduced by the Ministry of Human Resources Development and the Department of Higher Education.
- Provides an interest subsidy on education loans for economically weaker students pursuing technical or professional courses in India.
- Eligibility requires admission to a recognized Indian or foreign university, with a total family income not exceeding INR 4.50 Lakh per annum.
- Aims to offer financial assistance to those in need, ensuring access to quality education.
- The maximum loan amount under this scheme is set at INR 10 Lakh, providing substantial support for eligible individuals pursuing higher education.
In summary, the varied array of education loan initiatives in India, encompassing interest subsidies and community-centric programs, underscores dedication to enhancing accessibility to quality education. These initiatives not only relieve financial challenges but also enable students to pursue their academic aspirations, whether domestically or internationally. This commitment contributes to a more promising and inclusive future.