So, one of the most frequently asked questions is, Which loan is best for studying abroad? And Which bank is best for higher education loans? So here is the answer to these questions. Undoubtedly, government bank loans are one of the best sources of funding for higher education.
Prior to seeking financial assistance from any other institution, most prospective borrowers first seek out a government bank, which is the best bank loan for higher studies. India’s government bank loans are the most preferred form of Study Abroad Education Loans for several reasons. In addition to explaining all of those reasons, this article provides a list of countries that are considered eligible for government loans.
Advantages of borrowing from a government bank for higher education
Borrowers benefit significantly from government bank loans. Nationalized banks offer education loans with favorable repayment policies, which is one of the main advantages. Government bank loans are beneficial for higher education for several reasons, including:
Low-Interest Rate Study Abroad Loan
The interest rates on education loans may vary from one bank to another in India. Most students choose public banks/government banks in order to take advantage of the lower interest rates they offer. As far as the market is concerned, these rates are among the most affordable. Suppose you are considering an education loan to study abroad. In that case, it is advisable to apply to the Government banks, as their interest rates fall between 7.65% and 9%, which are considered the most competitive in India.
The interest rates on Government bank education loans are determined by the MCLR (Marginal Cost of Funds Based Lending Rate). This is the benchmark value for the Government banks to determine their interest rates on any loan, whether an education loan, a personal loan, a car loan, a home loan, etc.
Budget-friendly processing fees
Taking out an education loan through a government bank has a number of benefits, including lower processing fees. NBFCs and private banks provide education loans without collateral, and their processing fees are approximately 1% of the total amount of the education loan. According to common knowledge, Government banks charge a fixed processing fee of INR 10,000 for secured education loans due to their nature of funding. Depending on the bank, it may also be refundable. EduCred provides you with this significant benefit when processing your education loan.
Study Abroad Education Loan Subsidy 2022
A significant attraction of Government bank student loans is the subsidy programs offered by the nationalized banks to ease the burden of education loans. These schemes usually apply to the interest rates of education loans provided by Government banks. To assist students from economically weaker sections of society, government banks have introduced multiple programs in which students can receive a subsidy from the government on their education loan interest. There are a few subsidy programs for education loans, including:
a. CSIS (Central Sector Interest Subsidy Scheme)
b. Education Loan Interest Subsidy Scheme of the Padho Pardesh Government
c. Dr. Ambedkar Central Scheme of Education Loan Interest Subsidies
More flexible repayment terms and Transparency
Government banks often offer more flexible repayment terms than private banks, which can be helpful if you struggle to make payments. Government banks are required to be more transparent than private banks, which means that you’ll know exactly what you’re getting into before you take out a loan.
Overseas Education Loan Portal Vidyalakshmi
For students seeking education loans in India to pursue their dream of higher education, the Government of India established the Vidyalakshmi education loan portal under the Pradhan Mantri Vidya Lakshmi Yojana. By using the portal, students can apply for and track their education loans, making the entire process of applying for Government student loans easier.
The Vidyalakshmi portal allows students to check the education loan programs offered by all the Government banks in India. The portal was developed in collaboration with the Ministry of Finance (Department of Financial Services), the Ministry of IBA (Indian Banks Association), and Higher Education (Department of Higher Education). Introducing the Vidyalakshmi education loan portal made applying for government student loans easier for students with limited access to prominent government banks.
You can learn more about the education loan process by connecting with our team at EduCred, as our finance team will be able to assist you.
A student-friendly repayment plan for Study Abroad education loans
Student-friendly repayment terms are one of the irresistible benefits of processing through Government banks. Education loan repayment terms are among the most flexible in all government banks. Furthermore, government bank education loans feature a moratorium on payments. Before the repayment tenure begins, there is a moratorium period.
Students are not expected to begin the repayment of their education loans until the end of their course, plus six months after they have completed the course. Students will have sufficient time to find employment or arrange funds to repay their debts under this provision. Only government-sponsored education loans are eligible for this benefit. After completing their course, students are permitted to begin repayment of the interest on their education loans based on the simple interest concept. The Government banks in India also grant students a loan tenure of up to 15 years.
Overall, borrowing from a government bank for higher education can be a great option for Indian students. Be sure to compare interest rates, repayment terms, and eligibility requirements before choosing a loan, and always shop around for the best deal.
Eligibility criteria for flexible Study Abroad education loans
I hope your other question is answered by now. Which bank has the lowest interest rate on education loans abroad? Applicants for Overseas education loans must meet specific requirements to qualify for an education loan. Unsecured loans have much stricter eligibility criteria than secured loans, especially concerning co-applicants. A Co-applicant in an NBFC can only be an individual with a firm and stable income profile. In contrast, in a Government Bank, a Co-applicant can be a retired individual, an individual involved in agriculture, etc. In addition to these, there are also specific eligibility criteria for flexible education loans.
As a co-applicant, government banks permit third parties to be named. Many students face obstacles in the process of obtaining a government bank education loan, despite all the benefits of such a loan. It is at times like these when organizations such as EduCred come in handy. You can reach out to our financial officer at EduCred for assistance with all aspects of the education loan process.
A list of countries that are eligible for a government loan for overseas education
In contrast to their private counterparts, government banks have not set any ceiling on the amount of overseas education loans that students may be eligible to receive based on the country of their higher education. To proceed with your abroad education loan application with the utmost ease, you should be aware of the list of countries eligible for an abroad education loan from government banks.
Several students choose to study abroad in the United States, and it is also one of the top countries where you can receive a government loan for higher education. Borrowing a collateral-based education loan can allow the borrower to borrow a maximum amount from a government lender.
It is important to note that the value of your collateral plays a significant role in the final education loan you are eligible to receive. For students who wish to study in the USA, a maximum amount of INR 1.5 crores is available.
It should be noted that these numbers are estimates and that the actual amount will depend on the value of the asset that you are pledging. Canada is the dream destination for students willing to immigrate after their studies. We do Overseas Study Consultations, too, for you to choose from the best options. So you are a few keystrokes away from knowing which bank is best for education loan for Canada?
In the case of applicants seeking to study in the United States, a secured education loan will cover the I-20 amount, and for candidates seeking to study in Canada, the GIC amount.
EduCred can provide you with an unbiased opinion of the funding options that suit your profile if you are still unsure.
One important point should be kept in mind by all students who intend to borrow an education loan to study in Australia. As you review the previous articles listed here, you will notice that we have always highlighted the benefits of taking out education loans from government banks. Even though students have the option of contacting NBFCs for education loans, government bank education loans are often the only option when it comes to being able to obtain a visa to study in Australia without experiencing any hassles.
The Australian embassy favors students who take out secured education loans from nationalized banks such as the SBI and other public sector institutions.
This is because government banks have a proven track record of being financially secure and reliable, as opposed to non-bank financial companies (NBFCs). Students wishing to study in Australia must ensure they have no major financial obligations.
EduCred can provide you with an unbiased opinion of the funding options that suit your profile if you are still unsure.
- New Zealand:
In New Zealand, government banks provide secured bank loans for educational purposes. New Zealand is nothing less popular, and our students always ask how much maximum loan I can get for studies abroad. Government banks set a maximum loan amount based on various factors for those who wish to study in New Zealand. Student living expenses:
- The average living expense for students studying in New Zealand is NZD 15000 for the entire course duration or NZD 500 per month. A sum of NZD 1250, During the course. In New Zealand, bank loans for education cover these living expenses.
- Fees for tuition for students studying in New Zealand: Taking an abroad education loan from a government bank will cover the tuition fees stated in the college admission.
It is also important to note that although government banks grant third-party collateral-based education loans in New Zealand, the embassy does not promote this as a funding source. Therefore, it is advised that you avoid borrowing third-party education loans to study in New Zealand.
For any remaining doubts about funding options for your higher studies abroad, you should contact the EduCred team to obtain unbiased advice on which option best suits your profile.
- The United Kingdom
A secured education loan is the best option to finance your higher education in the UK. Several government-backed loans are available to Indian students, including the Overseas Student Loan Scheme (OSLS) and the Indian Government Education Loan Scheme (IGELS). The OSLS is open to Indian students studying at a recognized university or college in the UK and can cover up to 100% of your tuition fees and living costs. The IGELS is available to Indian students studying at a recognized university or college in the UK and can cover up to 85% of your tuition fees.
These loans are interest–free and have a repayment period of up to 10 years. To apply for either of these loans, you must submit an application form to the relevant authority. If successful, you must provide proof of your financial situation, such as your bank statements and income tax returns. Once your loan has been approved, you can use the funds to help pay for your tuition fees and living costs in the UK.
In order to fund your higher education abroad, collateral-based education loans from reputable government banks are always a better option.
The reasons for this are as follows.
- When compared with unsecured education loans, secured loans are always more affordable.
- Interest rates on secured loans are far too low.
- The processing fees are relatively low.
- Your application for a student visa is less likely to be rejected.
EduCred can provide you with an unbiased recommendation on the best funding option for your higher education abroad if you are still unsure which option is best for you.
We recommend you read the article on Government schemes for study loans.
Also, we refer to some more of our articles that will help you to achieve your Study abroad ambition:-