Education loans for studying abroad | Do’s and don’ts

Education loans for studying abroad

Embarking on an international education journey is thrilling, but the financial landscape can be daunting. Education loans for studying abroad have evolved since 1995, with the Reserve Bank of India’s Educational Loan Scheme playing a pivotal role.

Key considerations while applying

India offers prominent education loan providers like ICICI Bank, Union Bank, HDFC Credila, and more. Understanding interest rates and tenures is crucial. Banks typically offer rates between 8.55% and 15%, with tenures up to 15 years. Non-banking financial companies (NBFCs) provide rates between 10% and 15%, often with longer tenures of up to 20 years. Borrow wisely, align the loan amount with financial goals, and maintain a credit score above 650 for better options.

Common reasons for loan rejection

Several factors can lead to rejection, including low co-applicant CIBIL scores, limited co-applicant income, incomplete documents, poor academic performance, insufficient collateral, choosing an unrecognized university, and the financial background of the borrower and co-applicant.

Co-signer eligibility and responsibilities, collaterals, processing time, and fees

A co-signer, typically a parent or spouse, shares equal responsibility for loan repayment. Understanding collaterals is vital; options include property, fixed deposits, or life insurance. Processing times vary (7 to 45 days), with fees ranging from 0.5% to 10% of the total loan amount.

Early application for spring 2024 enrollment, fine print, grace period, and default consequences

To ensure timely fund disbursement, start the loan application process 90-100 days before Spring 2024. Read the fine print, understand interest terms, involved parties, and seek legal advice if needed. A moratorium period of up to 6 months post-course completion allows time for repayment preparations. Defaulting on unsecured loans affects credit scores; secured loan borrowers risk losing collateral, impacting guarantors’ credit eligibility.

Careful consideration of providers, terms, and responsibilities is essential. Adhering to dos and avoiding don’ts ensures informed decisions, providing a smoother financial journey for international education pursuits.