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Education Loans for UK

Updated on Nov 15, 2022
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Receiving an acceptance letter from your dream international university isn't enough to launch your career. Even before the arduous application process of submitting paperwork and exam scores, and the tense wait for a response, there is the matter of securing cash.

Even if a student is a stellar student and qualifies for scholarships or grants, studying abroad can burn a hole in one's wallet. While scholarships can cover up to 50% of the cost of study, the remaining costs must be paid in cash. This is where student loans can make a big difference in your future.

Table of Contents

1 Studying in the UK with an education loan

Many Indians are choosing the United Kingdom as their favorite study location these days because of its excellent educational system and universities that house the finest educators. However, because of the fee system and other costs such as lodging, travel, and food, the United Kingdom is one of the most costly countries to study in. An applicant must submit a well-structured financial plan when applying to UK universities for an undergraduate or master's degree.

A specified quantity of liquid assets, as well as loan documents or scholarship letters, must be included in the financial statement. It should be sufficient to cover at least the first year's tuition and living expenses in the country. After that, one can work part-time to supplement their income and pay for school.

Many Indian banks and financial institutions assist Indian students with their finances in order to support the dreams of millions of students who want to study abroad in countries such as the United Kingdom. Many banks and financial institutions compete with one another to provide aspirants with the smoothest experience in attaining their objectives, from providing a significant quantity of financial assistance to the lowest interest rate and flexible repayment time.

2 Eligibility

Students must first comprehend and meet the qualifying standards before applying for an Education Loan from their preferred money lending institution or bank. Various banks have different eligibility conditions. There are a few factors, however, that all money lending organizations (banks) consider:

  • The student must be an Indian citizen.

  • If the loan applicant is under 18, their parents must take out the loan.

  • A strong academic background is required of the candidate.

  • A recognized international university, institution, or college must have accepted the candidate.

  • Because banks prefer courses that will assist people in obtaining employment, the applicant's chosen course must be technical or professional in nature.

3 Loan Amount

The amount of the loan, the student's profile, the university, and other factors all play a role in obtaining an education loan without collateral. Students who take out a secured student loan in the UK, on the other hand, enjoy lower interest rates. The bank's risk is modest since the borrower offers security (if they fail to repay the loan).

4 Interest rate

Leading Indian banks provide education loans to assist students in achieving their academic goals. The interest rate on an education loan with a repayment period of up to 15 years begins at 6.60% per year. Education loans can be used for both in-country and overseas higher education.

The lender will assess which courses are qualified for an education loan. Higher education loans can be secured for full-time or part-time studies, as well as loans for working professionals.

5 EMI Calculator

The following mathematical formula can be used to determine your education loan EMI: [P x R x (1+R)N]/[(1+R)N-1] = EMI amount where the variables are P, R, and N. This also means that if you change any of the three factors, the EMI value will vary. The letter 'P' stands for Principal Amount.

EMI = [P x R x (1 + R) ^ n] / [(1 + R) ^ n - 1]

P= Principal loan amount

R= Applicable rate of interest

n= Number of monthly installments.

6 Loan Process

Before you get too enthusiastic about the prospect of studying in the United Kingdom, make sure you understand the complete UK education loan process.

Given the numerous sources of information available on the internet, we understand that gathering this knowledge can be somewhat overwhelming. The majority of students who study in the United Kingdom take out an education loan.

Here, we hope to provide you with a comprehensive understanding of the numerous financial requirements that all hopefuls must meet before beginning their higher education journey in the United Kingdom. It will also explain how to apply for an education loan in the United Kingdom.

7 Documents

Documents required to apply for a student loan to study in the United Kingdom completed application form

  • Proof of your identity

  • Proof of address

  • Proof of income

  • Photographs in passport size

  • Marksheets from high school and university

  • a copy of your award letter

  • Letter of acceptance

  • Additional Expenses

  • A copy of the foreign exchange permit

  • A concise summary of the co-assets borrowers and liabilities will be required.

  • Additional financial documentation.

8 Tax Benefits

You can get deductions on all kinds of vocational and academic courses and education loans. You can deduct the interest you pay on your student loan under Section 80E of the Income Tax Act of 1961. 

The tax benefits are applicable on the interest of the EMI, and not the principal amount. However, you can use these benefits several times with no upper limit.

To avail this benefit, you need a certificate from your bank or financial institution that segregates the principal and interest components of your EMIs.

9 Repayment

The loan payback period usually starts six to twelve months after you finish your studies or, whichever comes first when you find work. When it comes to repaying their loans, different lenders grant different moratorium periods to applicants. You can repay the loan in monthly installments.

10 Loan Providers (banks, private companies, NBFCs)

Leading Indian banks provide education loans to assist students in achieving their academic goals. The interest rate on an education loan with a repayment period of up to 15 years begins at 6.60 % per year. Education loans can be used for both in-country and overseas education.

The lender will assess which courses are qualified for an education loan. Higher education loans can be secured for full-time or part-time studies, as well as loans for working professionals.

11 FAQ's

Q1. Is the RBI's lending moratorium, which was enacted in response to the Covid-19 epidemic, also relevant to student loans?

As a result of persons encountering financial troubles as a result of the Covid-19 outbreak, the Reserve Bank of India has imposed a loan ban on school debts.

Q2. Will I receive the same amount of money on my education loan in India and abroad for the same level course?

No, education loans in India are usually not as liberal as those in other countries for comparable-level courses. Greater loan amounts are available for courses attended outside of India, as fees and other expenses may be higher elsewhere than in India (which also depends on the educational institution).

Q3. Is it possible to transfer my college loan to a bank with cheaper interest rates?

Yes, your school loan can be transferred from one bank to another. On the other hand, your present bank may charge you a refinance fee. As a result, it's critical to analyze all of the existing and new bank's aspects before changing the loan.

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