In a Nutshell – Education Loans for Study Abroad

Posted on May 9, 2013 by Akshay Study Abroad in Applications, Study Abroad

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In a Nutshell – Education Loans for Study Abroad

 

Studying abroad is an achievable dream for many aspiring Indian students because of the education loans. Here’s a glance at the various factors that an aspirant must consider before applying for one. Also, there is a look at the international student loans available for Indian students.

 

Criteria to be considered for Education Loans

 

 An aspirant must see to it that the loan offered is at the lowest interest rates. Some banks offer fixed rate and some offer variable rate option. A fixed rate stays the same for the life of the loan, while variable rates change quarterly, and may go up or down. The interest rate of the Study Abroad loan may vary depending on whether you repay the loan immediately or wait until after graduation to start repaying. Having a co-borrower can also have an impact on the rate of a loan. One must compare different options.

 

One must look for “the hidden costs”. The hidden costs for borrowing loan can have a big impact on your overall cost of borrowing. Examine carefully terms like Application Fee, Origination Fee, and Default Fee.

 

Also, one must see to it that there is no prepayment penalty. One must ask: Is there any penalty for early repayment? Or What’s the penalty for a missed or late payment?

 

Another important criterion is to know whether any collateral is required and one should try to go for a minimum or no collateral loan.

 

One must also see to it that there are flexible repayment and loan deferment options available. Putting off payments and having smaller monthly payments might increase one’s total cost of borrowing.

 

International versus Indian Banks

 

US students can receive federal loans guaranteed by the government, but these valuable loans are not available to international students. Luckily, private student loans are available to international students. The loans are cheaper compared to those available in India if an international student is fortunate to get the loan. The interest rate is around 4-6% compared to around 12 % in India.

 

Indian banks allow to repay within 5-7 years after the commencement of repayment. Repayment will commence one year after completion of course or 6months after securing a job, whichever is earlier. Repayment of an international student loan can be deferred while one is enrolled full-time, and for six months after one finishes. After that, one will have up to 20 years to repay the loan, with a payment due every month. Various Indian banks and institutions offer education loans. Some of them are State Bank of India, Bank of India, Punjab National Bank, Dena Bank, Saraswat Bank, IDBI Bank etc.

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