Best Funding Options for Education Overseas
Gain the strategic insight, checkout the process and pre-requisites to avail Abroad Study Loans.
Student loans serve as a great financial aid to students who wants to pursue their education abroad. If it weren’t for education loans, millions of students would never have made it to their dream universities. However, it is also a fact that not everyone is eligible to get an abroad education loan without collateral as too many loan applications get rejected by the lenders.
Types of Overseas Education Loans
- Low Rate Of Interest
- Lengthy Approval Process
- Need Property
- Lower EMI
- Risk Of Property In Case Of Default
- Parental Income Is Not Required For The Approval
- Longer Repayment Period
- Need Co-Applicants For ID Proof Only
Collateral loans are also known as Secured Loans, are provided by Nationalised Banks, Private banks and NBFCs. The quantum of finance up to which the bank can sanction the loan amount is up to 1.50 Crores for Overseas Education.
A loan on secured credit promises lower interest rates flexible repayment terms and a choice of different interest plans.
A Collateral Overseas Education Loan can be taken on the basis of assets like immovable property, LIC Policies, government bonds, shares etc.
However, secured education loans take longer than unsecured loans and only 75% of the amount will be sanctioned against the valuation of the property.
- Higher Rate Of Interest
- Quick Approval Process
- Need Only Stable Income
- Higher EMI
- No Such Risk
- Parental Income Is Required For The Approval
- Completely Shorter Repayment Period
- Need Co-Applicants As Financial Guaranter.
Non-Collateral loans are also known as Unsecured Loans, are viable option for the students who are not willing to pledge any collateral security against security the loan amount.
This type of loan can ne availed from nationalized banks, private banks, NBFCs and internationallenders.
NBFCs and few private banks offer up to Rs. 45 lakhs as a loan amount whereas nationalized banks provide unsecured loan up to Rs. 7.5 lakhs.
Non-Collateral is much quicker and convenient as it does not involve the procedure of legal verification and property valuation.
Our experienced Education Loan Advisors will not only assist you in selecting the right financial institution but also guide you step by step as to how to get education loan for studying abroad.
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Eligibility criteria for an Overseas Education Loan without collateral
- The academic profile of the applicant is to judge the “Employability Potential of the applicant”. At least a minimum of 60% is required in 10th, 12th, and degree. Also, students with more than 3 backlogs may not qualify for an unsecured education loan.
- Financial co-applicant’s income, CIBIL Score. This is the most important deciding factor for an unsecured education loan as lenders are not taking any collateral, they can stay assured if a student fails to repay the loan amount, their financial co-applicant would pay on the student’s behalf.
- Course/Degree that an applicant wishes to pursue. Courses like UG, PG in STEM disciplines are preferred by lenders over courses like Public policy or Aviation but never Ph.D., Mbbs, Theology, tailoring, etc.
- The country also matters. Most of the lenders focus on major study abroad destinations like the US, UK, Canada, Australia, Ireland, Germany but they are skeptical about the less known countries like China, Ukraine, etc when it comes to unsecured loan. University you are going to. Private banks have a list of universities with them only for which they approve an unsecured loan.
If you find yourself ineligible for an unsecured education loan, do not worry and connect with the
Study Achievers for your education loan process. Study Achievers is associated with 10+ lenders, and can still give it a try and talk to lenders for necessary deviations on your behalf as we’ve done multiple times before for students who otherwise were refused for the education loans.
Documents Required for an Unsecured Education Loan
Education loans for abroad studies without collateral can cover your flight fare, tuition fees, living expenses, study materials, etc. The lenders provide quick and hassle-free unsecured education loans once you provide the filled loan application form along with all the required documents listed below:
- KYC documents (PAN Card, Aadhar Card)
- 2 passport-size photographs of the applicant and co-applicants
- Bank Statement of last 6 months
- Optional – Guarantor Form
- Copy of offer letter of the Institute/university with fees schedule
- Mark sheets / passing certificates of S.S.C., H.S.C, Degree courses, entrance tests like IETLS, TOEFL etc.
- Income proof of the guarantor or co-applicant/borrower (i.e. salary slips/ Form 16)
As said earlier, the financial co-applicant is very important for an unsecured education loan, especially their earnings. A co-applicant can be salaried or self-employed and based on that lenders may ask for different documents of the co-applicant.
Banks providing Education Loans without collateral
The lenders can be categorized into two types i.e Public Banks and Private Lenders that provide education loans without collateral. It is private lenders that can provide a larger sum as non-collateral education loans.
- Public banks – Public banks like SBI, BOB, etc as per their policies can only provide up to 7.5 lakhs student loans without collateral irrespective of the course and country. But for some top-tier institutes in India, you can avail up to 40 lakhs of unsecured education loans from SBI.
- Private banks – Private banks can offer up to 40 lakhs of education loans for abroad studies without collateral. As mentioned above, these banks have a list of some top universities with them only for which they approve an unsecured loan. Private banks can fund up to 40 lakhs for a PG program and up to 25 lakhs for a UG program with a rate of interest of 10.5% and above.
- NBFCs – A Non-Banking Financial Company (NBFC) is also an option for Indian students as there are four NBFCs in India that provide a student loan without collateral. NBFCs decides the loan amount based on the students’ choice of a country like for the USA they can fund up to 60 lakhs at the interest rate of 11-12%, For Canada -35 lakhs at the interest rate of 12-13%, For the UK- 45 lakhs, Germany- 20 lakhs, Australia- 30 lakhs at the interest rate of 12-13.5%.
- Foreign lenders – Foreign lenders like Leap Finance, Prodigy Finance, etc can cover up to 80% of your total expenses. Their rate of interest is around 9.25-16% but because it is based on London Interbank Offered Rate(LIBOR) not Marginal Cost of Funds based Lending Rate(MCLR), when converted to INR it reaches around 14-15%, making it the most expensive unsecured education loan option.
All these aforementioned lenders can give you a non-collateral education loan for your abroad studies. There are many pros and cons of opting unsecured education loan which you should be aware of before applying for one.
Be mindful of the additional cost
- Moratorium period – It consists of students’ course duration plus 6 months to 12 months. Now with the public banks, students get the option to skip the payments of their incurred interest on the disbursed amount during the moratorium period. But private lenders do not give any such no-payment moratorium period to students. Yes, the EMIs start after the moratorium period but during their moratorium period, students are mandated to pay either partial or full interest.
- Processing fee – While public banks do not charge a processing fee for an unsecured education loan, private banks charge up to 1% on the loan amount plus GST and for some, it is 15k +GST. The processing fee can be 1% to 1.5% plus GST on the loan amount for the NBFCs and a minimum of 2% plus GST on the loan amount for the foreign lenders.
- Loan insurance – It is not mandatory to have loan insurance with public banks but it is compulsory for private lenders. It is 1% to 1.5% of the loan amount for private banks and 2% or above for the NBFCs.
It is to keep in mind that the processing fees and the loan insurance are negotiable in private lenders which is why when students approach these lenders on their own, they end up paying more.
Why do loan applications for unsecured education loans get rejected?
Apart from failing the eligibility criteria set by the lenders, there are some unwritten rules based on which sometimes lenders reject students’ loan applications.
- Undergraduate program – Private lenders do fund a UG program abroad if the university falls under the list but the chances are they will deny it at first as they prefer funding a PG program mainly due to the course duration being shorter compared to a UG program. NBFCs on the other hand rarely funds a UG program abroad, they consider funding only if a student’s financial co-applicant has an exceptionally good income source. Foreign lenders do not fundzUG programs altogether.
- Age of the applicant and co-applicant – Yes, age matters for NBFCs. For students older than 27 years, NBFCs are not willing to offer loans. They can consider at max up to 30 years if only the other profile parameters are good. As far as co-applicant, NBFCs won’t accept the profile if your co-applicant is retired (Pensioner or not) or about to be retired in 3 years.
- FOIR– A fixed obligation to income ratio or FOIR norm is only followed by the private banks. Private banks reject the loan if your co-applicant does not meet the FOIR norm, it basically means that the co-applicant’s obligations i.e the EMIs, are higher than how much he/she can afford.
So, when students visit these lenders without knowing these situations, their loan gets rejected by the lenders. Had students known about who to choose as co-applicant earlier, their loan may have been approved. Since WeMakeScholars has handled and has been handling the huge volume of loan applications, we have the solution to almost any problem in an education loan that a student might face. When you apply for your education loan through us, your assigned financial officer will tell you in advance if any such possibility emerges and guide you for the same. There are many such benefits you get while applying through Study Achievers.
How to apply for an education loan without collateral via Study Achievers?
- Visit our website and click on the request a callback button
- Select the region and then click proceed
- Fill in the required basic details, course details, etc in the form
- Once submitted the request, you’ll get a callback from our financial officer within 1-2 working days.
- After providing some additional information related to your education loan requirement, your financial officer will be able to help you out in choosing the best lender for you.
- Your assigned financial officer will send you a secured link to a portal, where you are required to upload all the relevant documents listed by the banks.
- Once all the relevant documents are uploaded, your financial officer will connect you with multiple lenders best suited to your profile and help you get the best deal possible.
Lenders sometimes may ask you to send your documents separately in the mail or over WhatsApp, but it is recommended to refrain from doing so as the confidentiality of the documents gets compromised. Study Achievers is renowned for maintaining the confidentiality of the documents uploaded by the students on our secured link.
What is the loan procedure for an education loan without collateral?
The loan procedure for education loans without collateral are quite quick and simple. The procedure involved for availing an education loan without collateral: (a) firstly fill the online application form (b) Collect the latest documents checklist from the Study Achievers team. (c)After you submit the documents, Study Achievers and the bank officials verify it and send it to the processing centre. (d) Processing officer verifies the application and sanctions the loan. (e) After the loan is sanctioned, you will be required to sign the documents. (f) Disbursement agreement is signed and disbursement of loan amount takes place.
Which banks can you approach for an education loan without collateral?
Both public and private banks give education loan without collateral. The difference is the loan amount. Public banks give maximum of INR 7.5L while Private banks can lend up-to INR 40 Lakhs. Also there is an option to go with NBFCs which works same as private bank. Some of the banks to get unsecured loan are: SBI, BOB, Axis, ICICI, Avanse, Incred etc.
What if you don’t have any collateral/security?
If you do not have any collateral to pledge, you need not worry as there are a number of options available in the market which will help you with collateral free education loans. To know the best lender matching your profile, connect with our team at Study Achievers and they will be able to help you out.
Study Achievers is an exclusive platform with the best funding options for overseas education aspirants who aim to scale great heights and carve a niche academically.
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