Everyone wants to go to the best schools, but it’s important to know that top schools often cost a lot. Without enough money, it’s really hard, maybe even impossible, to achieve certain things, especially in education.
Getting a loan as an international student is tough, and that’s why we’re talking about it in this article. Choosing to study abroad is a good decision. In this article, we’ll cover how to get a loan for studying abroad, along with important things to know, like the types of student loans and how to apply for them.
So, what’s a study loan for studying abroad?
It is money given to you by an organization, and you have to pay it back after a certain amount of time. You can get these loans from your government, a bank in your country, or even a foreign bank in the country where you’re studying.
Private loans are big sums, and you usually need your parents to sign with you. Government loans for studying abroad often have better interest rates. You might get a loan based on how much money you need or your credit score.
How To Get Educational Loans In Abroad Without Collateral
If you want a loan to study abroad, it’s not impossible, but you need to make yourself eligible. Here’s how:
1. Do Well in School:
Make sure your grades are good because getting a loan to study abroad is competitive. A strong academic background increases your chances.
2. Get a Cosigner:
If you’re not from the U.S. and want a loan there, having a cosigner is important. This person should be a U.S. citizen or resident with a good credit score. They promise to pay if you can’t.
3. Ask Your Program:
Talk to the people in charge of your study program abroad. They can give you reliable info about student loans and other financial help. They might even help you apply.
4. Check with Your University’s Financial Aid Office:
Your university’s financial aid officer is a good source too. They can tell you about trustworthy organizations for loans and help you avoid scams.
5. Apply for Federal Student Loans:
Start the application process early. Fill out a form called FAFSA® to apply for federal student loans. Your college will then offer you financial aid based on this form. Follow their instructions to accept the loan.
Before you get the money, you’ll do counselling to understand the loan terms. Then, you’ll sign a note agreeing to repay the loan. If you’re confused, ask your school’s financial aid office for help.
6. Save Money:
It’s a good idea to save some money for your studies abroad. This can be helpful if your loans don’t cover all your costs or if you’re eligible for only a partial loan.
7. Explore Your Choices:
Look into different options while seeking a loan. Explore government-covered loans and private student loans to find the one that fits you best.
8. Apply for Government Loans:
Government loans are a top choice for studying abroad. They have lower interest rates, are easier to qualify for, and offer flexible repayment. The only drawback is they might not cover all your expenses, so you might need extra money from elsewhere. Still, it’s a good option for study abroad.
9. Get a Student Credit Card:
Before applying for a loan, having a student credit card can help build your credit history for studying abroad. This can improve your chances of getting approved for a loan.
Types of Loans for Studying Abroad
When you’re looking to get a loan for studying abroad, there are mainly two types to consider: federal student loans and private student loans.
1. Federal Student Loans:
These loans come from the government of your country and are usually based on financial need. They’re flexible and offer more benefits than private student loans. You can apply for them through your university’s financial aid office by filling out a Free Application for Federal Student Aid (FAFSA).
To use federal student loans abroad, you must be earning credits from your home university.
Examples of Country-Based Federal Student Loans:
For students in India, the government provides various funding schemes. One example is the NBCFDC Education Loan Scheme, which is for applicants from the Other Backward Class (OBC).
This loan supports those studying general, professional, or technical courses at the Master’s or Bachelor’s degree level in an Indian or foreign university.
NBCFDC Eligibility Criteria:
- Government-issued OBC certificate.
- Admission to a foreign or Indian university.
- Admittance is based on an entrance exam or merit.
- Family income less than Rs.3.5 lakhs.
Remember, when choosing between federal and private student loans, consider factors like your school year, financial needs, and credit history. Federal student loans are often seen as more flexible and beneficial compared to private ones.
2. Dr. Ambedkar Central Sector Scheme:
The Dr. Ambedkar Central Sector Scheme is a government education loan program designed to support students with limited financial resources who want to study at foreign universities.
To be eligible, you need a government-issued certificate of Other Backward Class (OBC), admission into a foreign university for master’s or PhD studies, and a family income below Rs. 3 Lakhs per year.
3. Padho Pardesh Education Loan Scheme:
Similar to the Dr. Ambedkar Central Sector Scheme, the Padho Pardesh Education Loan Scheme is another initiative by the Indian Government. It helps students from economically weaker sections of minority groups pursue their studies at foreign universities.
To qualify, you must be admitted to master’s or PhD programs, belong to a minority community, apply for a loan from an IBA member bank, and have a family income of less than Rs.6,00,000 lakhs per year.
4. Central Scheme of Interest Subsidy for Education Loans (CSIS):
CSIS, an initiative by the Ministry of Human Resources Development, supports economically weaker students in India pursuing technical or professional courses in Indian or foreign universities.
Eligibility criteria include admission to approved courses in recognized institutions, applying for a loan under the Educational Loan Scheme of the IBA, and a family income of less than Rs. 4.50 Lakh per annum.
Canadian Government Student Loans for Studying Abroad
The Canadian government, along with many provinces, provides student loans for Canadians studying internationally. One such program is the Canada Student Loans Program, which gives both repayable and non-repayable grants to Canadian students.
Who Can Get These Loans?
These loans are available for full-time and part-time students, those with low to middle incomes, students with dependents, and permanently disabled students.
Loan Distribution in Canada:
The distribution of student loans depends on the province you apply from. Some provinces like Ontario, British Columbia, Saskatchewan, New Brunswick, and others provide Integrated Student Loans.
Alberta, Manitoba, Nova Scotia, and Prince Edward Island students can apply for Canada Student Loans and Grants. However, places like Nunavut, Northwest Territories, and Quebec have their loan programs, and Canada Student Loans aren’t available there. In Yukon, only permanent residents can get Canada Student Loans and territorial Grants.
What Can the Loans Cover?
The Canada Student Loans Program helps cover various academic expenses, including tuition, room and board, books, transportation, and other living expenses.
Eligibility Criteria:
To be eligible, you must be pursuing a degree, certificate, or license in the United States or Canada as a citizen. Non-U.S. citizens need cosigners. You should be a Canadian citizen, a permanent resident, or a designated protected person.
Additionally, you must be a resident of a Canadian province or territory that offers Canada Student Loans, show tangible financial need, and meet specific enrollment criteria based on your course load. If you’re over 22 years old and applying for your first Canada Student Loan, you’ll need to pass a credit check.
Note:
- Keep in mind that eligibility criteria may differ for permanent residents of Northwest Territories, Nunavut, and Quebec, as they have their financial aid programs.
1. American Government Federal Student Loans
The United States government provides different student loans for American students studying abroad. Here are some examples:
Direct Subsidized Loans:
- For eligible undergraduate students with financial need covering higher studies at a college or career school.
Direct Unsubsidized Loans:
- For undergraduate, graduate, and professional students who qualify for a loan but don’t demonstrate financial need.
Direct PLUS Loans:
- Awarded to graduate or professional students and parents of dependent undergraduate students to help cover tuition costs. This loan doesn’t require financial need but needs a credit check.
Direct Consolidation Loans:
- Allows you to combine all eligible federal student loans into a single loan under one servicer.
Federal Student Loan Examples:
1. Stafford Loans:
- Granted as both subsidized and unsubsidized loans.
2. Federal Perkins Loan Program:
- Low-interest loans for college or career school students with financial needs. Availability varies by school.
3. Foreign Enrolled Loans:
- For U.S. students studying at non-U.S. schools, offering high loan limits of up to $50,000 for undergraduate programs and up to $70,000 for medical, dental, law, or business school. Requires a cosigner or a good credit history.
Eligibility for American Government Federal Student Loans:
- Must be a U.S. citizen or permanent resident studying outside their home country at an approved U.S. school for undergraduate or graduate studies.
- Must receive credit at the home college or university.
- The chosen school must be accredited by the U.S. Secretary of Education and eligible for federal student aid programs.
Private Student Loans
Private student loans are offered by banks and financial institutions for specific circumstances. They require a direct application to the bank or institution and proof of repayment ability, such as a good credit score or a cosigner.
Types of Private Student Loans:
1. State Bank Of India:
- Offers a top bank for education loans for studies abroad in India. Features include a quick online application process, attractive interest rates, high loan amounts, easy EMI options, early approvals, tax benefits, and favourable repayment options.
- Types of student loans offered by SBI include SBI Takeover of education loan, SBI Skill Loan, SBI Part-time education courses, SBI Global Ed-Vantage, SBI Scholar Loan, and SBI Student Loan Scheme.
2. SBI Global Ed-Vantage Scheme:
- This SBI overseas education loan supports students pursuing graduate, postgraduate, or doctorate courses in foreign universities across the US, UK, Canada, Australia, Europe, Singapore, Japan, Hong Kong, or New Zealand.
- Eligibility: Full-time courses at foreign universities and colleges.
3. SBI Scholar Loan Scheme:
- Another SBI overseas education loan covers full-time degree or diploma courses, including executive management and certificate or part-time courses.
- Eligibility: Indian students in eligible premier institutions in India approved by SBI student loan for study abroad investors.
4. SBI Student Loan Scheme:
- A good SBI student loan option for students studying graduate and post-graduate courses in India, including technical and professional degree or diploma courses.
- Eligibility: Indian citizens pursuing higher education in India or abroad, already admitted to their preferred school.
5. SBI Skill Loan Scheme:
- A bank loan for study abroad supporting students in ITIs, polytechnics, and training partners affiliated to NSDC or Sector Skill Councils.
- Eligibility: Indian students pursuing skill development courses in India.
6. HDFC Bank:
- HDFC Bank, a leading private bank in India, offers education loans for foreign education, including HDFC Credila.
- Example: HDFC Credila facilitates loan approval even before securing admission, covering over 950 courses in 36 countries.
- Benefits: Higher loan amounts, easy repayment options, quick disbursals, coverage of tuition, living expenses, books, travel, laptops, verified tax rebates, and approval before admission.
7. Bank Of Baroda:
- Bank Of Baroda provides abroad education loans for MBA, MCA, MS, and other eligible courses.
- Eligible Courses: Graduate and postgraduate courses, CIMA-London, CPA in the USA, regular degree or diploma courses in Aeronautical, Pilot training, Shipping, STEM courses, Medical, Law, Economics, Management, and other education courses.
- Interest Rates: BRLLR + 1.50% Spread for specified institutions and BRLLR + 2.15% Spread for non-specified institutions.
8. Baroda Scholar Loan:
- The Bank of Baroda scholar loan is for students doing MBA, MCA, MS, and similar courses that help in getting jobs. To apply, students must be admitted to recognized institutes and courses.
- The loan limit for this Baroda Scholar Loan is Rs. 80 lakhs for specified institutes and Rs. 60 lakhs for non-specified institutes.
9. Baroda Education Loan to Students of Premier Institutions:
- This loan is for Indian students admitted to top educational institutions in India. The loan amount depends on the categorization of the institute – AA, A, B, C grade.
10. Skill Loan Scheme:
- The Skill Loan Scheme is for students studying technical education. The loan amount ranges from Rs. 5,000 to Rs. 1,50,000. Repayment periods depend on the loan amount, but it can go up to 7 years.
11. Axis Bank Abroad Education Loan:
- Axis Bank provides education loans for studies in India and abroad, starting from Rs. 50,000 with attractive interest rates. Benefits include a pre-admission loan sanction letter, flexible repayment tenure, and coverage for tuition fees, hostel charges, and book costs.
- No margin on loans up to Rs. 4,00,000.
- 5% margin on loans above Rs. 4,00,000 for studies in India.
- 15% margin on loans above Rs. 4,00,000 for overseas studies.
- Covers courses in medicine, engineering, and management.
- Easy loan disbursals.
- Can apply with parents as cosigners.
12. ICICI Bank Abroad Education Loan:
- ICICI Bank supports deserving students studying abroad with a loan amount ranging from 10 to 20 lakhs. It offers a low interest rate based on the loan amount.
- Interest rates: Up to 4 Lacs – 13.6%, More than 4 Lacs – 14.6%.
- Security requirements for secured and unsecured loans
- Late payment charge: 2% per month.
- Repayment period: 5-7 years.
- Eligibility criteria include being an Indian resident and securing admission before disbursement.
- Benefits include tax benefits under section 80E, a 0.50% concession in interest rates for female students, and varying margins for study in India and abroad. The loan covers college fees, hostel charges, books, and education-related expenses.
- Documents required include KYC, admission letter, college fee breakup, exam scorecards, and various documents for students and co-borrowers.
13. Bank Of Alfalah:
- Bank of Alfalah in Pakistan is one of the few banks offering study loans for students at the lowest interest rates. The study abroad loan is for Pakistani students who want to pursue higher education outside the country.
- The bank provides an annual amount of 70,000 USD or its equivalent in the student’s country of study’s currency. This covers tuition fees, living expenses, and application charges. To apply, you need to submit the required documents at any Bank Alfalah branch in Pakistan.
14. FCMB:
- FCMB’s study abroad loan, facilitated through the Education Advisory Services (EAS) initiative, is a collaboration between FCMB and MOD Group. This initiative aims to make quality international education more accessible to Nigerians.
- The EAS provides an opportunity for students to access an attractive education loan for studying abroad, removing the usual challenges associated with studying overseas.
15. Punjab National Bank (PNB):
- PNB Udaan is an abroad education loan offered by Punjab National Bank for Indian students aspiring to study abroad. This loan covers graduate, post-graduate, and job-oriented professional and technical courses.
- To qualify for this loan, you need to show a loan margin of 15% for any amount above INR 4 lakhs. The interest rate offered by PNB is the same rate for loans given to students in the top 200 universities worldwide.
16. We Make Scholars:
- We Make Scholars is not a bank or government body but a website where you can access various types of student loans for studying abroad. They provide detailed guidance on how to apply for each loan.
- Supported by the IT Ministry, Govt of India, they offer unbiased abroad education loan support to students. The services are free, and they are associated with 14+ banks in India, helping you find the best abroad education loan. When applying for bank loans from private banks, We Make Scholars acts as an intermediary, negotiating on your behalf.
Requirements for Applying for Student Loans Abroad:
Every institution has specific document requirements for granting a loan for higher education abroad. Some basic documents you might need include a filled application form, passport photographs, ID of you and the co-applicant, residence proof, academic documents, exam results, admission letter, last six months bank statements, income proof of the co-applicant, and collateral documents if applicable.
How to Apply for Student Loans:
To get the best education loan for studying abroad, compare available options, review terms and conditions, and apply. The application process may vary, but generally, you can apply in person or online. During the application, you and/or your co-applicant will need to submit the required documents.
How to Apply for Abroad Education Loan Without Collateral:
Collateral refers to assets pledged to the lender while applying for an education loan. While it’s challenging to get a non-collateral education loan for studying abroad, some organizations offer unsecured loans based on your and your co-signer’s future income and creditworthiness.
Nationalized banks, private banks, NBFCs, and international lenders are examples.
Organizations like Leap Finance, Axis Bank, InCred, Avanse, and Auxilo provide education loans without collateral for studying abroad. The loan amount and interest rates vary based on your profile.