Options for financing education abroad
January 25th, 2012 • Education Finance
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No collateral is required
Repayment terms are flexible
The loan is paid directly to the student giving him the flexibility to spend the money
No application fee is levied
Interest rate is much lower in comparison to that charged in India. If you apply through a creditworthy co-signer, you will get a low rate of interest. Interest rates are variable and will be essential LIBOR plus a margin and will be reset monthly. The margin will be set by the lender depending on the credit history of the co-signer.
So if you have a co-signer, then taking an international education loan make prove to be financially beneficial because of the low interest rates and flexible repayment terms.
Educational loan from an Indian Bank
If you are unable to get a loan in the US, the next option is to obtain one in India.
Eligibility
Admission should be confirmed
Loans are not given for correspondence courses
Past academic record of the loan seeker should be satisfactory.
Collateral: Usually for loans up to Rs. 4 lakh, no collateral security is required. For loans ranging from Rs. 4 lakh to Rs. 7.50 lakh, collateral in the form of a satisfactory third party guarantee is required. For loans above Rs. 7.50 lakhs, 100% collateral in any of the form of Immovable property / NSC / Units of UTI / LIC policy / RBI Bonds or any transferable Government securities is required
Repayment: Repayment has to start 6 months after the completion of the course or if the person gets a job immediately after completing the course, one-month after getting the job. The maximum time given for the repayment is 15 years counted from the date of the first disbursement.
Interest: Banks offer a choice between fixed and floating rate. Most nationalized banks offer variable rates while private and foreign banks charge fixed rates. The rate can vary between 10% and 15%.
No prepayment penalty is levied
In order to obtain finance for your education, make sure you tap all the possible options w.r.t. aid and if you’re unable to get aid, education loan is the next best option.
