LoginAbroad Education Loans: Government vs Private Banks – Differentiating Factors
Study abroad aspirants aiming for a degree from the best Foreign Universities often look for various ways to fund their education, such as overseas education loans. As more Indian students seek international platforms for research and work, various lenders in the financial market come up with tailor-made schemes for international aspirants. While there are various funding options, many students prefer to trust banks for their overseas education loan needs.
Banks in India are classified into Government or Private Banks, as we all know. While both types of banks function similarly and operate under the norms of the Reserve Bank of India (RBI), their abroad education loan schemes, policies, and benefits can differ greatly. In this article, let us compare both types of banks to better understand their differences.
Understanding Government vs Private Banks for Abroad Education Loans
Government Banks, also known as Nationalized Banks, are owned largely by the central or state government. On the other hand, Private Banks are owned by companies or shareholders. Let’s see how these banks differ.
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Quantum of Finance |
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Rate of Interest |
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Loan Margin |
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Repayment Tenure |
Up to 15 years, including the course duration |
Up to 15 years, including the course duration |
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Although Government and Private Banks have many differences, they are also similar in some ways. For example, both types of banks offer moratorium periods of around 6 to 12 months and overseas education loan tax benefits for students during the repayment period.
Having noted the major differences, let us learn about the best Government Bank abroad education loan schemes in the next section.
Best Government Banks for Abroad Education Loans
There are many Government or Nationalized Banks offering loans with and without collateral for global aspirants. The rules and norms for these banks are set by the government, focused on accessible and transparent financial services for people from all walks of life. Let us get a look at the abroad education loans offered by Government Banks.
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Unsecured loans: Up to INR 50 lakhs for Prime-Listed Universities |
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Unsecured loans: Up to INR 40 lakhs for Prime-Listed Universities |
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Now that we’ve had a glance at the loan amounts available through Government Banks, let us compare those with the loan types available at Private Banks.
Best Private Banks for Abroad Education Loans
Private Banks, headed by companies or shareholders, have many customer-based ventures and services. They are known for their efficient processes and innovative loan benefits, although there might be additional costs involved. Read on for a brief overview of the abroad education loans available through Private Banks.
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Unsecured loans: Up to INR 1 crore for Premium-Listed Universities |
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Unsecured loans: Up to INR 1 crore for Prime-Listed Universities |
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Unsecured loans: Up to INR 75 lakhs |
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Unsecured loans: Up to INR 85 lakhs for Prime-Listed Universities |
With this, we know the best Government and Private Banks to be approached for an abroad education loan, as well as their respective loan amounts. However, the loan amount is not the only factor to consider when looking for the bank that best fits one’s requirements. Read on for further insight into this aspect.
How to Select the Right Bank for Abroad Education Loans?
Overseas education loans from Government or Private Banks come with their own benefits and limitations. We will break down the key factors to consider when choosing the bank.
The required loan amount, based on the tuition fees, living expenses, travel expenses, health insurance, visa requirements, etc.
The overseas education loan interest rate, as well as any concessions or subsidies offered by the bank.
The collateral requirements for secured loans and the credit score requirements for unsecured loans
The documentation requirements and processing time of the bank
The moratorium period duration, interest repayment obligations, and overall repayment tenure for the loan
The disbursement process and post-disbursement support provided by the bank.
It is also important to check the loan eligibility criteria, including the Universities and courses recognized by the bank. Here’s an overview in the next section.
Eligibility Criteria for Abroad Education Loans
The eligibility criteria for an abroad education loan from Government and Private Banks can be similar, with certain differences for secured and unsecured loans.
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2. They must show an admission letter from a recognized University for an accepted course as per the bank’s specifications.
3. If the asset offered as collateral is property, it should come under the Municipal Corporation, Improvement Trust property, or the Nagar Parishad.
4. Students must include documents such as the sanctioned layout and building plans as per the bank’s requirements.
5. A chain of documents going back 30 years is necessary.
6. The co-applicant must have a CIBIL score above 650.
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2. They must show an admission letter from a recognized University for an accepted course as per the bank’s specifications.
3. The co-applicant’s annual income should be above INR 6 lakhs, with no liabilities.
4. For co-applicants with a business background, the ITR documents, balance sheets, and business registration certificates are needed.
5. The co-applicant must have a CIBIL score above 700 and a stable income. |
Documents Required for Abroad Education Loans
Whether one sends in a loan application to Government or Private Banks, it is necessary to attach certain documents for verification and approval. These document requirements may change as per the loan or lender type, so let’s take a look at the most required ones for students/applicants and co-applicants.
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2. Residence proof, like telephone or electricity bills
3. Recent passport-sized photos 4. Proof of admission from a recognized foreign University
5. Past academic records and qualifications
6. Score cards for standardized tests such as IELTS, GMAT, SAT, etc.
7. Statement of estimated tuition and living costs
8. Account Statement for the last 6/12 months
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2. Residence proof, like telephone or electricity bills
3. Recent passport-sized photos
4. Account Statement for the past 6/12 months, especially for previous loan borrowers
5. Income Proof, such as salary slips or business registration proof
6. Copy of Income Tax Returns of the past 2 years
7. Collateral documents such as property Title Deed or FD Receipts |
With this list of documents, students can send in their abroad education loan application to whichever lender best suits their needs. The next section can offer some insight for those still confused about how to shortlist the right bank. Here’s where Élan Loans comes into the picture.
How Élan Loans Assists in Shortlisting the Right Banks for Abroad Education Loans?
With so many excellent lender options in the market, it is natural to feel confused about the best options for one’s journey abroad. Fortunately, students and their parents or guardians do not have to make this decision alone. They can rely on Élan Overseas Education Loan Experts, who help them narrow down the list. Let’s see how they go about it.
Step 1: The student’s financial profile is created, with a thorough understanding of their assets, responsibilities, and highlights.
Step 2: Our team helps them understand the total loan amount needed, keeping exchange rates and comprehensive costs in mind.
Step 3: Based on the student’s profile, our team suggests the best lender options by comparing services and benefits.
Once the student shortlists a couple of options for an abroad education loan, our team offers end-to-end loan services for a streamlined application process. Keep reading to find out more.
Why Apply for Abroad Education Loans through Élan?
At Élan Overseas Education Loans, we have 7+ years of experience in helping students for the required financial backing to study abroad. Our in-depth profile assessment and evaluation helps us match students with the most suitable lenders for secured or unsecured loans. Some of our services are mentioned below.
Understanding the students’ needs
Shortlisting the Best Lenders as per the student’s profile
Explaining the Loan Application Process to the student
Assistance in the Documentation Process
Negotiation for Interest Rate Concessions or Reduction for eligible students
Availing of the Pre-Visa Approval of Loan as per the requirements
Entire Loan Processing without Bank visits
Quick Loan Disbursements
So, whether one chooses Government Banks or Private Banks, our experts ensure a smooth and transparent journey from start to end.
To bring it all together, students have excellent options for abroad education loans from both Government banks and Private Banks. Students can also think of borrowing from Non-Banking Financial Companies (NBFCs) or International Lenders, with our information and guidance. Élan’s Loan experts are prepared to guide aspirants from home to the halls of a Foreign University, so give us a call today!
Abroad Education Loans: Government Banks vs Private Banks FAQs
Q1. What is moratorium period in abroad education loans?
Ans. The moratorium period is a time during which students are not obligated to repay the loan amount. This period is usually put in place during the course chosen by the students and lasts around 6-12 months beyond, so that students can focus on studies and finding a job without having to worry about EMI payments.
Q2. Is there a way to reduce the interest rate for abroad education loans?
Ans. Yes, many lenders offer interest rate concessions or subsidies based on students’ profiles. So, it is important to know the lowest interest rate in banks and negotiate accordingly.
Q3. Can I get an abroad education loan from cooperative banks?
Ans. Yes, it is possible to get an abroad education loan from cooperative banks like Saraswat Bank. The loan types, eligibility, and interest rates may differ across lenders.
Q4. Can I get an abroad education loan without a co-applicant?
Ans. Yes, it is possible to get an abroad education loan without a co-applicant from International Lenders. However, most banks and NBFCs do require a co-applicant.
Q5. How fast can I get a loan from SBI?
Ans. It takes 20-30 days for a secured loan and up to 10 days for an unsecured loan from SBI.
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