Information: Bank on loans for a foreign degree

Acouple of decades ago, only the extremely wellheeled or the exceptionally brilliant student could think of studying abroad. But that has changed today — the easy availability of education loans has put it virtually within everyone's reach.
However, the cost of studying abroad is significantly higher than in India and finances require research and careful planning before you head out. The cost of education and living varies from country to country. For instance, education in the US or UK is, in general, more expensive than in Canada or Australia.
Further, even within the country, as in the US, there are substantial differences in costs, depending on whether the university is a public or a private one and again the location of the university. Costs also depend on the type and duration of the programme. For instance, arts courses are usually less expensive than tech programmes.
Scholarships at the undergraduate level aren't easy to come by. Start with assessing personal funds available so that you have a clear picture of the approximate amount of the loan you have to take. Loans for foreign education are easy to obtain from several banks, but there is the paperwork to deal with.
The upper limit of the loan at SBI is Rs 20 lakh. At other banks it varies from Rs 15-20 lakhs. It's important to know that the margin for a foreign education loan above Rs 4 lakh is 15% — this means the bank will finance up to 85% of the total amount required.
Expenses covered under education loans are fairly
comprehensive,including the tuition fee, examination/library/hostel fee, books and a computer, travel expenses for studies abroad. The student and the parent/guardian act as co-applicants for the loan.
For a loan of up to Rs 4 lakh, there is no need for any collateral. For between Rs 4-7.5 lakh, a third party guarantee is required. Loans exceeding Rs 7.5 lakh require tangible collateral security or a third party guarantee.
The rate of interest for a foreign education loan is usually the bank Prime Lending Rate (PLR) + 1%. At SBI, for instance, the rate of interest for a foreign education loan in excess of Rs 4 lakhs is currently 11.5%. Education loans come with a repayment holiday — you start paying back the loan only after you've graduated.
This holiday period is either one-year from graduation, or six months after getting a full-time job, whichever is earlier. During this period, interest is computed as simple interest and compounded from the commencement of the repayment period.
The repayment period in most cases is 5-7 years in the form of equal monthly installments. A 1% interest concession may be provided if the interest is serviced during the study period when repayment holiday is on.
You can avail loans for study at almost any university — banks check with the respective high commissions who have an accredited list of universities with them ^ before sanctioning the loan.
The time period for sanctioning the loan is between 15 days to a month. It's important to remember this, because it is essential to have all financial documents in place when applying for the visa, where you need to show sufficient funds to pay for your first year and indicate the source of your academic funding for subsequent years .

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