Basic education is free in many countries but when you wish to go for studies tuition cost is significantly high, you can get an education loan for abroad studies. If you have not won a free scholarship and need financial aid you can apply to get a study loan from different agencies; these could be government-owned, private, or non-profit organizations, banks or foundations, etc. There are many channels to get a study loan.
In general, your program director will help you in writing applications. But before you apply to a college course or a graduate program you need to make sure that you have the resources to pay tuition costs.
Often loan amount covers tuition costs but some givers may also consider paying the overall cost or cost for books etc in addition to the tuition fee. Plan your finances, know how much money you would need to spend on higher studies, and apply with a suitable giver. Normally education loans are free from a collateral guarantee, also there is no rate of interest involved but some lenders may expect a rate of interest. Before you apply know well the terms and conditions.
Education loans are also given by corporate on some pre-fixed conditions, generally for professional studies. Some givers may expect you to work for the company for a certain period once you complete your studies. In such a case you would need to sign an agreement with an education loan provider.
When lending financial aid for education any giver consider the following points in general
Having a financially strong co-applicant is a great factor for you when you are going for an education loan. Who better than your parents can be your co-applicant? But what if your parents are not eligible to be your co-applicant? Below are certain factors where you can process an education loan even without having financially strong parents or parents who don’t file ITRs.
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Collateralized Loan
When you are going for an education loan with public banks, you will need to have collateral to pledge against your loan except in the case of Vidya loans which offer unsecured loans of up to 7.5 lakhs. Collateralized loans in SBI do not require financially strong co-applicants. They just require a co-applicant whom they can contact when the applicant is not reachable.
Banks like SBI can consider a person as a co-applicant even if he or she does not file ITR. They can consider the income certificate of a co-applicant as income proof if they don’t have any ITR. Though they cannot submit a single ITR, they must have either at least two ITRs or no ITR. SBI does not have income criteria for the Co-applicant so your parents even with low or no income can be your co-applicant and you can get an education loan.
Interest rate: A collateralized loan from public banks will cost you around 9.50% to 11% interest rate.
Financial Co-applicant
If you are applying for an education loan from private banks or lenders, then you will need to have a strong financial co-applicant. If your parents do not have an income that meets the eligibility requirements of the private banks or lenders or BOB, then you can involve another person who meets the financial requirements of the bank and who is also eligible to be a financial co-applicant. Parents, Spouses, Parents-in-law, or guardians can be considered primary co-applicants in the case of public banks. So even if you have a financial co-applicant you will need to have a primary co-applicant according to the requirement.
In private banks and lenders, you can have the same person as the financial and the primary co-applicant, but in the case of public banks, you can have the same person as the financial and primary co-applicant only if it meets the requirement of both. Below is the table to show, who you can select as a financial co-applicant according to the type of bank or lender you are going to.
| Lender or Bank | Who can be accepted as a Financial co-applicant? |
|---|---|
| Government Banks | Parents / Parents-in-law, Siblings, Parents siblings, Spouse, First cousins |
| Private banks | Parents / Parents-in-law, Siblings, Spouse |
| NBFCs | Parents / Parents-in-law, Siblings (preferable brother over sister), Spouse, Brother-in-law, Parents siblings, First cousins |
Interest rate: The current interest for private banks or lenders is around 25.87% to 30%.
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Self-Co-applicant
Your parents are not financially strong, you do not have collateral to pledge and you do not have a strong financial co-applicant, can you still get an education loan? Yes, you can. Even after lacking in all these factors, you can get an education loan!
If you have a work experience of 3 years or more and you are going to A1 or A2 university for a PG program and your income is more than 35k per month, then you can get an education loan. In this case, you will have to deposit an FD of moratorium period interest and you won’t need another financial co-applicant. You can consider yourself as self co-applicant for the loan. Though you will need to provide a primary co-applicant who can be contacted in case you are not available.
Interest rate: The current interest rate to go to A1 or A2 universities is 11%.
