Abroad Education Loan FAQs

Getting an education loan for your overseas studies is not as straightforward as it may sound. There are just way too many things to consider before you finalize your lender. 

To make an informed decision, you need to know everything and to know everything you ask questions, maybe from your lender, ask people around you, or look online for answers, etc. And there are a few basic but common frequently asked questions that almost every student asks which we've compiled in this article for students like you.

You may find a few questions that seem very particular, but it answers the common questions through those scenarios. The education loan issues mentioned in this article are categorized into different sections based on the nature of the questions mentioned here.

1. What is the basic list of property documents to be submitted by candidates for an abroad education loan?

More often than not, a lot of students face a lot of issues when they fail to submit all the property-related documents mentioned in the checklist provided to them at the time of applying. In order to avoid being stuck at this stage of the abroad education loan process, the following documents have to be submitted by students.

1. Property Title Deed
2. Registered Sale Agreement / Gift Deed / Will
3. Original registration receipt for the above agreement
4. .Allotment Letter By Municipal Corporation / Authorized Govt. Authority Like MHADA, CIDCO, HUDA, DDA, JDA, GIDC, etc. (if applicable).
5. A Copy of the municipality-approved building plan or plot layout.
6. The latest property tax bill and Latest electricity bill bearing the same address.
7. 30-year link document or Previous chain of sale deed establishing title or EC is required. It is a 30-year track record of who sold the property to whom in the last 30 yrs. If you own the property for more than 30 years, then the sale deed of the previous is enough.

Documents required by different lenders may vary since different lenders do ask for a different sets of collateral documents. You may also be asked to bring in additional collateral papers for different states or locations.

2. What kind of immovable properties cannot be pledged as collateral security against an education loan abroad? Which ones are mostly preferred by banks?

There are 7 types of collateral securities that banks accept for education loans which are- House, land, FD, insurance policies, etc. But the ones that banks do not accept at any cost are given below-

• Agricultural lands are not accepted as collateral security for education loans because of the SARFAESI ACT, of 2002.
• Non-agricultural lands without build-up boundaries are not accepted. A clear demarcation of land with a boundary of at least 2 feet high is required.
• Gram panchayat properties are not usually acceptable. Property has to be under a Municipal Corporation.
• Cantonment area property is not accepted by every bank. It includes- temporary quarters for troops and a permanent military station in India.

Though all properties mentioned below are suitable, lenders prefer certain properties over others based on the property's prospects.

• Urban properties over rural properties.
• Residential properties over commercial properties.
• Build up properties over empty lands.

3. I am a resident of Nagpur, but the property which I plan on placing as collateral is in Mumbai. Will I get my education loan from the local government bank branch in Mumbai or Nagpur? What is the process to avail of one?

What to do if the property is located elsewhere? Banks call this scenario a multi-city case. Students can avail of an education loan for overseas studies in this case. However, multi-city cases can prove to be a lot harder than expected. Most local branches of government banks are not well-equipped to solve issues related to multi-city cases. Hence, to seek the right solution to your multi-city case, get in touch with the financial team of WeMakeScholars.

WeMakeScholars have handled multiple Multi-city cases and have successfully been able to get loans sanctioned for students who had previously been denied by banks.

1. What is a CIBIL Score? How is it calculated?

CIBIL refers to Credit Bureau of India Limited, an organization that keeps track of all the financial transactions of individuals. These financial transactions include any loan taken by individuals, their credit card payment history, loan EMI payment schedules, etc. An individual’s CIBIL score helps banks and other financial institutions determine their ability to repay any loan for which they may have applied. Both government and private lenders always check a loan applicant’s CIBIL score before considering their education loan application. 

2. How is the CIBIL score calculated?

The financial details of all individuals holding a PAN card or a savings account with any bank functioning in India are recorded by CIBIL from the moment their accounts are active. Based on your past credit history, CIBIL gives you a score ranging from 300 to 900. A score closer to 900 is considered to be a good score and vice versa. 

There are mainly four main factors to determine a CIBIL score

• Repayment history - Your consistency of paying earlier EMIs, how regular you were with them, and so on.
• A mix of loans - In the past, the type of loans you've taken (Secured or Unsecured)
• Credit limit - Utilization of the credit limit of your credit card or any credit line.
• Multiple loans at one time - Have you taken or applied for too many loans in a short time?

3. Does the education loan affect my CIBIL score?

Yes, and not just only yours but also of your co-applicants. When you take an education loan, it immediately doesn't affect either of your CIBIL scores, it reduces or improves as your repayment period starts. Non-repayment or delay in paying EMIs of your education loans will result in the reduction of your credit score and vice versa. 

4. What is the benchmark CIBIL score that a candidate needs to maintain to be eligible for an abroad higher studies education loan?

Generally, while taking an education loan, the required CIBIL score is a minimum of 685. Government banks sometimes accept lesser CIBIL scores if it is low because of some not-so-serious reasons such as credit card-related issues, on the other hand, Private banks and NBFCs are less flexible on CIBIL issues. 

1. If your CIBIL score is low because you failed to pay your credit card dues, this issue can be resolved within no time and your CIBIL score will be back to normal.
2. If you have had remarks such as ‘Loan write off’ or ‘loan settled’ written on your or your co-applicants income profile, or if the cheques issued by you or your co-applicant have bounced in the past, it is difficult for you to get an abroad education loan from the respective lender.

5. Will a low CIBIL score hamper my chances of getting an abroad studies education loan?

Yes. There are chances that your low CIBIL score may affect your chances of getting an education loan. In order to secure an abroad education loan from government banks in India, it is necessary that you meet the CIBIL score benchmark set by the bank. 

1. What is a pre-visa disbursement?

If students need to disburse any component of their abroad studies education loan to fulfill certain financial pre-conditions laid down by their respective embassy in order to become eligible for a student visa, such a disbursement is called a pre-visa disbursement in the banks’ terms. 

For example, students who wish to study in Canada are required to deposit their entire one year’s living expenses into a GIC account to be able to qualify for a Canadian student visa. They can only be deemed eligible if they fulfill this condition before their visa process. In this scenario, your lending bank is supposed to approve your pre-visa disbursement.

2. How do I avail myself of a pre-visa disbursement? Will my loan officer refuse to approve my Abroad Higher Studies Education loan?

According to the education loan policies laid down by the bank, your loan officer is supposed to approve this disbursement provided that it is a requirement for your student visa process. But in reality, a lot of students face an issue regarding the same when they directly approach their loan officer. If you are stuck in a similar situation, getting in touch with the WeMakeScholars team will help you progress faster in the education loan process.

3. How do government banks disburse abroad education loans? What is the procedure followed by them for the same?

On the successful sanction of your abroad education loan, your assigned bank branch will disburse different components of your loan amount according to your university’s payment requirements. The general process is that the bank will disburse the tuition fee component on a pro-rata basis directly to your university’s account and the living expenses will be disbursed into a forex card which can be used just like a debit card by candidates, on reaching their destination of study.

1. I plan to name my father my co-applicant. However, he is going to retire in 2 years. Will I face any issues regarding the same?

It may depend on the lender from whom you've chosen to apply for a loan. Government banks do not have any restrictions on the age or financial profile of co-applicants, however, private lenders may not accept them as co-applicant. 

2. What are the mandatory financial documents my co-applicant needs to provide for an abroad education loan?

Documents to be submitted by salaried co-applicants:

• Latest Salary slips (of the last 3 months)
• Form 16 of the last 2 yrs.
• Employers ID card
• ITR of last 2 yrs

Documents to be submitted by self-employed co-applicants:

• ITR of last 3 yrs
• Last 3 yrs Balance sheet and Profit & Loss account (only if self-employed)
• Proof of Business address

3. My co-applicant has not filed his ITR. Will this affect my chances of getting an education loan?

Ideally, the co-applicant ITR of the past two years is a compulsory document required by government banks, as well as private lenders for the purpose of processing your abroad education loan. Hence, there is a high chance that your assigned loan officer may disagree to process your loan application. 

You may fill out the above form, which has been put together for such abroad higher studies, and seek help from the online team if you come across this hurdle. If you resort to our help for this particular abroad education loan issue, you are less likely to have a problem in the abroad education loan process.

4. My father does not have any income source. Whom can I name as my financial co-applicant?

All lenders accept parents, siblings, parents-in-law, spouses, etc. as financial co-applicants for an abroad education loan in such a scenario. Your lender will check your co-applicants eligibility for the same. 

You can request a call back from the WeMakeScholars team for your abroad education loan process, all your doubts will be cleared by your assigned financial officer.

Our team of Financial officers assists you with the entire education loan process until sanction, disbursement, and beyond. All the services offered by WeMakeScholars are free of cost as this initiative is supported by the IT Ministry, Govt. of India.