Myths Related to Abroad Education Loans from Indian Government Banks

There are lots of myths that loom around among students about taking abroad education loans from the Indian Government, because of which many still hesitate to approach them for loan purposes.

There are a lot of misunderstandings about nationalized banks and their regulations regarding student loans. While many are worried about the longer processing time, others are concerned about the amount of paperwork demanded by these banks. But, did you know that this is not the case?

The main motive of this article is

• To dismiss certain false claims made by certain private banks and NBFCs about the government banks' policies regarding education loans abroad.
• To suggest practical solutions for some commonly reported issues faced by a lot of students for education loans abroad.

This article is taken from the 8th episode of the web series Loanfilx- Abroad education loans simplified. In case you are comfortable watching the episode, click on the video below. You can hear our experts at WeMakeScholars dismissing many myths surrounding government banks' issues and their policies regarding education loans abroad.

If you are comfortable watching the episode, click 

We've already busted a few common myths about abroad education loans in one of our previous articles which you can read here- 13 Common Myths about Abroad Education Loans

Usually, all Government banks keep margin money in education loans, meaning they do not fund 100% but a maximum of 90% of the total loan requirement by students. However, there's a catch.

The Truth:

You can get a 100% Loan for education from Government banks. The education loan schemes of certain public-sector banks do offer to cover 100% of a student's total expenses depending on the certain criteria that the student's profile needs to meet to get 100% funding. 

Until a couple of years ago, most officials at banks were not aware of the pre-visa requirements by different countries, so they would refuse to release living expenses before a visa. But you need to transfer living expenses to get the visa as per the pre-visa requirement. 

The Truth:

Now that more students apply for education loans from different countries every year, Government banks now have revised this policy where they can release the living expenses before the visa process from your sanctioned loan amount, and so Government banks do pre-visa disbursement.

Due to a lack of knowledge, people think only home and land can be pledged as collateral because they do not know liquid securities ( FDs, Insurance policies, and Govt. Bonds) can also be used.

The Truth:

Immovable property is just one among many things you can put as security in Government banks. There are 7 types of collateral security that students can use while opting for a secured education loan from Government banks.

Often, students are confused about this policy during the education loan process. There have been many instances where banks have refused to sanction loans because they failed to submit the I-20 form from the intended university. In other words, until recently, nationalized banks were under the impression that an I-20 form (for US Aspirants) is mandatory for the university to sanction the loan amount.

The Truth:

The truth is that before sending the I-20 form, universities require proof of the student's financial status. In 2017, our team of experts at WeMakeScholars was successful in convincing our partner banks to issue loan sanction letters to students without the I-20 form.

Banks used to ask for a student visa from students before disbursing the loan amount. However, a few countries have made it mandatory for students to transfer amounts (first-year tuition fee and 1-year living expenses) in order to be eligible for the student visa process. 

The Truth:

Government banks disburse funds prior to the visa process if that is the requirement by the embassy of that particular country for the student visa.

Listed below are some of the most common requirements by the university or the embassy:

1. Australia requires a 1-semester fee and 1-year living expenses to be paid before the visa.
2. The government of Canada recommends students deposit money for the purpose of opening a GIC account in order to qualify for a student visa.
3. Similarly, the German embassy also recommends students purchase a blocked account in order to qualify for a German student visa.

Apart from the major issues mentioned in this article, there are many other general issues faced by students. For example.

Policy revisions made by University/Embassy: Embassies and universities keep revising their fee payment policies from time to time. And it is necessary for nationalized banks to keep up with the changing policies.

A few years ago, many universities in the US stated that they would accept fee payments only through Flywire, a third-party software. Our banks were not aware of this development. As per their policy, fees are supposed to be directly transferred only to the university's account. Due to the rise in the number of applicants facing this problem, our team approached our partner banks and they released a circular containing the updated information in 2016.

Any problem faced by our candidate during the loan procedure is not taken lightly by our team. If you are facing any similar issues, please feel free to contact our financial officers for further assistance.

Also, we recommend that instead of facing a problem after approaching a nationalized bank, you apply for your desired education loan through our financial officers. We promise to make the process a good experience for you.

Terms like 'Loan Margin', 'Insufficient collateral', etc. mostly scare and confuse the applicants, especially when they don’t have somebody to guide them. This is when WeMakeScholars comes into the picture. Below highlighted are a few reasons why approaching WeMakeScholars is recommended.

• Our financial officers explain basic concepts of education loans in an easy, understandable language to our candidates. They also provide useful tips to applicants on how to get higher loan margins from banks by smart calculation of numbers.
• We share a closer association with nationalized banks, and we have also contributed to their policy-making decisions. This doesn't mean that we are not close to private lenders/ NBFCs. We work pretty closely with them too. Especially with their head offices rather than local offices and hence we can negotiate better for your education loan terms and conditions.
• So far, we have been successful in changing the banks' mindset regarding many terms and conditions of abroad education loans. Being an enterprise supported by the Digital India initiative, we accept applicants from all over India. Hence we offer our assistance without charging anything.
  In conclusion, we would like to say that nationalized banks are the most reliable when it comes to securing an education loan for abroad studies. With changing times, the banks have also changed their policies, and now, obtaining an education loan for abroad studies by the Government banks is no longer a difficult process, as long as you apply via WeMakeScholars.

If you have any other questions regarding education loans for abroad studies by the Indian government or any other loan-related topic, please request a callback from the WeMakeScholars support team for clarifications. We are very active online and would love to answer your comments. So, feel free to leave your comments at the end of this article.