Union Bank of India Abroad Education Loan

Union Bank of India is India’s fifth largest public sector bank, owned by the Ministry of Finance, Government of India. Union Bank of India offers student loans at interest rates starting from 9.25% to study abroad aspirants for their higher education in India and Abroad. When Union Bank first introduced its unsecured education loan product in 2023, it had been a major hit in the study abroad student community. It was the first time a public sector bank offered unsecured education loans of up to 40 Lakhs without a collateral requirement. But this perspective soon started changing because what followed was a series of bad experiences students had with Union Bank. In this article, we are going to discuss all there is to know about the education loan products of Union Bank. 

Special Union Education Loan Schemes for Premier Institute Abroad Studies:

Under this scheme, Union Bank of India education loan is provided with and without collateral to students to pursue their studies in 150 premier universities in popular study abroad destinations like Germany, Canada, USA, the UK, etc. The premier university list is prepared by the bank itself, but WeMakeScholars has access to it.

Further details about this scheme are mentioned below in the table:

Union Bank of India charges an upfront fee of Rs 5000 from the students, which will be refunded if the student takes the loan within 3 months from the date of sanction. Otherwise, there are no such processing fees charged by the Union Bank of India for this scheme.

Students applying for an education loan with collateral will have to pay Rs  7,500 to Rs 10,000 as the cost of legal and valuation reports. 

NOTE: If the collateral is offered for the loan below Rs. 40 lacs interest concession is available.

Union Education Abroad/ NRI Student:

Courses covered outside of India

• Students pursue their graduation or post-graduation from a recognized educational institution
• Ph.D. courses
  • Courses conducted by CIMA in London or CPA offered in the USA and other such courses offered by top institutes

Even if your preferred course is not there in the list above, still no need to worry. Request a callback or fill out the common application form to get your education loan process started with WeMakeScholars, as we are paired with 14+ public and private banks in India, we will help you find another lender that offers education loans for your preferred course.

Loan margin

Union Kisan Shiksha Suvidha with collateral:

Collateral Accepted for Union Kisan Shiksha Suvidha with collateral

Generally, Immovable properties like houses, flats, and non-agricultural land, and liquid securities like government bonds, FD, LIC Policies and are considered as collaterals. However, for this scheme, agricultural land can be pledged with the Union Bank of India as security, to take collateralized education loans. As per the following conditions:

• Agricultural land is accepted as collateral only if it is not be used for agricultural purpose and only in those states where it is permitted by the bank to be mortgaged
• Agricultural land should have properly demarcated boundaries and should be easily marketable.

The mandatory documents checklist includes:

Application form  

• Application form to get student loan with 2 passport-size photographs (hardcopy of online form filled on WeMakeScholars website is also accepted)

Basic documents of applicant and co-borrower or Guarantor

• Address proof – Electricity Bill/ Voter ID Card/  Passport/Ration card/Bank account statement/ Telephone Bill/Aadhar card(if applicant’s permanent and current addresses are not the same then 2 different address proofs will be required)
• Proof of identification – PAN Card or Passport of the student (if applying for a Union Bank of India Education loan for abroad)
  • If the co-applicant is salaried then the last 6 months' personal and salary bank account statement showing the salary crediting. If the co-applicant is self-employed then the bank then shows transactions of 1 year’s business if self-employed.
• Statement of personal asset & liability (assessed by the branch professional)

All the papers should be self-attested.

Section 3: Student's academic documents

• Educational scorecards and certificates of class 10th, 12th, Degree
• Admission proof in the course (should be reflecting the total fees and  course duration)
• Fee breakdown and payment deadlines
• Entrance exam scorecard provided by a responsible authority

Income documents of the Co-applicant

If Salaried

•  The identity card of the company
• Form 16 of the last 2 years
• last 2 years of ITR  Latest Salary slips (for last 3 months)

If Self-employed

• ITR of last 3 years
• A balance sheet of the last 3 years showing profit & loss statements  Business address proofs

Other Documents

• Notarised affidavit with the co-applicant and student in the Bank’s standard format, which will be provided by your assigned financial officer at WeMakeScholars
• Declaration by the co-applicant, that leftover expenses will be borne by them (Format will be provided by your assigned financial officer at WeMakeScholars)

Additional docs (if applicable)

• Statements of loan account of past 1 year if there is any pending loan.
• Receipts of advance payments made if any.
• Break certificate on Rs 100 stamp giving the reason for the gap in the academic degrees. (As per the format given by your WeMakeScholars)
• Gap certificate if the applicant has taken any break in their academic degrees.   It should be on Rs. 100 stamp paper. 

Collateral documents (Optional)

Required only if a student is taking an education loan with collateral, and each state has a different requirement of documents, you can ask your financial officer about the collateral documents required for your state.

Ask for an overall documents checklist from the assigned financial officer that is customized specially for your loan process, after analyzing your education loan profile. Get in touch with your financial officer at WeMakeScholars, by requesting a callback or filling up the common application form,  to get your own document checklist.

At face value, the Union Bank education loan scheme may not seem like a bad product at all given that it is offered by a public bank. However, nothing works as efficiently as it is portrayed at UB. Here are a few of the major problems that many students have experienced while attempting to avail of their education loan from Union Bank.

Issue 1: Loan Margin

• From the sections you have read about the Loan Margin offered by Union Bank, you can observe that the standard loan margin they provide is 15% which does not appear to be too unreasonable given that it is similar to most public banks, doesn’t it?
• To make it a little easier for you to grasp, let’s first explain what exactly a loan margin is. A loan margin is the amount that a student is supposed to contribute towards the total funding of the amount required to finance your education in a foreign country.
• For instance, suppose you require 80 Lakhs to study at some university in the USA; this will be inclusive of all costs including tuition fees, living expenses, and other miscellaneous expenses. These costs are then confirmed by the bank using proof of costs from the relevant authorities. Then, the calculations are made depending on the loan margin, which the student has to pay to the bank, and you receive an estimation. Thus, in case the loan margin is 15% the bank can offer up to 68 Lakhs to the student and the student has to come up with 12 Lakhs on their own.
• Most students would understandably think that 80 lakhs is way more than enough for me, 68 lakhs will suffice to get me there. But what students fail to grasp is the fact that for the 68 lakhs to be credited into your account you will have to first pay the bank the 12 Lakhs. If not, the disbursement will not take place.

Regarding the main question concerning the Union Bank Unsecured Education Loan product,
If you go ahead with their unsecured education loan product, you can get a maximum loan of up to Rs 40 Lakhs. Depending on our previous assumption that the total loan amount the student would require to study abroad is 80 Lakhs, we have arrived at a loan margin of 50%. Let me illustrate this with a table for a better understanding.

When you think of taking an unsecured loan from Union Bank to meet your total requirement of 80 Lakhs, you will have to arrange for 40 Lakhs on your own so that the bank can contribute their part of the deal. Many may consider that 80 Lakhs might be a lot and you will not need that much. However, UB only provides unsecured loans to the universities on their prime list and most of the universities on their prime list are universities from the United States of America. The average of the i20 amount is 40 lakhs. Taking into account that students prefer to enroll in a 2-year course. The total cost is 80 Lakhs.

Issue 2: In this case, Previsa is not required to make any disbursement.

The students who wish to continue their higher studies in some foreign country have some financial requirements to meet before they are granted a visa.

• Canada: First-year tuition and a Guaranteed Investment Certificate 
• Germany: Payment for a blocked account.
• Australia: Tuition fees for the first year of study and costs of living in the first year of accommodation.
• UK: CAS deposit for Confirmation of Acceptance for Studies.

However, students are experiencing some difficulties in handling Union Bank because they do not release the loans pre-visa and the students need to prove all the expenses before the visa is processed. What is the meaning of taking an education loan if the students are not even able to apply for a VISA? Hence, the students are no longer borrowing their loans from the Union Bank and are instead looking for other banks. Like in the case of Australia, getting a loan from Union Bank also means risking visa rejection.

Issue 3: Not getting moratorium period

• Moreover, there are so many other similar cases like students who do not receive the moratorium period for the non-collateral loan and they have to pay the full interest rate from the first day.
• So in other words, these are our recommendations if you intend to get your education loan through Union Bank
• Students who wish to study in Germany, Canada, the UK, or Australia should not take an education loan from Union Bank because they do not disburse the amount to any student before visa confirmation. For Australia, the student can be denied a visa.
• If the student is planning to go to the USA, a 40 lakh non-collateral loan from Union Bank has high margin requirements and for the larger loan amounts, collateral is needed.
• However, if you require the use of an asset to secure the loan, other banks may be cheaper even with slightly higher interest rates than Union Bank. But there are other options which are available in which 70-80 lakh loans can be taken without any security.

The usual repayment duration for abroad education loan taken from Union Bank of India is 15 years after the moratorium period ends, however, students can opt to repay their education loans even earlier by implying the following repayment strategies; 

• Pre-payment or part payment
• Keeping the repayment period shorter
• Transferring their education loan

NOTE: The students who opt for pre-payment or part payment of their education loan, to repay the loan early, are offered additional interest rate concessions on the usual rate. 

Suppose a student takes an education loan at a 10% interest rate for an amount of say Rs 40 lakhs for 15 years of duration to study abroad. Then the amortization schedule of the student will look like  the following:

You will also be informed about your repayment cycle by the lender's side after each EMI repayment. To start your loan process with WeMakeScholars, ask a callback or fill the common application form.

Offline Application process

• Go to the nearest Union Bank of India’s branch and ask about the education loan products
• Choose the best education loan product to study abroad and fill out the application form, as per your eligibility.
• To start the loan process, get the list of documents required 
• Visit the bank again to submit your documents to finally get your abroad education loan process started

Online Application process via WeMakeScholars

• Step 1: Fill out the online abroad education loan form for Union Bank of India 
• Step 2: Give your loan profile details as asked to your financial officer, so that they can analyze your profile and connect you to the best lenders
• Step 3: Select your lender after comparing all the lender options as per your eligibility and loan policies
• Step 4: As per the shared documents checklist shared by your financial officer, upload your documents online on the WeMakeScholars document portal
• Step 5: After document submission, your loan file will be logged in. You will receive a loan sanctioning confirmation within 15-20 days from the public. banks, and within 2-6 days from private banks & NBFCs.
• Step 6: You are supposed to sign the loan agreement, once your loan is approved, and collect your sanction letter.

The process will not be this easy if you approach the banks and apply in the banks directly to get your education loan sanctioned on your own. You are sure to find the following issues while processing your loan:

1. Delay in processing
2. Too much documentation
3. Improper customer service
4. Biased legal & valuation reports
5. Insufficient information regarding loan schemes
6. No specific document checklist
7. Numerous visits to the bank

With WeMakeScholars you get:

1. Digitized application process : Online education loan process and WeMakeScholars online documents portal empowers students with the power of digitalization and reduces the stress of going multiple times to the bank, thus reducing the loan processing time by 50%.
2. Minimal Processing time : With years of experience we hold expertise in sanctioning abroad education loans within 7  working days from private banks & NBFCs, and within 15-20 days from the government banks, after the documents are submitted. This is 50% less time than what banks usually take.
3. Tax benefits : While guiding you through the repayment process, we also provide guidance to save tax under Income tax Section 80E, 80C, etc, and tax collected at source (TCS).
4. Expert guidance :- Your financial officer will guide you through the complete education loan process, as per your loan profile analysis, to choose the best lender according to your eligibility and bank policies.
5. Better Interest rates : Banks offer special interest rate discounts of 0.5% to 2% on the usual interest rate for the students processing their education loan with WeMakeScholars
6. Negotiation support : We push ourselves a little extra, to negotiate with the bankers & lenders team for rate of interest and loan conditions, wherever possible, on your behalf.
7. Free of cost services : We are a government funded initiative, supported by the IT Ministry, under the Digital India Campaign and therefore all our prime loan sanctioning services are totally FREE for all the students.
8. End-to-end support : We will be available at your service, even after getting your loan sanctioned, till the last repayment of your EMI to provide you help in disbursement and repayment process.
9. Cashback offer : You get a chance to win a cashback of up to Rs 3,000 from us, at the time of your disbursement

Apply for your abroad education loan in the Union Bank of India through WeMakeScholars, Request a callback or fill the common application form to get the process started.