According to most overseas education aspirants, there are only two major hurdles that they need to cross, for starting a successful study tenure overseas. The first one is getting an acceptance at their desired university, and the second is, getting the visa approval. However, many are unaware that between these two, there is another hurdle that needs to be tackled. Getting an overseas education loan is harder than one can imagine. There are certain criteria that need to be met and precautions that need to be taken.

There are also different Kinds of Overseas Education Loan and each has its own separate dos and don’ts. Read on to know more about the hurdles faced during the process and precautions involved.

The reputation and accreditations of the university to which you have applied play an important role during the loan process. The lender organizations generally have a list of universities for which they readily provide education loans. The listing takes into account factors like the university’s reputation in the country and the world, its global ranking, placement track record etc. A student who receives confirmation from a university listed higher in global rankings may get the application processed faster and may also be eligible for lower interest rates.

This is a very important aspect that lenders look into. Certain courses such as STEM courses (Science, Technology, Engineering, and Mathematics) are thought to ensure a high chance of employment due to the demand and scope for STEM graduates. Banks and NBFCs prefer candidates opting for STEM courses for granting education loans.

This is a very important parameter that lenders look into before considering someone’s Education Loan for Abroad Studies. The Credit Information Bureau (India) Limited (CIBIL) is a credit information company licensed by Reserve Bank of India. It keeps track of credit history, rating and report, of individuals and businesses and produces a 3-digit numeric score (the CIBIL score) which ranges from 300 to 900. If you have a better credit rating, your score is closer to 900. A score of 700 and above is considered a good score. Benefits to individuals with a good CIBIL score are, faster loan processing time, quicker disbursement and a lower rate of interest.

Tips for maintaining a high CIBIL score include; repaying your Credit Card bills on time, not missing your loan EMIs, and never defaulting on debts.

Banks need collateral as security for loans exceeding a certain amount, generally INR 7.5 lakhs. Collateral may be in the form of a residential apartment, shop, or a plot. There are options for Unsecured loans wherein collateral is not required, however, the unsecured loans are granted at a higher rate of interest. Verification/ valuation of the collateral is done by the agency granting the loan, prior to disbursement. All documents pertaining to the collateral must be submitted during the application.

Many of the banks do not disburse the complete amount. They disburse a  particular percentage such as 80% or 90% and the applicant has to arrange the remaining amount on his own. This must be taken into account before signing up for the education loan. The student and the co-applicant must make sure to keep the amount specified under visa requirements otherwise they may be denied the visa.

The preferred method nowadays is submitting an Online Loan Application for Abroad Studies to the desired financial institution, followed by submission of all required documents including those for collateral. This is followed by verification and, if everything matches up a contract is signed by the applicant and co-applicants. Disbursement is done in installments, as and when required.