Different banks offer different loan limits to study abroad. Most of the banks cap the limit to Rs 20 lakh for studying abroad and Rs 10 lakhs for studying in India.
What is covered?
While different banks consider different heads of expenses that can be added to the loan amount, here are the broad expenses that can form part of the loan.
a) Fees payable to College / School / Hostel
b) Examination, laboratory, library fees
c) Purchase of Books, Equipment, Instruments, Uniform
d) Caution Deposit
e) Travel expenses
f) Insurance premium
g) Other expense required to complete the course including thesis, projects etc.
Tax benefits under section 80 (E) of Income Tax Act 1961 are available. However, they only cover the interest component of the loan.
Banks like Punjab National Bank do not want a guarantor in case the amount of the loan required is under Rs 4 lakh.
However, they do require security in case the amount exceesds Rs 7.5 lakhs. The security can be in the form of land / building / Govt. Securities / Public Sector Bonds / Units of UTI, NSC, KVP, LIC Policy, Gold, Shares/ Mutual Funds/ Debentures, Bank Deposit in the name of the student parent / guardian or any other third party or any other tangible security acceptable to the bank.
Interest rates vary from bank to bank and is generally a few percentage points higher than the bank's base rate. Individuals need to check with individual banks and get the most competitive deal.
State Bank of India charges a deposit of Rs. 5000/- for education loan for studies abroad which is adjusted in the margin money.
For loans above Rs 7.5 lakhs the repayment period is fixed at Rs 7.5 lakhs.