If you are an international student who is planning to study in UK, then you may require an education loan to finance your education. UK is one of the most popular destinations for international students due to its high-quality education and excellent job opportunities. However, the cost of studying in UK can be quite high, which is why many students turn to education loans to finance their education. Here is everything you need to know about education loans to study in UK.
What is an Education Loan?
An education loan is a type of loan that is specifically designed to finance education-related expenses. These expenses may include tuition fees, living expenses, travel expenses, and other related expenses. Education loans are offered by banks and other financial institutions and are available to students who meet certain eligibility criteria.
Types of Education Loans
There are two types of education loans available to international students who want to study in UK:
Secured Education Loan:
A secured education loan is a type of loan that requires collateral to be pledged as security for the loan. Collateral may include property, shares, fixed deposits, or any other asset that has a significant value. The interest rate for secured education loans is usually lower than that of unsecured education loans. However, the borrower may risk losing the pledged collateral if they fail to repay the loan.
Unsecured Education Loan:
An unsecured education loan is a type of loan that does not require collateral to be pledged as security for the loan. The interest rate for unsecured education loans is usually higher than that of secured education loans. However, the borrower does not risk losing any collateral in case of loan default.
Eligibility Criteria
The eligibility criteria for education loans may vary from lender to lender. However, here are some general eligibility criteria that most lenders require:
- The borrower should be an Indian national
- The borrower should have secured admission to a recognized university in UK
- The borrower should have a good academic record
- The borrower should have a co-applicant who can act as a guarantor for the loan
- The borrower should be able to provide proof of income and financial stability
Documents Required
The documents required for education loans may vary from lender to lender. However, here are some common documents that most lenders require:
- Admission letter from the university in UK
- Mark sheets of previous academic qualifications
- Proof of identity and address
- Proof of income and financial stability
- Collateral documents (in case of secured education loans)
- Co-applicant’s documents
Loan Amount and Repayment
The loan amount and repayment terms may vary from lender to lender. However, here are some general guidelines:
- The loan amount may cover up to 100% of the tuition fees and other related expenses
- The repayment period may range from 5-15 years
- The interest rate may vary from 10-15% per annum
- Repayment may start after the completion of the course or after securing a job
Advantages of Education Loans
Here are some advantages of education loans:
- Education loans provide a convenient way to finance education-related expenses
- Education loans have lower interest rates compared to personal loans or credit cards
- Education loans may provide tax benefits under section 80E of the Income Tax Act
- Education loans may help build a good credit score for the borrower
Disadvantages of Education Loans
Here are some disadvantages of education loans:
- Education loans may require collateral to be pledged as security
- Education loans may have strict eligibility criteria
- Education loans may have high interest rates compared to other loans
- Education loans may require the borrower to start repayment immediately after completing the course
Conclusion
Education loans are a great way to finance education-related expenses for international students who want to study in UK. However, it is important to carefully consider the eligibility criteria, loan amount, repayment terms, and interest rates before applying for an education loan. Make sure to compare different lenders and choose the one that offers the best terms and conditions for your specific needs.