With the rise in competition in the job market, the need for an advanced degree has been accentuated way higher than ever before. Now students want to complement their higher studies with a degree from a foreign university since this makes a substantial difference in the overall outlook. Even short-duration courses have high yielding value. Earlier, this used to be an uphill task. Still, banks have developed structured schemes to provide loans for abroad education at very reasonable interest rates and a feasible repayment process. This is something that has made a significant difference in the education lending ecosystem.
State Bank of India (SBI), being the largest lender in India, has developed schemes that help students study abroad at very reasonable interest rates. SBI has a trendy plan, SBI Global Ed-Vantage, that covers loans with more than 20 lakh INR. While students wanting lesser loans can also go for SBI Education loans. We will discuss both schemes in detail to present a holistic picture and help you choose the right loan for you.
SBI Global Ed-Vantage Scheme
The sanctioning of the loan depends on the eligibility of the applicant. An applicant must fulfill the following criteria to get the SBI Global Ed-Vantage loan-
• The applicant must have Indian citizenship.
• The applicant must be above the age of 18. In the case of minors, the loan is given in, parent’s name, and they have to be the borrower.
• The applicant must have a cosigner or co-applicant, which must be closely related. Parents, Spouse, Legal Guardian can be co-applicant.
• The collateral pledged by the applicant must belong to the co-applicant.
• There is a provision for pledging third-party assets belonging to a distant relative or a friend. The owner of the said property will have to be the guarantor, and if there are multiple owners of the property, then all the owners will have to act in the capacity of the guarantor.
• The applicant must take admission in a Regular Graduate/ Post Graduate/ Doctorate Course in any discipline offered by foreign Institutes/ Universities in the USA, UK, Canada, Australia, Europe, Singapore, Japan, Hong Kong, New Zealand.
Loan Amount Sanctioned Under the Global Ed-Vantage
SBI Global Ed-Vantage scheme has one of the highest loan amounts sanctioned compared to other loans. The system is structured for increased loan amounts. The minimum loan amount is 20 lakh INR, and the maximum is 1.5Crore INR. For loan amounts less than 20 lakh INR, students are advised to go with the Student Education Loan scheme.
Asset Valuation Method for Loans
Valuation of assets is done with the utmost care by the banks keeping in mind the real value coupled with market dynamics that might affect the value of the pledged asset. The bank adopts a risk assessment methodology to finalize the loan amount sanctioned for a particular asset.
The loan amount is sanctioned up to 90% of the total loan value for assets with high liquidity. High liquidity assets include Fixed Deposits, Gold, etc. On the other hand, the sanctioned loan amount for real estate-based collateral is much less, and it is anywhere between 65-75% of the asset’s value. Another factor that will affect the interest rates is the loan duration. More is the term of the loan, the higher will be the interest rates.
The Advantage With SBI Global Ed-Vantage
SBI Global Ed-Vantage scheme’s benefits can be assessed by doing a comparative analysis with other schemes by the bank. SBI Student Loan is another scheme for abroad education loan by the State Bank of India that helps students finance their abroad education. However, the loan amount is restricted under a maximum of 20 lakh INR.
This is where the advantages of Global Ed-Vantage come into the picture, wherein the loan processing is carried out at a much rapid pace than the SBI student loan scheme. Also, owing to less borrowing, it doesn’t interest banks for education abroad since there are already many applications for domestic loans in the same scheme.
The loan amount sanctioned through this scheme is high, and that is needed in most cases. Also, the bank puts more impetus on these loans since the interest through these loans is way higher than loans with a lesser amount.
Schemes Other Than Global Ed-Vantage
There are primarily two other loan schemes viz. SBI Student Loan and SBI Takeover of Education Loans. The viability of these schemes solely depends on the loan amount and the repayment ability of the borrower.
SBI Student Loan
• Gives a maximum loan amount of INR 20 Lakhs.
• Mostly used by students seeking admission to colleges in India.
• The processing is usually slower than the Global Ed-Vantage scheme owing to a vast number of applicants.
• There is no need for collateral up to INR 7.5 Lakhs and tangible collateral for loans between INR 7.5 Lakhs to INR 20 Lakhs.
• Zero processing fee for loans up to INR 7.5 Lakhs.
• The repayment holiday/moratorium period is One year after completing the course, and it is longer than the Global Ed-Vantage Scheme, where it is six months.
• Interest rates for loans up to INR 7.5 Lakhs are 8.65%, and beyond this, the interest rate is similar as that of the Global Ed-Vantage scheme.
• No margin for loan amounts till four lakhs, and beyond that, it is 15%.
Note: Margin is the amount that the borrower pays, and the bank covers the rest. For instance, a loan amount of INR 10 Lakhs, if the margin is 10%, the borrower is expected to pay INR 1lakh.
SBI Takeover Of Education Loans
This scheme helps students who take the loan at a higher interest rate due to contemporary financial compulsions. But now, after completing the course, the student is in a better financial position to repay the loan amount. SBI has a scheme where a borrower can switch to a lesser interest rate on the existing loan.
• The loan amount is between INR10 Lakhs to 1.5 crores.
• The interest rate is three years MCLR @6.65+ Spread of 2%= Effective Interest Rate of 8.65%.
• 0.50% concession for girl students on the interest rates.
• Zero processing fee for this loan.
• The repayment period is 15 years.
With all the options available for loans, the best loan varies from one applicant to another. However, SBI Global Ed-Vantage is the most sought loan by students wanting to go abroad for higher studies.