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How to Choose the Best Educational Loan?

Lesson Summary:

What are the criteria for a good Educational loan?

Shortlisting loan offers

Indian Vs International Banks: What are the pros and cons

What loans are popular with international students?

What are the criteria for a good Educational loan?

• Lowest Interest Rate
• No prepayment penalty
• Minimum or no collateral required
• Flexible repayment options
• Student Loan deferment options

Shortlisting loan offers:

Education loans aren't one size fits all. You should consider the following things while evaluating the best loan option for yourself:

Interest Rate:

Some banks offer fixed rate and some offer variable rate option. A fixed rate stays the same for the life of the loan, while variable rates change quarterly, and may go up or down. Be sure to compare different options.

Pay attention to the terms:

The interest rate of your loan may vary depending on whether you repay the loan immediately or wait until after graduation to start repaying. Having a co-borrower can also have an impact on the rate of a loan.

Check the Hidden Costs:

The hidden costs for borrowing loan can have a big impact on your overall cost of borrowing. Examine carefully terms like Application Fee, Origination Fee, and Default Fee.

Prepayment Penalty:

Is there any penalty for early repayment? What's the penalty for a missed or late payment?

Get the proper advice and support you need:

Choose the right loan option as per your financial situation. Learn about the impact of deferring repayment and choosing a long repayment term. Putting off payments and having smaller monthly payments might increase your total cost of borrowing.

International versus Indian Banks:

US students can receive federal loans guaranteed by the government, but these valuable loans are not available to international students. Luckily, private student loans are available to international students. The loans are cheaper compared to those available in India if an international student is fortunate to get the loan. The interest rate is around 4-6% compared to around 12 % in India.

Indian banks allow you to repay within 5-7 years after the commencement of repayment. Repayment will commence one year after completion of course or 6 months after securing a job, whichever is earlier. Repayment of an international student loan can be deferred while you are enrolled full-time, and for six months after you finish. After that, you will have up to 20 years to repay the loan, with a payment due every month.

For more information regarding the educational loans offered by Indian Banks click here

International Student Loans:

U.S Banks offer students loan to international students if the loan is co-signed by a creditworthy US citizen or permanent resident (holder of a "green card"). International students may choose from the following international student loan option:

Global Student Loan Corporation: GSLC offers student loans for International students that do not require a co-signer in the host country. You do not require a U.S. cosigner if you plan to study in U.S. In addition to covering your tuition, the Global Student Loan provides funding for other school essentials such as computers, insurance, communications, travel, and housing.

Federal student loans are popular with US students in the USA, but they are not available to international students. International Student Loans are specialized private education loans that are available for international students who are studying in the USA. International students will have to apply with a qualified co-signer and should only apply for international student loans after exhausting all scholarships, personal funds and other options.

For more details: Click Here

International Student Loan Program (ISLP) and Study Abroad Loan Program (SALP):

In order to be eligible for international student loan program (ISLP) you should be

• Non U.S. citizens or non-citizen permanent resident attending an eligible U.S. college or university

• Have a creditworthy cosigner who is a U.S. citizen or a non-citizen permanent resident.

The minimum loan amount is $1,500 per academic year. Students may take up to 25 years to repay the loan. SALP is an alternative loan program for US citizens to study abroad.

For more details, click Here

Canadian Higher Education Loan Program (CanHELP): CanHELP is an alternative loan program for Canadian university students to study in America and approved schools throughout the world. Graduate students may borrow a maximum of $15,000 per year without a co-signer, or up to cost of education with a co-signer. Students can repay loan upto 20 years. Graduate students can apply without a co-signer if they pay a 7.5% guarantee fee at disbursement and a 2% guarantee fee at repayment which will be financed into the loan. Undergraduate students are required to have creditworthy Canadian citizen as co-signer.

For more details: click Here

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