Studying abroad in the United Kingdom is a dream for many students, but the high costs associated with it can be a major hurdle. Scholarships and grants may cover only a portion of the expenses, leaving students to find other means to finance their education.
In such cases, education loans play a crucial role in fulfilling the aspirations of those who wish to pursue their studies in the UK. This guide provides comprehensive information on obtaining education loans for studying in the UK.
Top 10 Universities in the United Kingdom
Before delving into the details of education loans, here are the top ten universities in the UK that students can aim for:
- University of Cambridge
- University of Oxford
- Imperial College London
- University College London
- University of Edinburgh
- University of Manchester
- King’s College London
- London School of Economics and Political Science
- University of Bristol
- University of Warwick
Why is a student loan necessary for studying in the UK?
If you’ve already decided to pursue your education in the UK, you must be aware that it is one of the most expensive study abroad destinations. The overall cost encompasses university tuition fees, living expenses such as accommodation, food, transportation, medical costs, and various other miscellaneous expenses. Given these substantial costs, it’s natural to feel financially limited and in need of a student loan.
Below mentioned are some of the top reasons to opt for student loans for international students UK: Interest rates for any loan, such as a home loan, a car loan, a personal loan, and so on, are often greater than on educational loans. In addition, all Government banks offer a 0.5% discount to female borrowers. Tuition costs, transport (tickets), housing rent, university fees, food expenditures, living expenses, laptop, or any other thing required for your education are all covered by a student loan in UK.
Typically, parents liquidate significant assets to cover cost of studying in UK, which disrupts long-term financial plans. However, when you take out an education loan, banks hold your liquid assets as security, such as FDs, insurance, and government bonds, and issue you a loan based on that security. Therefore, a student loan for UK is the best alternative to help you cover all your expenses in a safe and timely manner while fulfilling the admission and visa requirements.
Top reasons why opting for student loans for international students in the UK is beneficial
- Favorable Interest Rates: Educational loans generally come with lower interest rates compared to other types of loans like home loans, car loans, or personal loans. Moreover, female borrowers can avail an additional 0.5% discount offered by Government banks.
- Comprehensive Coverage: A student loan in the UK covers a wide range of expenses, including tuition fees, transportation costs, housing rent, university fees, food expenditures, living expenses, and even expenses for essential items like laptops required for your education.
- Preserving Parent’s Financial Plans: Rather than liquidating significant assets, such as fixed deposits, insurance, or government bonds, which may disrupt long-term financial plans, an education loan allows you to use these assets as collateral while obtaining the required funds for your studies.
- Ensuring Smooth Admission and Visa Process: By opting for a student loan, you can manage all your expenses in a secure and timely manner, thereby fulfilling both admission and visa requirements without financial constraints.
Types of Education Loan for Studying in the UK
There are primarily two types of loans available for Indian students planning to study in the UK. Let’s explore them:
- Collateral Education Loan: This is a secured education loan for the UK, where you need to provide a security or collateral to obtain the loan. The collateral can be in the form of tangible assets like Fixed Deposits (FDs) or immovable assets such as property.
- Non-Collateral Education Loan: This is an unsecured education loan for the UK, meaning you do not need to pledge any collateral to apply for the loan.
How to Obtain a Loan for Indian Students in the UK?
If you’re wondering about the availability of loans for Indian students in the UK, the answer is a resounding yes! You have the opportunity to borrow money to cover both tuition fees and living expenses while studying at universities in the UK. Eligibility for student finance depends on various factors such as the university, chosen course, age, nationality, and whether you have pursued a higher education course before. Here are the steps to follow when applying for a student loan in the UK:
- Online Application: Begin by applying for a student loan in the UK through the online application process.
- Funding Period: You can avail of funding through an education loan for up to 9 months after the commencement of your academic course.
- Application Processing Time: Expect the processing time for your loan application to take approximately 6 weeks.
- Identity Verification: You will be required to submit proof of your identity as part of the application process.
- Repayment: Once you start earning a stable income, you can begin repaying the student loan.
- Monthly Instalments: The number and amount of monthly instalments will be determined based on your monthly earnings.
The expenses that are covered under a student loan in the UK
- Institution Fees: The tuition fees payable to the educational institution are covered by the student loan.
- Examination and Academic Fees: Expenses related to examinations, library membership, laboratory fees, and other academic-related costs are included.
- Books and Supplies: The cost of books and supplies necessary to complete the course is covered under the student loan.
- Refundable Deposits: Any refundable deposits required for accommodation, caution money, or other refundable deposits are included in the loan coverage.
- Travel Expenses: The student loan also covers travel expenses associated with studying abroad.
- Two-Wheeler Cost: Up to 50,000 INR of expenses for purchasing a two-wheeler are covered by the loan.
- Study Tour or Project Work: Expenses related to study tours or project work directly associated with the course are included in the loan coverage.
Repayment of Student Loan for UK
Before applying for a UK education loan for international students, it is essential to familiarize yourself with the repayment process. Below, we outline the repayment plans for education loans from Indian banks for studying in the UK:
- Public Bank Loan: The repayment period for this loan begins after one year of course completion. Borrowers have the flexibility to repay the loan within 15 years from the start of the repayment period.
- Private Bank Loan: Repayment for this loan starts during the course period and continues for an additional one year or six months after securing employment. Similar to the public bank loan, the private bank loan can also be repaid within a span of 15 years.
In summary, the repayment terms for UK education loans differ based on whether the loan is obtained from a public or private bank. Being aware of these repayment details will help you plan your finances accordingly.
Banks Providing Education Loans to Study in the UK
When applying for an education loan, students should begin the process as soon as they receive an unconditional offer letter from their desired university. Different banks and financial institutions have their own requirements and documentation processes, making thorough research essential. Here are some banks that offer tailored education loan schemes for studying in the UK:
1. Bank of Baroda (BoB)
The ‘Baroda Scholar Loan’ provides financial assistance to Indian students pursuing undergraduate or postgraduate programs, doctoral degrees, or technical job-oriented courses in reputable foreign universities. This loan covers tuition fees, hostel fees, travel expenses, and related costs. The loan can be repaid over a period of 10-15 years, with a maximum loan limit of Rs 150 lakhs for full-time courses.
2. Bank of India (BoI)
The ‘Star Education Loan’ is specifically designed for students who have secured admission into graduate or postgraduate programs in recognized institutes, including courses offered by institutes like CIMA-London, UK. This loan covers various expenses such as hostel fees, tuition fees, exam fees, and even the cost of a laptop if required. For loans up to Rs 7.50 lakhs, no collateral security is required.
3. Central Bank of India (CBI)
The ‘Cent Vidyarthi’ scheme supports students who have gained admission to higher education programs in recognized universities or colleges in India or overseas. Eligibility is merit-based or through an entrance test, or candidates should have a minimum of 50% marks in the qualifying examination. This loan covers tuition fees, exam fees, travel expenses, and the purchase of books and computers. The scheme offers a maximum loan amount of Rs.20 Lakhs and provides life insurance protection to the borrowers.
4. HDFC Bank
HDFC Credila, in partnership with HDFC, offers loans of up to Rs.20 lakhs for students studying abroad. The bank provides flexible loan terms, low-interest rates, and tax benefits under Section 80 (E) of the Income Tax Act.
5. State Bank of India (SBI)
SBI offers two loan schemes for students aspiring to study in the UK, namely, SBI Student Loan and SBI Global ED-VANTAGE. The student loan scheme offers a maximum loan amount of Rs.20 lakhs, while the ED-VANTAGE scheme can provide financing of up to Rs.1.5 Crore.
6. Syndicate Bank
The SYNDVIDYA Scheme allows student loans from Rs.20 Lakhs to 2 Crores for both degree and diploma courses. The repayment tenure is 15 years, and collateral is required for loans exceeding Rs.7.50 Lakhs.
Documents Required for Education Loan Approval
While each bank or financial institution may have specific documentation requirements, here is a generic list of documents to prepare for an education loan application:
- Completely filled loan application form from the relevant bank.
- Verification documents for identity and current address.
- Evidence of age.
- Two passport-sized photographs.
- Proof of income for employed individuals (salary slips, Form 16, etc.).
- Latest salary slip and income tax assessment order for the last two years.
- All supporting financial documents.
- Bank account statement for the last six months of the borrower.
- Summary of assets and liabilities for the co-borrower.
- Copies of the foreign exchange permit.
- Transcript from the most recent qualifying examination in India (school or undergraduate studies).
- Confirmation of enrollment from the university without any conditions/Unconditional offer letter from the university.
- Comprehensive breakdown of anticipated expenses for the specified course.
- Copies of scholarship letter, if granted any.
Can I apply for an education loan in the UK from India?
Yes, you can apply for an education loan to study in the UK from India through various public banks, private banks, and NBFCs.
What is the graduate route in the UK?
The graduate route in the UK allows international students who have completed their studies to apply to reside in the UK and work or search for a job after their course or graduation.
Is it worthwhile to move to the UK from India?
Many skilled and talented professionals from around the world consider the UK as one of the best places to study and settle. The UK offers courses that meet the standards of today’s competitive job market. To learn more about the cost of living and eligibility, you can watch episode 21 of loanflix.
How much education loan can I obtain for studying in the UK?
For studying in the UK, you can receive funding of up to 1.5 crores through education loans from public banks.
What is the 28-day rule for a UK visa?
To meet the UK visa requirements, if the loan amount is disbursed into your account, you need to demonstrate that the funds were present for 28 consecutive days within the 31-day window after your visa application. However, the 28-day rule does not apply if you are using your loan sanction letter.
Do UK banks accept education loans for financing higher education?
Yes, UK banks accept education loans as a valid means of financing higher education in the UK.
What is the interest rate for a student loan in the UK?
Interest rates for education loans in the UK vary depending on whether you obtain the loan from a public bank or a private bank. Public banks typically offer interest rates between 8.85% to 9.35%, while private banks tend to charge higher interest rates ranging from 10.99% to 13%.
If my student loan application for the UK is rejected, can I reapply?
Yes, if your application for a student loan in the UK is rejected once, you can definitely reapply for the loan.
Studying in the UK is undoubtedly expensive, but with a well-structured education loan plan, students can fulfill their dreams without financial constraints. By researching different bank offerings and preparing the necessary documents, students can secure the funds needed to embark on their educational journey in the United Kingdom.