Canada is competing with the USA as the most preferred destination for pursuing higher studies abroad. Cost of studying in Canada depends on the university, course, and duration of study and cost of living. Although there are a lot of good universities in India as well, but excellent career opportunities and high living standards drive students to opt for studying abroad. Not every aspiring student can afford to live and study in Canada. Therefore, various banks and other financial institutions are offering education loans to students wishing to pursue higher studies in Canada. Although different financial aids and scholarships are also available, but because of the fierce competition, not every student can avail them. In this article, we will inform you about each and every aspect from eligibility to loan applying process to documents required for getting an education loan to study in Canada. Apart from this, we will also inform you about what all expenses are covered under the education loan.
Process for applying for an Education Loan
Getting a loan sanctioned is not only tedious but also time taking, so, in order to avoid any last-minute rush, one should always start applying for a loan early. After getting the admit letter from the university, students get an idea of the total expenditure including study and living. Calculate the amount you need to finance and how much you are going to spend from your own pocket. Do some research before applying for a loan and check which banks are giving the best deals on loans. Also, check out how to choose your bank for education loan to study abroad.
Compare the loan offers of different banks on these parameters:
- Interest rate
- Processing fee
- Expenses covered under the education loan
- Loan processing time
- Prepayment terms and duration
After selecting the bank, fill the application form and check the requirements of the bank. The inability to show sufficient funds can also result in rejection, therefore, it is always recommended to approach at least two-three banks for loans.
List of documents required while applying for an Education Loan
From last few years, the number of Indian students going to study abroad has increased exponentially, therefore, demand for loans has also risen significantly. In order to sanction the loan, banks also verify the details given by the applicants. So, there is a list of documents which the applicant needs to submit to the banks. Here’s a list of the documents required while applying for the education loan:
- Admission letter from university/institution (Proof of admission)
- Loan application form
- Passport size photographs
- Academic documents (certificates and mark sheets)
- Documents of qualifying exams (like GMAT, IELTS)
- Resident proof of the student and the guarantor
- Statements of borrowers bank accounts (last one year)
- Income proof of the guarantor
Note: Requirement of documents can vary as per the banks’ own rules and regulations, so it is always advised to check the list of the documents required with the respective bank.
Courses for which banks provide a loan to study in Canada?
Those students who wish to apply for the undergraduate, masters or research programs in established institutions are funded by the banks. Banks also provide loans for SPP programs. Nationalized banks generally do not offer education loans for vocational, short-term or diploma courses. As banks always think about getting the amount back from the student seeking funds, they always prefer to disburse loans for job-oriented courses.
Eligibility criteria to apply for an education loan to study in Canada
Before applying for an education loan one must check the eligibility criteria for getting the loan approval. Some of the factors that are considered by all the banks are:
- The loan applicant must be an Indian citizen.
- The applicant must have secured admission in a recognized foreign university/institution.
- The loan applicant must be above the age of 18 years or his/her parents will have to apply for the loan.
- The applicant must have secured admission in a professional course.
Repayment starts after a period of one year or six months, whichever is earlier, after the completion of the course once the candidate gets the job. The loan amount has to be repaid in 5 to 10 years once the repayment starts.
Note: The repayment conditions vary according to the banks’ rules or conditions covered under the loan scheme.
Expenses covered under Education Loan
This is one of the most important factors to keep in mind while applying for an education loan. As there are a lot of student loan schemes offered by banks, it is always recommended to check which scheme suits your needs the best. Different expenses are covered under different schemes, so one should always check with the bank as to what all other expenses are covered in the loan scheme apart from tuition fee. The list of expenses includes:
- Tuition fee
- Travel expenses
- Cost of buying books and other study material
- Laboratory fee
- Hostel fee
- Purchase of a laptop (If required for the course)
- Expenses for project work or study tours
If the loan amount exceeds INR 7.5 lakh then tangible assets are needed as collateral security. Also, parents are required to be co-borrowers for all the education loans.
Tax benefits can be claimed on the interest paid on the entire loan amount under section 80E. Further, the tax benefits can be claimed up to seven consecutive years once the repayment starts.
Loans are boon for brilliant students who can make big in life but due to rising cost are not able to gain the quality education. However, it is recommended to carefully check the conditions of the loan agreement.