Education Loan for Abroad Studies by the Indian Government: Do’s & Don’ts before Applying

Dreaming of studying abroad, but unsure how to fund it? We have some good news for you. The Government of India offers education loans at low to no interest rates specifically for overseas studies. With an array of schemes, some targeting specific communities, while others are open to merit-based applicants, it’s a powerful way to make your global education dreams a reality. Yet, eligibility criteria can be strict and vary across schemes. That’s why this article is your friendly guide to the Do’s & Don’ts before applying. To make sure that your journey is smoother, brighter, and less stressful, read this article completely.

Benefits of taking an Education Loan for Abroad Studies by the Indian Government 

While there are umpteen benefits, here’s why these Govt education loan scheme can be a great choice:

• Low or Zero Interest during the Study Period: Several schemes offer interest subsidies or even a full waiver during the course and moratorium period. 
• Collateral-Free Options: Loans up to a certain cap require no collateral or third-party guarantee. 
• Tax Relief: Repayment of interest (and in some cases principal) is deductible under Section 80E of the Income Tax Act. 
• High Loan Limits: Some schemes offer loans up to INR 30 lakhs or more, enough to cover tuition, living expenses, and travel. 
• Fast Loan Processing: The government has directed public sector banks to process education loans within 15 days. 
• Centralized Application Portals: Platforms like Vidya Lakshmi (PM-Vidyalaxmi) make applying much simpler by comparing multiple schemes and loans.

With these perks in check, let’s come to the much-anticipated part of the article. 

Factors to Consider while Education Loan for Abroad Studies by the Indian Government 

Before diving in, here are key factors to weigh in the smart Do’s and caution-flagging Don’ts.

Do's for Education Loan for Abroad Studies by the Indian Government

• Check the eligibility right away: Many schemes require your family income to be below a threshold, specific community affiliations like SC, OBC, EWS, or merit-based admission.
• Use the Vidya Lakshmi Portal: This portal lets you compare 139 loan schemes from 45 banks, as well as an education loan for abroad studies by Indian government.
• Opt for schemes with Interest Subsidy or Moratorium Benefits: The CSIS grants a full interest subsidy during the course and one year post-study. Likewise, Dr. Ambedkar Central Sector Scheme offers a full interest subsidy to OBC/EBC students for M.Phil and PhD abroad. 
• Consider Collateral-Free Schemes when Available: Schemes like the Credit Guarantee Fund Scheme (CGFSEL) allow up to INR 7.5 lakh without collateral. Some bank-specific schemes offer up to INR 50 lakh collateral-free for premier institutions.
• Keep your Documentation ready: Expect to submit your admission letter, income proof, caste/EWS/minority certificate, and citizenship documents. A complete package helps meet the 15-day processing mandate. 
• Moonlight as a Tax Planner: Use Section 80E to reduce your tax liability by claiming interest paid over up to eight years. 
• Stay Updated on Application Trends: For example, Gujarat’s scheme saw a 168% rise in student participation over five years, proof that awareness is growing.

Don’ts for Education Loan for Abroad Studies by the Indian Government

• Don’t Ignore the Repayment Terms or Tenure: Know your moratorium (It varies between 6 months to 1 year post-course) and repayment window (can be 10 to 15 years). Exceeding tenure risks higher EMIs.
• Don’t Assume all Banks offer Subsidies: Only banks registered with the Indian Banks’ Association (IBA) are eligible for interest subsidy schemes; NBFCs usually aren’t. 
• Don’t Miss the Margins and Collaterals: For example, SBI requires a 15% margin for loans above INR 4 lakhs for foreign studies. Missing this could delay approval. 
• Don’t Forget to Check Destination Shifts: As visa winds shift, students are trending toward Germany and other European countries for Engineering, or Russia/Kyrgyzstan/Philippines for Medical degrees. This might affect your cost and loan requirements. 
• Don’t overlook state-specific schemes: Your state may offer superior terms, especially for underrepresented or minority students, many of whom get high-value loans and the lowest interest rate on education loan through such schemes.

To sum up, applying for an education loan for studying abroad can feel daunting until you know the right steps. By planning smartly, keeping tabs on eligibility, and acting promptly, you will be well on your way to funding your global dreams with confidence. Follow these do’s and don’ts and watch your study-abroad aspirations take flight. Good luck!