Summary: Crack the disbursement process for your abroad education loan to facilitate a smooth process. This blog sheds light on the education loan disbursement eligibility, documentation, different stages of the process, & pre-visa disbursement for students.
Table of Content
- What is the education loan disbursement process?
- Different stages
- What is an education loan disbursement letter?
- Which are the top education loan lenders for disbursement?
- Eligibility for an education loan disbursement
- Documents required for education loan disbursement
- What is a pre-visa disbursement loan?
- Are you eligible for an education loan disbursement letter?
- Frequently Asked Questions
Getting your education loan disbursed is a great achievement as it ensures your financial security to study abroad. Otherwise, loads of financial anxieties arise while you study abroad, disturbing your peace while away from home. Don’t let your disbursement process delay or get rejected because you were unaware of the intricacies – take help from this blog and fill the gap by learning more about the education loan disbursement process.
What is the education loan disbursement process?
The education loan disbursement process denotes releasing the education loan amount to the applicant’s account. It is the last stage of your education loan application process that is followed by repayment once you complete your studies.
The total amount is disbursed in recurring intervals that are often the start of a new semester or an academic year. Typically, the lender responsible for disbursement coordinates with the university or college for timely disbursement of the loan amount, according to the tuition fee, academic cost, and living expense needs.
Education loan disbursement process: Different stages
- Fill out the education loan application form
The first step for education loan disbursement is filling out the application online or offline. You will be required to provide your and your co-applicants personal and financial information along with the details of your academic program.
- Arrange and submit the necessary documents
Documentation is crucial for a successful education loan disbursement process. The list of documents includes personal ID proof, academic records, and financial documents of the applicant and co-applicant.
- Get the education loan sanction letter from the lender
Once you submit the documents, the lender reviews them for compliance check. If your application is approved, you will receive a sanction letter detailing the amount, interest rate, repayment conditions, date of disbursement, and all other crucial information regarding your education loan. Acknowledge and respond back to the lender once you receive the education loan sanction letter, and you may suggest the date of disbursement if you are asked for it.
- Obtain confirmation from the institution
Your education loan lender will connect with your institution to confirm the disbursement. Make sure your institution responds promptly to the disbursement confirmation.
- Disbursement to the borrower’s/ institution’s account
After getting confirmation from the borrower and institution, the education loan disbursement takes place to the borrower’s or institution’s account in installments. If the disbursement is to the institution’s account, the amount will be redirected to your living costs via the institution.
Education loan disbursement process duration
Usually, it takes 7 – 15 business days or up to 30 days to sanction your education loan after verifying all the documents. The disbursement can be after 4 – 7 days from getting the sanction letter, according to your demands.
Factors influencing disbursement duration include the completion of any additional documentation, verification processes, and the specific disbursement schedule outlined by the lender. It is advisable to contact the loan provider for precise information regarding the expected timeframe for disbursement in your particular case.
What is an education loan disbursement letter?
An education loan disbursement is a formal document provided by your lender. It is necessary to submit this letter to the university as proof of financial support. Once you receive the loan disbursement letter, you can proceed to initiate the disbursement process.
- You need to ask the lender to initiate the disbursement process after receiving the letter.
- Better not to initiate any changes in your university as the lender is ready to transfer the loan amount to the respective accounts.
- Once you get the disbursement letter, the chances of your disbursement being rejected are least.
Which are the top education loan lenders for disbursement?
| Indian Banks Public and private banks in India provide education loans to study abroad, with or without collateral. Their disbursement process is smooth and timely once the loan approval is confirmed. You are eligible for tax benefits under Section 80 E for bank education loans. | NBFCs Non-Banking Financial Companies (NBFCs) offer education loans of high amounts without collateral to study abroad. Compared to banks, they have a higher acceptance rate and more coverage of institutions abroad. |
| International Lenders International lenders offer education loans without collateral to study abroad at select institutions. They collaborate with their partner institutions to streamline the disbursement process. | US Banks US banks offer education loans to international students studying in US institutions. The disbursement will be coordinated with the institution in frequent intervals. |
Eligibility for an education loan disbursement
Getting an education loan sanction letter is the primary eligibility requirement for your education loan disbursement. However, there have been rejections even after obtaining a sanction letter mostly due to documentation issues. Make sure you submit the documents correctly for a timely disbursement of your education loan.
Here are the general eligibility criteria for education loan disbursement:
- Get admission to a recognized university
- Provide valid documents timely
- Co-applicant must have a high CIBIL score
- Provide your institution’s confirmation for disbursement
Documents required for education loan disbursement
The documents required for education loan disbursement are recommended by every lender before sanctioning the loan. In general, the following documents are required for a successful education loan disbursement:
- A letter from the university or a valid document showing the fee structure
- KYC documents of the student and co-borrowers, such as PAN Card, Passport, etc.
- Collateral document, if the education loan is with collateral
- Salary certificate and TCS form of the co-applicant if the education loan is without collateral
- Tuition fee receipt if it is already paid
- A document showing the average living costs such as food, study material, and so on.
- Rent agreement if the student stays in a rented apartment/ room/hostel
- Health insurance proof
What is a pre-visa disbursement loan?
Pre-visa disbursement means an education loan getting disbursed before the student borrower gets a student visa. It is advantageous to the student as the funds disbursed can be used to pay the visa fee, traveling cost, tuition fee, and the deposit required for a student visa.
If the lender finds your profile eligible, you might be eligible for a pre-visa disbursement. If you are looking for a disbursement before your visa application, inform the lender in advance and request an early disbursement.
Are you eligible for an education loan disbursement letter?
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Frequently Asked Questions
How is an education loan disbursed when I study abroad?
Your education loan is disbursed to your university’s account, and you get the living cost from the university. The disbursement takes place every year on a semester or annual basis.
How many days are required to complete the education loan disbursement process?
Usually, it takes 4 – 7 days or more to complete the first installment of your education loan disbursement, according to case-specific demands. The disbursement may be delayed if the documentation is not properly done.
What if 2nd or 3rd-semester disbursement delays due to documentation issues?
In case you face a documentation error, check if it is from your end or the lender’s. If it is on your part, rectify it immediately. Otherwise, request the lender to do the same. In both cases, generally, no penalty is charged.
What are the stages of education loan disbursement?
The education loan disbursement process involves mainly four stages – submission of the application form, document submission, sanction letter received, and disbursement. The process is communicated to the borrower and institution concerned through a disbursement letter.
When does EMI start after disbursement?
EMI starts only after the whole amount is disbursed. Typically a student does not need to repay an education loan during the moratorium period (course years + 6 – 12 months).
How is an education loan disbursed to the student?
Usually, an education loan is disbursed via Electronic Fund Transfer (EFT).
Can I repay my education loan before the tenure without any penalty?
You can repay your education loan before the repayment tenure. Some lenders charge a preclosure fee if the complete repayment is within 6 months after your moratorium period.
Can I change my course or university after loan approval?
No. You must not change your course or university once the education loan is approved and you get the sanction letter. In case you need a change, contact your lender and look for possibilities for negotiation.
What if I am not able to find any job post studies? Will I get any grace period?
Typically, it is hard to extend your loan moratorium period. Anyway, you may negotiate with the lender for a final decision.
