Union Bank of India is one of several Indian banks that offer education loans to help Indian students pay for the expense of attending university overseas. The bank provides two different kinds of loans for studying outside of India:
Read on to learn more about how these Union Bank of India loans work, what is required to apply, and the expected interest rates.
| 📝 Your Complete Guide to Union Bank of India Study Abroad Loan |
|---|
Union Bank Education Loan for Study Abroad is available for graduation and post-graduation degrees from recognized foreign universities.¹ The loan also covers specialised certificate courses such as CIMA (from London), CPA (from the US), and Ph.D. programs. Other courses, such as diploma programs, are not eligible for this loan.
The Special Union Education Loan Schemes for Premier Institute Abroad Studies is exclusively for students who have received acceptance from one of the premier foreign institutes shortlisted by the Union Bank.² It covers courses in management, STEM, medical and other programs like law, arts, economics, performing arts, and design. This scheme offers loans up to INR 1.5 lakhs, with no collateral required for loans up to INR 40 lakhs.
Study-abroad education loans offered by the Union Bank cover the following expenses:
Union Bank of India has specific prerequisites for international education loans that differ from domestic ones. Read through the requirements for each type of loan to find the best fit for you.
Nationality: Union Bank education loans are only available to Indian nationals.
Qualifications: Applicants must have completed their high school education before applying for the education loan. In addition, students pursuing a postgraduate program must have completed their undergraduate degree and other qualifications required by the premium institution abroad.
Admission Letter: To apply for a study abroad loan, applicants must first be accepted into the program offered by the foreign university.
Co-applicant: Loan application must be co-signed by the student's spouse, parent, guardian, or in-laws who are Indian nationals.
The loan application requires you to provide a collateral asset to guarantee the loan. The collateral can be a deposit account, an investment, or real estate of the same value as the required collateral. In addition to the collateral requirements outlined below, the applicant is required to have life insurance covering the loan amount in the bank's favour.
Collateral Requirement for Union Bank Education Loan for Study Abroad¹
Eligible applicants can use the Credit Guarantee Fund Scheme for Education Loan (CGFSEL)³ to help provide collateral under this scheme.
| Loan Amount | Collateral Requirement |
|---|---|
| Up to INR 4 lakhs | No collateral required. |
| INR 4 lakhs to INR 7.5 lakhs | Third-party guarantee accepted. |
| Above INR 7.50 lakhs | Collateral is required for the entire loan amount plus interest. |
Collateral Requirement for Special Union Education Loan Scheme for Premier Institute Abroad Studies²
Under this scheme, providing additional collateral can help reduce your interest rate.
| Loan Amount | Collateral Requirement |
|---|---|
| Up to INR 40 lakhs | No collateral required. |
| Above INR 40 lakhs | Collateral is required for 50% of the loan amount plus interest. |
Union Bank of India Education Loan for Study Abroad has no loan processing fee and requires 15% of the loan amount as margin payment for loans above INR 4 lakhs.¹
Special Union Education Loan Scheme for Premier Institute Abroad Studies charges a loan processing fee of INR 5,000, which is refunded if the student avails the loan within 3 months from the date of sanction. A 15% of the loan amount as a margin payment is required for applying for the loan under this scheme.²
The effective rate of interest for education loans offered by the Union Bank of India depends on four different factors:³
The education loan interest rate is based on the Reserve Bank of India’s External Benchmark Lender Rate (ELBR). The Union Bank of India adds a premium on top of EBLR to calculate the effective rate of interest on the loan.
Rates for Union Bank Education Loan for Study Abroad - Covered under CGFSEL
| Loan Amount | Effective Rate* |
|---|---|
| Up to INR 7.5 lakhs | 11.30% |
Rates for Union Bank Education Loan for Study Abroad - Not covered under CGFSEL
| Loan Amount | Effective Rate* |
|---|---|
| Up to INR 4 lakhs | 12.55% for male, 12.05% for female |
| From INR 4 lakhs to INR 7.5 lakhs | 12.30% for male, 11.80% for female |
| Above INR 7.5 lakhs | 11.40% for male, 10.90% for female |
Rates for Special Union Education Loan Scheme for Premier Institute Abroad Studies
| Loan Amount | Effective Rate* |
|---|---|
| Up to INR 40 lakhs, with collateral from 50% to 100% | 9.55% |
| Up to INR 40 lakhs, with collateral of 100% and above | 9.30% |
| Above INR 40 lakhs, with collateral of 100% and above | 10.80% |
*Rates retrieved on May 25, 2023.
Please verify the latest rates from the Union Bank of India publication.
| 💸 Income Tax Benefit |
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| Section 80E of the Income Tax Act allows borrowers to deduct the interest paid on education loans when filing income taxes.⁵ You can only claim this deduction for the interest paid in the same year you file your income tax. |
Once your education loan is approved, you won’t need to start repayments until you have completed your course, plus an additional 12 months after. This grace period during which no repayments are required is called a moratorium. After the moratorium period ends, the bank will expect you to start making your monthly repayments on the loan.
Although you are not required to make any interest payments during the moratorium period, you can still choose to make payments and benefit from an interest rebate.
Union Bank of India offers a loan tenure of up to 15 years (180 months) for study-abroad educational loans.
Union Bank of India accepts online applications for education loans through the Vidya Lakshmi portal. You can also visit the nearest bank branch and complete the loan application in person.
Visit your nearest Union Bank of India branch⁶ and complete the loan with the help of a representative. Make sure to bring physical copies of the required documents, as outlined below.
Union Bank of India may request additional documents to support your application.
| 📞 Union Bank of India Contact Information | |
|---|---|
| You can track your loan application and get further information by calling toll-free on 1800 2222 44. Customers outside India can call Union Bank of India on +91 80 6181 7110. |
Generally, Union Bank of India takes a week to ten days to approve an education loan if the application is complete.
Union Bank of India disburses the loan funds directly to the university according to the provided payment schedule. You must have the pro-rata margin amount in the Union Bank Savings Account before the loan money can be paid out.
Any qualifying fees can be reimbursed by your loan as long as you can provide original receipts. The bank will remit the living expenses directly to the student’s overseas account whenever required.
Starting a new course as an international student can come with many expenses. Once you arrive abroad for your studies, check out the Wise multi-currency account available for residents living in supported countries. Enjoy an account as worldly as you are and spend just like a local when you travel abroad with a linked debit card, while also paying less in fees.
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Sources used for this article:
Sources verified on May 26, 2023.
Cover photo by AMIT RANJAN on Unsplash.
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