Embarking on the journey to pursue a medical degree abroad, particularly in the field of MBBS, is an exciting yet financially challenging endeavor. Once a student secures a seat in a renowned international medical college, the daunting task of covering high tuition fees becomes apparent. This is where education loans for MBBS abroad step in as a crucial financial lifeline for many aspiring Indian students. Given the limited options for foreign medical colleges offering MBBS courses, understanding the intricate landscape of education loans becomes imperative to ensure that this hard-earned opportunity is not missed.

Securing Loans for MBBS Abroad: The Collateral Connection

Securing unsecured loans for MBBS abroad is often an uphill battle, as private lenders are hesitant due to the extended duration of the courses and other factors. However, all hope is not lost. Students can still access overseas MBBS loans by offering collateral as security. In this blog, we shed light on the intricacies of education loans tailored for studying MBBS abroad. 

Why Unsecured Loans for MBBS Abroad are Scarce?

The majority of students pursuing foreign MBBS courses opt for countries like China, Ukraine, the Philippines, etc., which may not align with the preferences of private lenders in India. Risk evaluation and the extended duration of the courses make private lenders cautious about launching unsecured MBBS education loans. Consequently, students often turn to secured education loans offered by public-sector banks.

Secured Loans for MBBS Abroad: Exploring Options

Secured education loans, requiring collateral, are favored by government banks in India due to their lower interest rates, higher chances of approval, and additional benefits like tax advantages. Major public-sector banks, such as SBI, Bank of Baroda, and Punjab National Bank, stand out as reliable options, backed by the trust associated with government entities.

Collateral Options for Secured Education Loans

Two main types of collateral securities, tangible and intangible, offer flexibility for securing education loans for MBBS abroad. Tangible collateral includes immovable properties like land, houses, apartments, or shops. In contrast, intangible collateral encompasses liquid assets such as fixed deposits, life insurance, and government bonds.

Interest Rates and Loan Amounts for MBBS Abroad: A Financial Landscape

Public-sector banks, setting education loan interest rates based on the Marginal Cost of Funds-Based Lending Rate (MCLR), offer competitive rates compared to private lenders. The MCLR serves as a benchmark, factoring in elements like the marginal cost of funds and operational expenses. With interest rates typically ranging between 8% and 10%, government bank education loans, like SBI's, start around 8.8% p.a., with maximum loan amounts reaching up to INR 1.5 Crores.

Eligibility Criteria: Fulfilling the Requirements

Common eligibility criteria for secured education loans in India include possession of all collateral security papers, Indian nationality, admission to a recognized foreign institute, a strong academic record, and a favorable CIBIL score—a crucial factor considered by most banks when approving education loans for MBBS abroad.

Chances of Approval: Navigating Success

Banks carefully assess student profiles when considering education loan applications. While applicants to MBBS programs in the USA often enjoy higher approval chances, similar success rates may not apply to MBBS courses in countries like Ukraine, the Philippines, or China. This discrepancy arises from the limited inclusion of universities in these countries on the list of preferred institutions by government banks in India.

Choosing Collateral Wisely: A Pivotal Decision

The choice of collateral plays a pivotal role in securing a loan for MBBS abroad. Tangible collateral, such as immovable properties, requires careful consideration, and students and their co-applicants must ensure that the property's documentation is in order. On the other hand, intangible collateral, including liquid assets like fixed deposits and government bonds, provides a more accessible option without the complexities associated with tangible assets.

Documentation and Application Process: Navigating the Maze

Securing an education loan for MBBS abroad involves a meticulous documentation process. Apart from the collateral-related paperwork, applicants need to provide proof of Indian nationality, admission to a recognized foreign institute, academic records, and a favorable CIBIL score. The application process may vary slightly between banks, but generally, it involves submitting these documents along with the loan application form.

Understanding Loan Repayment: Planning for the Future

While the excitement of securing a loan for MBBS abroad is significant, understanding the repayment process is equally crucial. Public-sector banks often offer flexible repayment tenures, allowing students to start repaying the loan after the completion of the course. The grace period can extend up to one year or more, depending on the bank's policies.

Benefits of Government Banks: A Closer Look

Opting for a loan from a government bank for MBBS abroad comes with several advantages. Lower interest rates, compared to private lenders, make these loans more affordable. Additionally, government banks often offer tax benefits on the interest paid on education loans, further easing the financial burden for students and their families.

Building a Financial Plan: A Long-Term Perspective

Securing an education loan for MBBS abroad is not just about fulfilling the immediate financial need but also about building a robust financial plan for the future. Responsible financial behavior, timely repayments, and maintaining a good credit score contribute to a positive credit history, opening doors for future financial endeavors.

How to Apply for an Education Loan ?

Applying for an education loan independently can be a tedious and time-consuming process, requiring meticulous attention to detail and navigating through various procedures.

At Klassfin, we understand the challenges associated with this endeavor, and we are here to simplify the entire process for you. 

Our dedicated team takes on the responsibility of conducting thorough due diligence on your behalf, streamlining the application process, and ensuring that all necessary documentation is handled efficiently. 

Through our exclusive negotiations with financial institutions, we secure the best possible interest rates for your education loan. 

At Klassfin, our mission is to alleviate the burdensome aspects of the application process, allowing you to focus on your education while we take care of the financial intricacies.