Education Loan in Canada for India Students - A Complete Guide

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MOEC

11 April 2022

1826

Overview

Canada competes with the United States as the preferred destination for pursuing higher education abroad. The cost of studying in Canada depends on the university, the course, the length of study and the cost of living. Although there are also many good universities in India, excellent career opportunities and a high standard of living make students opt for study abroad. Not every aspiring student can live and study in Canada. Therefore, various banks and other financial institutions offer student loans to students who wish to pursue higher education in Canada. Although different financial aids and scholarships are also available, but due to fierce competition, not all students are eligible. In this article, we will inform you about everything from eligibility to the loan application process to the documents required to obtain a student loan to study in Canada. Apart from this, we will also inform you of all the expenses covered by the study loan.

Student Loan Application Process for Canada

Getting a sanctioned loan is not only tedious but also time consuming, so in order to avoid any last minute rush, always start applying for a loan early. After receiving the admission letter from the university, students get an idea of the total expenses including study and living. Calculate how much you need to finance and how much you will spend out of pocket. Do your research before applying for a loan and check which banks offer the best loan deals. Also find out how to choose your bank for a student loan to study abroad.

Compare loan offers from different banks according to these parameters:

  • Interest rate
  • Processing fee
  • Expenses covered by the student loan
  • Loan processing time
  • Terms and duration of prepayment

After selecting the bank, complete the application form and check the requirements of the bank. Failure to show sufficient funds can also lead to rejection, therefore, it is always recommended to contact at least two to three banks for loans. Contact leading education loan providers in India through Shiksha Study Abroad.
List of documents required when applying for a student loan

Over the past few years, the number of Indian students going to study abroad has increased exponentially; hence, the demand for loans has also increased significantly. In order to sanction the loan, the banks also verify the details provided by the applicants. So there is a list of documents that the applicant must submit to the banks. Here is a list of the documents required when applying for a student loan:

  • Letter of admission from university/institution (proof of admission)
  • Loan application form
  • Passport size photographs
  • Academic documents (certificates and grade sheets)
  • Qualifying exam papers (like GMAT, IELTS)
  • Proof of residence of the student and the guarantor
  • Statements of borrowers' bank accounts (last year)
  • Guarantor's proof of income

Note: Document requirements may vary according to bank rules and regulations, so it is always advisable to check the list of required documents with the relevant bank.

Courses for which banks offer a loan to study in Canada?

Students who wish to apply for undergraduate, masters or research programs at established institutions are funded by banks. Banks also provide loans for SPP programs. Nationalized banks generally do not offer student loans for vocational, short-term or degree courses. As the banks always think of recovering the amount from the student seeking funds, they always prefer to disburse loans for job-oriented courses.

Eligibility criteria to apply for a student loan to study in Canada

Before applying for a student loan, one should check the eligibility criteria to get loan approval. Some of the factors considered by all banks are:

  • The loan applicant must be an Indian citizen.
  • The candidate must be admitted to a recognized foreign university/institution.
  • The loan applicant must be over 18 years of age or their parents will need to apply for the loan.
  • The candidate must have obtained admission to a professional course.

Refund

Reimbursement commences after a period of one year or six months, whichever comes first, after completion of the course once the candidate has secured the position. The loan amount is to be repaid in 5 to 10 years once the repayment starts.

Note: Repayment terms vary depending on bank rules or terms covered by the loan scheme.

Expenses covered by the student loan

This is one of the most important factors to keep in mind when applying for a student loan. As there are many student loan programs offered by banks, it is always recommended to check which program best suits your needs. Different expenses are covered by different schemes, so always check with the bank what all other expenses are covered by the loan scheme except tuition fees. The list of expenses includes:

  • Tuition
  • Trip costs
  • The cost of purchasing books and other educational materials
  • Laboratory fees
  • Hostel fees
  • Purchase of a laptop (if necessary for the course)
  • Cost of project work or study tours

Warranty rules

If the loan amount exceeds INR 7.5 lakh, tangible assets are required as collateral. In addition, parents are required to be co-borrowers for all student loans.

Fiscal advantages

Tax benefits may be claimed on interest paid on the full loan amount under Section 80E. Additionally, tax benefits can be claimed for up to seven consecutive years once repayment has begun.
Loans are a boon for brilliant students who can earn a lot in life but due to rising costs are unable to acquire a quality education. However, it is recommended to carefully check the conditions of the loan contract.

 

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