Every year lakhs of students go to Canada through student loan schemes, and this changes the entire landscape. Students get an ocean of opportunities and see a considerable change in their lifestyle after completing the degree. Earlier, taking a loan for study abroad was an arduous task, and a few students could afford higher studies in Canada without taking a loan. With the advent of new fintech companies and the liberalization of the financial sector, it has become possible for students from middle-class families to afford an abroad education.
The loans that Banks and NBFCs provide gives a holistic coverage of all the expenses of a student. Depending on the type of loan and the financial institution providing the loan, they cover the tuition fee, hostel fee, course material expenses, etc. There is a great degree of variance when it comes to loan types, so one needs to assess their requirement and repayment capacity before moving ahead with a loan. Several Fintech companies in this space provide a complete range of services, from collecting documents for the loan to getting a bank account opened in Canada. So let’s delve into the details of the whole loan scenario for students wanting to go to Canada for their higher studies.
The Cost Of Education In Canada
The cost of education in Canada needs to be calculated by taking all the possible expenses into account. There are certain one-time expenses, and then we have yearly expenses, so a holistic picture of all the expenses should be drawn to reach a conclusive cost of education in Canada for an Indian student. Some expenses can be reduced, but there are other unforeseen expenses too which one can’t possibly anticipate.
The expenses are obviously high in the first year since one-time payments have to be made. Also, the overall expenses increase since students are in a new country, so it takes time to adapt to the prevalent spending culture. Many students don’t live in shared apartments in the first year, and thus, staying in a hostel may increase their overall cost of education, and it will be reflected in the loan amount.
The Process Of Taking Study Loan For Canada
Once a student gets the admit letter, it’s advised to start the process of the education loan for Canada. The time taken to approve the loan is certainly less than what it used to be a decade back, but the processing involves a couple of tedious tasks that might be time-consuming. The loan amount must be assessed by accounting for all the possible expenses that a student may have to bear in the course duration.
Certain factors should be considered before moving ahead with the loan
- The interest rate charged by the bank
- Processing fee on the loan
- Time is taken to approve the loan
- Valuation of collateral pledged against the loan (in case of secured loans)
- Terms and conditions of the repayment
- Moratorium or Repayment Holiday
Documents Required at the time of applying for a student loan.
One should keep all the documents handy before moving ahead with the loan application. The banks verify each document with the utmost diligence, and any mismatch of information can lead to a delay or, in some cases, even cancellation of the application. There are few documents that all the banks, NBFC or international lenders will ask, and you have to furnish all of them at the time of verification.
- Admission letter or any confirmation document that can act as proof of admission.
- Documents regarding the academics that will contain mark sheets and certificates.
- Duly filled loan application form.
- Recent passport size photographs.
- Proof of residence of the applicant and the co-applicant.
- Income proof of the guarantor.
- Scorecard of qualifying exams, e.g. GRE, GMAT, TOEFL, etc.
- Bank statement of the borrower.
Courses in Canadian Universities on which the banks offer loans
There is a range of courses offered by the Canadian Universities on which loans are approved. And the criteria are more or less the same for all the countries barring a few. All the regular graduate/post-graduate courses are covered under various loan schemes run by both Public and Private sector banks. However, nationalized public sector banks don’t usually provide loans on diplomas and vocational courses. One of the most considerable contentions with the banks is about the repayment of loans. If a loan is sanctioned against a course that doesn’t have much scope post completion of the degree, the chances are likely that the loan application might get rejected.
Going by the trends of the last decade and so, it can be said that almost all the students going to Canada go for job-oriented courses only. With new entrants in the fintech space, the ambit of loans has certainly broadened over time. Now more students get loans for a rainbow of professional courses provided by Canadian Universities.
The Benefits Of Getting A Student Loan
Some students can afford to study without taking a student loan, but they also take the loan route. What’s the reason behind this thinking? It’s a smart strategy as loans are now not seen as a liability; rather, loans are crafted in such a way that they also act as an asset. There are several benefits associated with student loans in the form of tax exemption claims on the interest payment under section 80E. The tax benefits can be claimed seven years post the beginning of the repayment period.
Students beginning to pay loans also get a good credit score right from the time of repayment of loans.
Top Lenders For Study Loans in Canada
In public sector banks, SBI and Bank of Baroda are Canada’s leading names for study loans. They have attractive interest rates coupled with other advantages such as broad expense coverage, an amalgamation of social sector schemes for the marginalized sections, etc. In the private sector, Axis bank, Avanse, MPower Finance, Prodigy Finance are the leading names as they provide loans for Canadian Universities without any collateral. An ideal loan varies from one borrower to another, so an applicant should consult the experts in the field before finalizing the loan.