Published date: 10 Feb 2020 Updated on: 06 Apr 2020 When the 2018 financial year came to a close, the portfolio size of study loan disbursals touched INR 82,600 Crore, climbing 9.25% in twelve months! The average loan amount disbursement to a student went from INR 6.8 Lakh to INR 9.6 Lakh at the same time. These figures have risen even further this year. But is the education loan disbursement process as easy as it appears from these statistics? The short answer is no. Once a student loan is sanctioned, the applicant still has a long road ahead. Adopting a laid-back attitude after loan approval leads to panic and rush at the eleventh hour. Whereas, the awareness of the entire loan disbursal process and preparing for it immediately after approval saves you energy and time. This blog exactly aims to do this - making our readers aware of the disbursement process of an SBI education loan. Keep reading to find a breakdown of the complete SBI education loan disbursement process. Apply Via GyanDhan in SBI And Forget About The Road Blocks ! Arrange a call back from the loan counsellor What are the Perks of an SBI Education Loan? SBI, the biggest nationalised bank in the country, offers two study loan schemes for overseas education - SBI Global Ed-vantage and SBI Student Loan. Both come with a plethora of perks including the following: Interest is Low. Processing Fee is Nil or Minimal. Repayment Period is 15 years Long. Over and above, SBI offers a second top-up loan. This loan allows students to study a second course in their chosen country, and it extends the moratorium period too. The repayment of the loan starts 6 months after the completion of the second course What Expenses do the SBI Education Loans Cover? SBI student loans cover 90% of the expenses, including tuition, miscellaneous fees, books, equipment, accommodation, travel expenses, etc. The remaining 10% is considered as margin money. What is Loan Margin Money? - Important to Understand Before the Disbursement. Out of the total financial cost of studying abroad, the amount of money a student is supposed to bear is called loan margin. Since SBI is a public sector bank, the exact loan margin percentage depends upon the amount sanctioned. Minimum, it is 10% of the entire expense. Let’s say a student needs INR 100 from SBI to pay the tuition, and the margin set as per the loan amount sanctioned by the bank is 15%. Then the bank gives INR 85, and the balance tuition of INR 15 is paid out of the student’s pocket. You can read this blog to understand how SBI exactly calculates the margin money. Using a more realistic case, if the complete expense of studying in the US for two years is INR 50 Lakh, and SBI sanctions INR 40 Lakhs, in that case, INR 10 Lakhs i.e. 20% becomes the margin money. The applicant pays it. All scholarships and fellowships are counted as part of margin money. What Steps Need to be Taken Prior to SBI Loan Disbursement? Before you reach the disbursement stage, you have to apply for the education loan and get your application approved. Here is a brief guide to applying for a student loan: Fill the education loan application form online. (You can do it on our platform.) Get a customised document check-list via email. Submit the documents. (For all the metro cities, GyanDhan picks up the papers from your home. For other cities, we share the branch manager or relationship officer’s details via email.) Verify the documents. (For all the further steps, a nominal processing fee is charged by banks, not GyanDhan) The collateral’s legal evaluation and technical assessment are conducted by the bank’s valuators. Both the applicant and co-applicant are evaluated based on the CIBIL score. The precise loan amount is calculated. If the education loan is approved, the bank offers a sanction letter which is valid for six months. What Happens After the Education Loan Sanction? Both the applicant and the co-applicant physically sign the sanction agreement. Then a loan account is opened under the student’s name. Understanding the terms and conditions attached to SBI’s sanction agreement and formalities of opening a loan account tends to overwhelm students. To ease the way and resolve queries swiftly, GyanDhan’s Relationship Officers are at your back and call. The applicant submits all the original documents of the collateral. This creates a lien or equitable mortgage wherein the borrower deposits the title deed of the property as security in favour of the bank until the loan is fully repaid. This stage of the education loan process is particularly challenging. Assembling property papers knackers even the best of people. We highly recommend taking the aid of our ROs when submitting the documents to smooth over any missteps. Also, Read What is the Education Loan Disbursement Process? After the loan sanction letter formalities are finalized, students relax in the misbelief that the hard part of the loan process is done. It is not. The next stage is equally, if not more, crucial. The disbursement of funds begins now, and it takes place in 3 steps Document Collection for Disbursement - The student arranges documents which act as proof of expenses. The amount the bank disburses hinges upon these documents. Therefore, it is critical to gather all the papers beforehand for incidentals that the bank has to cover. It avoids hassles of reimbursement. List of documents an applicant will need to submit for the student loan disbursal - University’s demand letter with a clear fee structure. In case the student has on-campus housing, the accommodation fee breakup. In case the student opts for off-campus stay, the rent agreement. An estimate of average living costs. It includes food, clothing, study material, gadgets, and so on. A guesstimate of miscellaneous charges. Always provide a clear breakdown encompassing health insurance, study aids, travel costs, and assorted incidentals. Education Loan Disbursement Letter - After the bank has evidence of expenses, it issues a study loan disbursement letter containing the final loan amount to be paid out to the applicant. The disbursement letter has to be signed before disbursal. Actual Disbursement - In the very last step of the education loan disbursement process, SBI pays the tuition fee by transferring the money directly to the university’s account. If the student chose on-campus housing, then that is sent too. For all other expenses such as off-campus accommodation charges and living costs, the funds are transferred to the student’s bank account. The student also has the option to get the funds loaded in a prepaid Forex card, provided that a clear breakdown is submitted upfront before disbursement. Exceptional Case of Pre-Visa Disbursement A common query during the student loan disbursement process is – ‘Will SBI disburse money from an education loan before a visa?’ The answer is yes if mandated. For instance, Canada, Australia and New Zealand expect tuition fee deposit before the student visa is approved. Therefore, SBI offers pre-visa disbursement for all the three countries and sends the tuition directly to the chosen university or the block account as per the requirement. From start to finish, the education loan process spans multiple phases. GyanDhan ensures that an applicant has assistance at every step. With our assigned loan counsellor, you can be assured that the loan application and progress is tracked vigilantly until the very end, i.e., loan disbursement. What are the Benefits of Loan Disbursal in SBI? If you take a look at how the loan amount in SBI Global Ed-vantage scheme is disbursed, the flexibility is apparent. That’s the advantage SBI brings. The living and other expenses are loaded onto the student’s account (if a precise estimate is given during sanctioning) and tuition and additional fees are transferred directly to the college. It even caters to the pre-visa disbursement mandates of certain countries like Germany and Canada. What’s the Advantage of Using the GyanDhan Gateway for Education Loan? When you pick the GyanDhan gateway for a student abroad loan, our loan counsellors put in the effort that otherwise would be required from your side. First, we ease the communication channel between you and the bank. Second, we immediately resolve any queries that inevitably crop up during the confusing procedure. Third, we keep a constant and attentive check on the loan disbursal progress. The perks of availing assistance from an education loan counsellor don’t end here. The SBI loan process is long and prone to hurdles. Our loan officers unearth instant solutions to these snags. We even expedite the transfer of funds through third-parties such as GlobalPay and FlyWire, if needed by your preferred university. Want the education loan disbursement process to take place quickly? Don’t want to manage the tedious task of ensuring that the monthly expenses are disbursed to your forex card or savings account? Use GyanDhan to apply for an SBI education loan. All it takes is a request for a callback!
This is a companion discussion topic for the original entry at https://www.gyandhan.com/blogs/disbursement-process-of-sbi-education-loan