Once you’ve taken a student loan to study abroad, how does the university receive funds for each semester, and what is the process for transferring the money to a foreign bank?
When you take a student loan to study abroad, the process for transferring funds to your university and managing the payments can vary slightly depending on the lender and the country of study. However, the general process is as follows:
1. University Fee Schedule
- The first step is for your university to provide a fee schedule that outlines the payment amounts and deadlines for each semester or academic year. You’ll need to submit this to your lender, who will then approve the disbursement of the loan based on these dates.
2. Loan Disbursement to University
- For most lenders, especially in international education loans, the funds are directly disbursed to the university. Once the loan is sanctioned and the fee schedule is submitted, the lender releases the money as per the agreed-upon payment schedule. This can be done in lump sums or by semester.
3. Transfer to University’s Bank Account
- The lender usually transfers the money to the university’s bank account in the local currency of the university. In some cases, if the lender is partnered with the university, the transaction is streamlined. Otherwise, the funds are converted into the necessary currency before being sent.
4. Foreign Exchange Fees & Charges
- Be aware of foreign exchange fees when the funds are converted to the currency of the university’s country. The lender will manage this conversion, but it’s essential to confirm whether any fees are deducted from the loan amount for this service.
5. Personal Expenses and Living Costs
- If your loan also covers living expenses, the process for receiving these funds may differ. Some lenders provide a portion of the loan directly to your personal account in the foreign country for rent, food, and other daily expenses. In this case, you will need to provide details of your foreign bank account.
6. Subsequent Payments
- After the initial payment, the process typically repeats for each semester, where the university will invoice you, and you’ll forward the invoice to the lender. As long as the loan is active, the lender will continue making payments on your behalf.
7. Monitoring & Documentation
- Keep a close eye on all transactions and documentation, ensuring that payment confirmations are received from both the university and the lender. This ensures transparency and helps resolve any issues if there are delays in the transfer.
This step-by-step process ensures that your tuition fees are covered, and you can focus on your studies without worrying about payment logistics.