Know all About Disbursement of Living expenses

Education loan disbursement is one of the lesser-discussed aspects of the process of getting an education loan for studies abroad. A lot of education loan applicants may have experienced the agony of not being able to understand the exact procedure followed by NBFCs and government banks regarding the disbursement of living expenses.

Although education loan disbursement is the subject of Loanflix’s 28th episode, many students are still confused about the process of disbursement of living expenses. This is especially applicable to students who are planning to fund their higher education in Canada and Germany with the help of an education loan for studies abroad. They are in the dark about how their GIC and blocked account expenses are going to be catered for by the education loan for studies abroad.

The video embedded below will give you a better understanding of the entire disbursement process for living expenses.

When students apply for an education loan for studies abroad with government banks, most of them have some clarity regarding the disbursement of their tuition fee component. All government banks disburse the tuition fees according to the requirements set by the university, i.e, either directly to the university’s account or via third-party services. However, a lot of students are still unsure about the disbursement process for living expenses from the education loan for studies abroad by government banks.

Many students are under the impression that most government banks transfer their living expenses also to the university only. If you are also thinking along the same lines, here is an interesting fact for you, this is a myth.

The transfer protocol for living expenses followed by prominent government banks is different. Living expenses are never sent to universities. On the contrary, it is deposited into an FTC or a Foreign Travel Card.

When students directly approach government banks for an education loan for studies abroad, they are often misguided about this particular part of the education loan for studies abroad disbursement process. It mostly happens because a lot of bank officials are themselves not clear on their bank’s policies regarding the education loan for studies abroad disbursement process. If you are in a similar situation, do not hesitate to request a callback with the WeMakeScholars financial team for assistance.

When it comes to unsecured education loans, the disbursement process for living expenses followed by NBFCs and Private banks is that they disburse the amount required as living expenses while studying abroad according to the preference of the student. 

An FTC or a Foreign Travel Card is issued by most prominent government banks such as the SBI, Bank of Baroda, etc. for students to withdraw their living expenses while studying abroad. It is common knowledge that an education loan for studies abroad is divided into two different components; tuition fees and living expenses. Out of these two, the disbursement of tuition fees is done as explained previously. 

The living expenses are loaded into the FTC. This card is issued to students for one single reason. It takes time for students to open their own savings account as soon as they land in a foreign country for their higher studies. Hence, in order to make it easy for them to receive their living expenses while studying abroad, government banks issue the FTC.

Students can use this card to withdraw their living expenses from their education loan for studies abroad in India for the first three months of their stay. Post this period, they will be required to open a bank account. Once the details of this account are sent to their lending banks in India, the living expenses will be transferred to their bank account abroad for the rest of their stay.

Students who plan to pursue higher education in countries like Germany and Canada must deposit their entire year’s living expenses into a savings account. The savings account is referred to as a GIC (Guaranteed Investment Certificate) account in Canada and a Blocked account in Germany. Episodes 18 and 19 of the Loanflix web series explain the complete process of opening these accounts in vivid detail. So be sure to watch them.

Now, the students who wish to study in Canada and Germany are required to open their GIC and blocked accounts respectively before commencing their visa process. One of the biggest hurdles faced by such students is getting their lending banks to approve a pre-visa disbursement of their living expenses for this very purpose. As of today, all government banks are required to approve this disbursement if it is a mandatory requirement for students to fulfil any financial obligations in order to get their student visas approved.

So, if your loan manager is asking for your student visa as proof to approve the disbursement of living expenses, do keep in mind that this is not true. All government banks have an obligation to transfer the required funds. 

Government banks are required to follow a separate protocol while disbursing the living expenses for GIC and blocked accounts for students studying in Canada or Germany, respectively.

If you are having difficulty getting your pre-visa disbursement, request a callback with the WeMakeScholars team for a quicker resolution of your situation.

Thousands of students apply for an education loan for studies abroad in India every year. Out of these, only a few hundred students actually make it to the country of their choice for higher education. One of the major reasons why these students miss out is the lack of awareness about how to fund their higher studies abroad. With different web series such as Loanflix and Loanflix Inshorts, the WeMakeScholars team is trying to make a change in this pattern. If you are looking for guidance and assistance regarding your education loan process, do feel free to register a callback and the WeMakeScholars team will reach out to you. The next article will elaborate on the education loan for studies abroad interest rates set by various lenders in India. So keep reading this part of our website.

Note: WeMakeScholars is an organization funded and supported by the Government of India that focuses on International Education finance. We are associated with 14+ public/Pvt banks/ NBFCs in India and help you get the best abroad education loan matching your profile. As this initiative is under the Digital India campaign, it’s free of cost. The organization has vast experience dealing with students going to various abroad education destinations like the US, Canada, UK, Australia, Germany, Sweden, Italy, China, France among others