All you need to know about Education Loan Transfer in India

While deciding on a loan provider, it is very important that you conduct thorough research on their terms and conditions regarding education loans abroad. 

But what if you end up borrowing an education loan from a lender whose interest rates are very high or whose education loan repayment policies are not convenient for you? If you are stuck in such a situation, don't worry because there is a way out. You can transfer your education loan from one bank to another, this process is known as an education loan transfer or education loan takeover.

This article aims to give you complete information about an education loan transfer or takeover and when you should consider switching your education loan lender.

Education loan transfer includes an extended process of transferring debt from one bank to another. Most students prefer education loan transfer from one bank to another because of the higher interest rates, unfriendly repayment policy of the bank, etc. 

Note: The minimum loan balance required to transfer an education loan from one bank to another is 10 lakh rupees. Banks won't prefer to take up your case if it's anything less than that because they won't benefit from the transfer.

There are basically 4 types of Education Loan transfers/takeovers:

1. Loan transfer from secured to secured type of loan: In case of secured to secured loan transfer, wherein your existing loan is with collateral, the new loan will also have a collateral security. In such case, you will not have collateral originals and hence the process will be done on xerox papers.
2. Loan transfer from unsecured to secured type of loan: Either due to time constraints or unavailability of mandatory collateral papers, most people consider an unsecured education loan from private banks or NBFCs. During the time of repayment, students realize their loan is very costly. With collateral security, students get a lower rate of interest in Government Banks.
3. Loan transfer from unsecured to unsecured type of loan: In the case of unsecured to unsecured transfer, it is more likely to take a loan from NBFCs and they prefer moving to a private bank because of the certain benefits like 80E, which will help them save tax on the interest.
4. Loan transfer from secured to unsecured type of loan: This is very rare as this includes giving upon lower interest rates for higher interest rates. This happens mostly when the collateral owner is willing to sell off the property and get released from the loan. 

Here’s how an education loan transfer from one bank to another works. Let’s assume that you took an abroad education loan from an NBFC because of their shorter processing time and later on you are not satisfied with their education loan repayment policy and would like to opt for a student loan refinance from a public bank.

In such a situation, you may apply for an education loan transfer from your NBFC to a nationalized bank. Here’s how it can be done.

1. Once you decide to opt for an education loan transfer, your old lender gives you a statement of the pending loan amount to be repaid.
2. This statement has to be submitted to the bank providing the student loan refinance.
3. Once the new bank receives this statement, they begin your education loan process as usual.
4. Once your loan is sanctioned, the new bank issues a cheque with which you can clear your pending dues with your former lender.

It is to be noted that when an unsecured education loan from a private lender is being transferred to a public bank, the collateral must be pledged if the loan amount that is being transferred is more than 7.5 lakhs. 

Note: You can use the Loan takeover calculator for a detailed understanding of your case.  

A loan applicant may opt for an education loan transfer from one bank to another only when-

Primary conditions:

• There are no more disbursements to be taken from their current lender, i.e students cannot demand any more disbursements on the remaining loan amount or borrow any money from the old lender.
• Repayment of your old loan must be started in the form of EMI and should be regular to avoid a low CIBIL score in the future.

Other terms

• As per the bank-laid norms, if your current loan is collateral-based, the new bank will take over your collateral under possession until the loan is repaid completely with interest.
• As per the bank-laid norms, if your loan is unsecured and you are transferring it to a Government Bank, you would need to arrange valuable collateral securities to get the loan against it. There will be no loan margin as the new bank will pay off the pending dues to your old bank and the loan amount on that collateral will be 100%.

The rest of the terms and conditions are similar to those of a regular abroad education loan. If you are still facing any doubt regarding your eligibility for a takeover loan, Please feel free to request our financial team for a callback, as our team has special expertise in processing huge volumes of education loan transfers. Our team will respond at the earliest.

1. Completely filled-in Loan Application Form
2. 2 passport-size photographs
3. PAN Card of the student and Parent/ Guardian / other co-borrower
4. Aadhaar Card of the student and Parent/ Guardian/ other co-borrower
5. Proof of Identity (Driving Licence/Passport/Aadhaar/ any other acceptable photo identity as per KYC norms)
6. Proof of Residence (Driving Licence/Passport/Electricity bill/Telephone bill)
7. bank account statement of the Student/Co-borrower/Guarantor, for the last 6 months
8. IT return/ IT assessment order, pertaining to previous 2 years, of Parent/ Guardian/ other co-borrower (if IT Payee)
9. Brief statement of assets & liabilities of Parent/ Guardian/ other co-borrower
10. Proof of Income (i.e. salary slips/ Form 16) of Parent/ Guardian/ other co-borrower

Student

• Photo ID proof
• Proof of residence
• Passport sized photograph
• Proof of admission
• Fee structure document
• Salary slips of experienced candidates
• Visa copy
• Academic documents

Co-applicant

• Photo ID proof
• Proof of residence
• Passport sized photograph
• Income-related documents

Collateral documents

• Property documents
• FD documents

A takeover of your education loan by another lender brings with it a lot of financial benefits. 

• Lesser interest rates: If you are switching to a government bank from a private lender, you are in for a treat! The biggest takeaway is that your education loan interest rate will be considerably lower than what would have been had you chosen to continue with your private lender.
• Eligibility for education loan subsidy under government schemes: If you qualify for an education loan interest subsidy under several government schemes, you can avail it when you switch your lender from a private one to a government lender. Watch the 13th episode of the YouTube web series, Loanflix to get a deeper understanding of these schemes.
• Longer education loan repayment tenure: Most NBFCs have limited the education loan repayment tenure to ten years. Public banks allow students to avail of a total of 15 years as repayment tenure. The other way to look at it is that the longer the repayment period, the thinner the initial EMIs.

• If you transfer an education loan along with collateral, the new bank will replace the existing collateral.
• On the other hand, if you are looking to transfer non-collateral loans to a particular public bank that usually offers loans on the basis of collateral, you will have to provide valuable collateral to that specific public bank. The collateral will not be secured by any loan margin and the loan amount will be 100%.
• Moving student loans from bank to bank is often beneficial due to low interest rates and improved repayment options. However, to avoid losses, consider looking into past loan transfer trends before making a decision.

Yes, but you need to let the bank know and submit the relevant documents. Now you may be wondering, “Will I have to pay back the loan amounts if I change universities?” Well, the short answer is no, you won’t have to pay back any loan amounts if you change universities. However, to benefit from the most recent changes, you need to talk to your bank. In addition, you need to submit the relevant documents, such as the letter of acceptance from your new school, any scholarships you have won, and any other records specified by your bank.

How long will it take for the bank to approve my request to switch universities?

Depending on your bank's internal processes and the complexity of your case, the amount of time it will take to approve your request to transfer universities may vary. Contact your bank early to get a rough estimate.

1. Zero-Processing Fee: For the loan takeover cases, WeMakeScholars has secured approval from all the banks and NBFCs for the Zero Processing Fee. This means if you transfer your loan via WemakeScholars either there is no processing fee or it is 100% refundable.
2. Complete assistance for students abroad: In most situations, students studying abroad seek an education loan transfer in India. Applying via WeMakeScholars can help students connect with our financial officers via WhatsApp calls or through other digital modes as well. The candidate’s parents will be allowed to carry out further documentation if in India and will receive assistance from the student's dedicated financial officer at each and every step. In cases where the candidate and the candidate’s parents are both abroad, the process can be done by involving a local guardian.
3. No Pre-Payment Penalty: There will be no pre-payment penalty at any of the banks. This means that even if you procure a bulk payment and ought to close the loan on an immediate basis or within 6 months, there will be no charges for pre-closing the loan.
   Along with providing support for regular overseas education loans, our financial officers also help you with student loan transfers. Our team has processed close to 20,000 student loan applications in the past year. No one in the market has as much expertise as our team in the market, due to the large number of loan applications processed by us.

Our team's expertise is built on the knowledge acquired from processing huge volumes of education loan applications every year. So, if you are someone who is stuck with the wrong lender who is charging you a bomb in the name of interest, do approach our team to help you get an education loan transferred to a bank that charges a lower interest rate.

We hope this article helps you solve your doubts regarding education loan transfers. For any further assistance, feel free to contact the financial team at WeMakeScholars.