Union Bank of India Education Loan

Union Education - Abroad Studies 

Courses covered:

• Graduation and post-graduation degree courses available at recognized universities
• PG Diploma 
• PhD courses
• Undergraduate
• Certified courses offered like CPA in the USA or CIMA in London, or other such institutes

If your course is not listed above, then also there is no need to worry. Get in touch with your financial officer at WeMakeScholars to know other lenders who provide education loans for your course of study. 

Special Union Education Loan Schemes for Premier Institute Abroad Studies

Under this scheme, Union Bank of India provides education loans with collateral security and education loans without collateral to students for their higher studies in 200 premier universities in popular study-abroad destinations like the USA, Canada, Germany, the UK, etc. The premier university list is prepared by the bank itself.

Further details about this scheme are mentioned below in the table

Acceptable programs:

• Masters
• Post-Graduation Programs 

There are no processing fees for sanctioning education loans under the Special Union Education Loan Scheme, however, the students will have to pay Rs 5,000 to the bank, which will be refunded if the student avails of the loan within 3 months from the date of sanction. 

Additionally, there will be, a legal and valuation charge of Rs 7,500 to Rs 10,000 when students take collateralized education loans eligible under the scheme, the amount of which will have to be paid by the student separately.

*NOTE: If the collateral is offered for the loan below Rs. 40 lacs interest concession is available.

Union Kisan Shiksha Suvidha

Collateral Accepted for Union Kisan Shiksha Suvidha:

• Generally, liquid securities like FD, government bonds, LIC Policies, and Immovable properties like houses, flats, and non-agricultural land are considered collaterals. However, for this scheme, agricultural land can be pledged with the Union Bank of India as security, to take collateralized education loans. As per the following conditions:
• Agricultural land can be pledged only in states where it is accepted as collateral and is as per the bank’s conditions.
• Agricultural land should have proper boundaries and be easily marketable.

Note: Union Bank requires the utilization of a minimum of 20% of the sanctioned loan amount, and failure to comply may result in consequences for the applicant.

Union Education - Inland studies 

Courses covered under Union Education India

• Graduation / post-graduation / diploma courses from recognized universities
• Technical/ Professional / management courses
• PhD courses

Special Union Education Loan Scheme for Premier Medical Institutes  

*NOTE

If the collateral is offered for the loan below Rs. 40.00 lacs, an interest concession is available.

Education loan under the Special Union Education Loan Scheme for Premier Medical Institutes is offered by Union Bank of India only for selected prime colleges & universities in India.

Special Scheme for students of Premier Management & Technical Institutes Inland Tier I

*NOTE 

There are no processing fees for taking an education loan under the Special Scheme for students of Premier Management & Technical Institutes Inland Tier I. However, The rate of interest and other loan parameters vary according to the course like MBA programs for working executives, PG programs in management for working executives, and e-post graduate offered by different educational institutions.

Special Scheme for Students of Premier Management & Technical Institutes (Tier-II)

*NOTE

There are no processing fees to take education loans under the Special Scheme for students of Premier Management & Technical Institutes (Tier-II) but, the rate of interest for this scheme is floating.

Union Kisan Shiksha Suvidha

Note: Union Bank requires the utilization of a minimum of 20% of the sanctioned loan amount, and failure to comply may result in consequences for the applicant.

On the surface level, the Union Bank education loan scheme might seem like a quite decent product considering it is offered by a public bank. But things don't run as smoothly as they seem at UB. Here are a few major issues many students have faced while trying to get their education loan sanctioned from Union Bank. 

Issue 1: Unreasonable Loan Margin

As you have read about the Loan Margin offered by Union Bank in the above sections, you can see that the standard they offer is 15% which seems pretty reasonable, considering it is the same in almost all public banks, doesn't it?

For you to understand a little better, let's start by understanding what exactly is a loan margin.

A loan margin is the student's contribution to meet the total requirement of the amount needed for your education abroad. To put it simply, assume that you need 80 Lakhs to pursue your education at some university in the USA (Including all costs such as tuition fees, living expenses, and other miscellaneous costs). These costs are then verified by the bank using official proof of costs. After that, the calculations are made according to the loan margin (which the student has to pay to the bank) and you are given an estimation. So considering the loan margin is 15%, the bank can give up to 68 Lakhs to the student and the student has to arrange the 12 Lakhs by themselves. 

Many students would naturally assume that I don't need 80 Lakhs 68 Lakhs is more than enough for me to make it there. But what students fail to understand is that for the 68 lakhs to be disbursed into your account you will have to pay the bank the 12 Lakhs first. Otherwise, the disbursement won't happen. 

Coming to the main issue with the Union Bank Unsecured Education Loan product,

If you go through with their unsecured education loan product, you can receive a maximum loan amount of up to 40 Lakhs. As we previously assumed that the total loan amount the student would require to study abroad is 80 Lakhs, this brings our loan margin up to a whopping 50%. Let's understand this better with a table. 

As you can see when you consider getting an unsecured loan from Union Bank of 40 Lakhs with your total requirement being 80 Lakhs, you would have to first arrange the 40 Lakhs all by yourself for the bank to contribute their part of the deal. A lot of people might think that 80 Lakhs might be a huge number and that you won't require as much. However, UB only offers unsecured loans to the universities on their prime list and most of the universities on their prime list are US-based universities. The average i20 amount is around 40 Lakhs. Considering that students want to pursue a 2-year course. The costs add up to 80 Lakhs. 

Issue 2: No Previsa disbursement

The students who want to pursue their higher education abroad have certain financial conditions to fulfill before they are issued a visa. They need to pay the first year fees and make specific deposits such as:

• Canada: First year tuition and a GIC certificate guaranteeing an investment will earn a fixed interest rate for a certain period.
• Germany: Payment for a blocked account.
• Australia: Tuition fees for the first year of study and accommodation expenses in the first year of residence.
• UK: Deposit for Confirmation of Acceptance for Studies (CAS) deposit.

However, students are facing problems in dealing with Union Bank because they do not disburse the loans pre-visa and the students are required to have the amount disbursed to show all expenses before their visa is approved. What is the point of an education loan if the students don't aren't even able to apply for a VISA? Thus, students are no longer taking their loans with Union Bank and are instead seeking other banking institutions. For Australia, a loan from Union Bank can lead to visa rejection as well. 

Issue 3: Not getting moratorium period

Besides, of course, there are so many other cases like this students who don’t get a moratorium period for the non-collateral loan and have to pay full interest from the very first day.

So to summarize these are our recommendations if you are planning to get your education loan through Union Bank

Students planning to study in Germany, Canada, the UK or Australia should avoid taking a loan from Union Bank because they do not release money to any student before the visa is processed. For Australia, the student can be denied a visa.

If the student is planning to go to the USA, a 40 lakh non-collateral loan from Union Bank has a high margin requirement and In the case of larger loan amounts, security is required.

However, if you need to pledge an asset as security, other banks may offer cheaper rates even though their interest rates are slightly higher than Union Bank. However, there are other options which are available in which 70-80 lakh loans can be availed without pledging any asset.

The application process to take an education loan from the Union Bank of India is

Offline application process

• Visit the nearest Union Bank of India branch, and ask for an education loan from the loan officer.
• He will give you a list of documents to be submitted to the bank to get the education loan along with a loan application form.
• Visit the bank again to submit all the mentioned documents and application forms. The loan process will start only if you submit all the documents.

Online application process via WeMakeScholars

• Step 1 Reach out to WeMakeScholars by Requesting a callback or filling a common application form
• Step 2 Give all your education loan details to your assigned financial officer over a call

After analyzing your loan details, your financial officer will suggest and connect you with suitable lenders.

• Step 3 Choose the best lender as per your suitability and tell your financial officer.
• Step 4 According to the document checklist provided by your financial officer, submit all the documents in the bank, to start your education loan process.
• Step 5 Sit back and relax, your financial officer will take care of everything else, if required take follow ups from them from time to time.
• Step 6 Collect your education loan sanction letter from your lender bank within 15 -20 days.

The application process is not as simple as it looks if you go directly to the banks to get your education loan sanctioned. Following is the list of issues if you go directly to the banks:

• No particular list of required documents
• Inconvenience of going to the bank multiple times
• Delay in the process
• Improper customer care channels
• Unavailability of correct information
• Unawareness about education loan eligibility and coverage

But, why get caught up in the hustle and bustle when you can directly skip to the good part with WeMakeScholars? With years of experience, after processing thousand’s of loan files we proudly call ourselves, education loan experts and here are the reasons why:-

• Professional guidance - We connect you to the best lenders as per your eligibility and guide you throughout your loan sanctioning process. 
• Support - Our financial officers, if required, negotiate with the Union Bank of India team to get the best interest rate deal for your loan. 
• Online application process - We empower you to apply and get your education loan sanctioned via the online process.
• Short processing time - With us, your loan would be processed within 7 days from private banks and NBFCs, and it would take only 15-20 days to get your loan sanctioned from a public bank after your documents are submitted.
• Round-the-clock availability  - We are available on all working days from 9 AM to 9 PM to update and assist you at any time during your online loan application process.
• Benefit in Tax - We make sure that you save maximum tax by suggesting ways through the tax saving schemes of the government of India.
• Cashback offer - You can get up to Rs 3,000 as a cashback at the time of your disbursement from us. 

Union Bank of India grants a moratorium period of the course duration plus upto 12 months. And the total repayment duration can last a maximum of upto 15 years after the moratorium period ends.

If suppose a student has taken a non-collateralized education loan of Rs 30 lacs for their higher education in India at a 12% rate of interest and chose to repay it in 10 years, then their repayment schedule will be as follows

Step up repayment

Generally, in most banks if your repayment period starts they check your outstanding loan amount and they divide it by the number of months in your repayment tenure and you are given an EMI Schedule which is constant throughout. 

But at Union Bank, under their step-up repayment policy the student can choose to pay a lower EMI for the first three years of the repayment tenure after which it gets spiked up to the regular EMI after the student becomes financially stable to start paying the EMIs

TIP - While repaying the last EMI, don’t forget to pay around Rs 500-1000 additionally, to avoid any written off scores in your CIBIL, because the process of loan closure takes at least 1 day to process.

When you process your loan through WeMakeScholars, we make sure to offer you post-disbursement assistance till you are done paying your last EMI. 

PADHO PARDESH SCHEME

Padho Pardesh is an interest subsidy scheme launched and regulated by the Ministry of Minority Affairs to  benefit students from religious minority communities like Muslims,  Sikhs, Buddhists, Christians, Jains, and Zoroastrians to motivate them to take education loans for their higher education abroad. Under this scheme:

• Students belonging to religious minority communities need not pay any interest to their lender bank in the moratorium period.
• The benefits are only available till the moratorium period lasts.
• Only Indian students are benefited

Eligibility criteria take benefit under Padho Pardesh Scheme:

• Students should have secured admission in either Masters, M. Phil or Ph.D. courses abroad.
• Gross family income of the student should not be more than Rs.6 lacs per annum.

Note: The scheme is currently closed and hence no new beneficiaries can enroll. However, the beneficiaries before the 31st of march will continue to receive subsidies as usual

 Dr. Ambedkar Central Sector Scheme of Interest Subsidy

Dr. Ambedkar Central Sector Scheme of Interest Subsidy was launched by the Ministry of Social Justice & Empowerment to provide financial assistance to study abroad aspirants belonging to other backward classes (OBC) & Economically Backward Classes (EBC) of society. As per the scheme:

• Students do not have to pay any interest against their education loan within their moratorium period.
• To be declared eligible for Dr. Ambedkar Central Sector Scheme of Interest Subsidy, students must:

Submit income proof either of ITR/ Form-16/ certificate issued by authorized officers appointed by the respective State Governments

• Secure admission to higher studies abroad in M. Phil, Masters or Ph.D. levels courses
• Belong to the other backward classes (OBC) & Economically Backward Classes (EBC) with an annual gross family income not exceeding Rs. 8 lacs respectively.

CENTRAL GOVERNMENT INTEREST SUBSIDY SCHEME (CSIS)

The HRD Ministry, GOI launched this interest subsidy scheme on educational loans for students belonging to Economically Weaker Sections (EWS) candidates, to pursue their higher education in India.  Eligible under the scheme:

• There is no need for collateral or third-party guarantor to get benefited
• Students can take interest subsidy benefits of amounts only up to Rs 7.5 lacs, even if the sanctioned loan amount is more. 
• The gross parental or family income of the applicant should not be more than Rs 4.5 lacs

To avail the benefit of the Central Government Interest Subsidy Scheme (CSIS) a student should:

• Secure admission after class 12th, in professional/technical courses approved by NAAC-accredited Institutions, NBA, or CFTs.
• Students should provide an income certificate issued by some appointed authority
• Parental income of students should not be more than Rs 4.5 lacs