Top-up loans are available for parents/students who have already taken out an education loan. Top-up loans can be obtained from the same bank where you previously obtained an educational loan.
What are Top up loans?
The amount supplied to the borrower by a lending institution in addition to the current loan is referred to as a top-up education loan.
When a borrower approaches a lender for financial aid to fund, say, higher education overseas, a specific amount is approved based on various parameters.
If a borrower applies for a secured loan,’ the lending institution will authorize the amount of the loan based on the value of the collateral, which could be land, property, or a fixed deposit, for example.
This loan would receive a top-up loan based on the same/different property.
In the event of an unsecured loan, the sanctioned amount is determined by factors such as academic profile, particularly GRE Score, credit worthiness depending on the applicant’s and co-credit applicant’s history, sources of income, career prospects after completing higher education, and so on.
Money is given to the borrower from this sanctioned amount when the borrower needs it. After reevaluating all previously analyzed elements, a top-up loan on this loan would be offered.
Need for Top-up loans
With life returning to normalcy post the pandemic, students who’d already put off traveling abroad for further education are now continuing their plans.
Currently, the expense of such an education is out of this world. People who have children studying abroad or who want to send their children abroad for studies generally take out education loans to cover the costs of their studies.
As a result, if you need extra cash, you could consider taking out a top-up loan to pay for your study abroad.
With rising costs, it is common to see parents/students struggling financially. In this case, you can take out a top-up loan, over and above the loan already taken.
Furthermore, because the bank already has your information, you will have an easier time getting loan approval. However, authorizing an additional top-up loan depends on the higher loan eligibility.
The bank also considers the outstanding amount you may have as a borrower.
The calculation for Top Up Education Loan
Let’s see this example, as a borrower when you were qualified for Rs 50 lakhs but chose a credit of only Rs 35 lakhs, you also had Rs 15 lakhs available to you.
Furthermore, if you’ve already paid Rs 5 lakhs from the Rs 35 lakhs, your overall eligibility increases – and you are now eligible to obtain a loan of Rs 20 lakhs more.
Institutions offering top-up education loan
Instead of going with your bank, you might check into other choices, including other banks, non-banking finance companies, and education financing firms, which may be able to provide you with a loan at a lower interest rate.
If your current bank refuses to approve the increased money requirement, you could check into alternative banks, NBFCs, and education finance businesses.
Furthermore, if your present bank declines your additional loan application, you could try to transfer your existing loan to a new loan company instead of accepting a new loan from the new bank.
Remember that additional loan approval is subject to the bank’s policies, and not all banks offer top-up loans.
| Institution | Interest Rate | Loan Amount | Notes |
|---|---|---|---|
| EduFund | 8.5% | Up to ₹1 crore | Quick approvals, no collateral needed. |
| State Bank of India (SBI) | 7.95% – 10.55% | Up to ₹1.5 crore | Varies based on collateral. |
| Axis Bank | 9.90% – 15.20% | Up to ₹75 lakhs | Competitive rates with flexible repayment options. |
| ICICI Bank | Starting from 10.25% | Up to ₹2 crore | Offers pre-approved loans based on academic performance. |
| HDFC Credila | Starting from 9.5% | No upper limit | Tailored solutions for higher studies. |
| Punjab National Bank (PNB) | 8.65% – 9.90% | Up to ₹1.5 crore | Processing fees may apply. |
| Bank of Baroda | 10.50% – 11.85% | Varies by program | Offers education loans for domestic and foreign studies. |
Conclusion
Applying for an education loan to help pay for higher education abroad necessitates careful planning.
It requires the borrower to arrive at a precise approximation of the tuition fee and a determined prediction of other expenses, such as the cost of living.
However, a student may need to borrow more funds from a bank to make up the difference due to currency rate fluctuations or fee increases.
