Federal Bank Education Loan for Abroad Studies

Getting an education loan from Federal Bank makes sense for two reasons; banking in India has been in steady growth for the past years and private sector banks have shown significant growth to be the market shareholders, according to the RBI’s Report on Trend and Progress of Banking in India 2021 - 22. Federal Bank is a prominent private-sector bank with 1.40 Crore customers. Regarding education loans, the bank has specialized offerings under its education loan schemes to help students study abroad.

Additionally, accessibility is a great factor favoring Federal Bank for students. Most of its branches out of the total 1,282 are located in semi-urban areas (685), followed by rural (233), metro (207), and urban (157) areas. These are good reasons to think of applying for an education loan from the Federal Bank to study abroad. 

Overview of Federal Bank Education Loans for Abroad Studies

Before we dive deep, an overview of Federal Bank education loans to study abroad will give you a big picture to organize and connect the data in the blog sections. Federal Bank education loans are mainly secured education loans, and unsecured loans are limited to a small amount (see the difference between secured and unsecured education loans if you are new to the terms). 

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  For study-abroad education loans from Federal Bank, no collateral security is required for amounts up to INR 4 Lakhs
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  A third-party guarantee or collateral security is required for loans up to INR 7.5 Lakhs
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  For loan amounts above INR 7.5 Lakhs, collateral security with a stipulated margin is required, which is 10% - 50% for various collaterals

See the table below and check whether the education loan products by the Federal Bank align with your study abroad goals:

If you are satisfied with the terms of Federal Bank education loans, let’s explore the education loan schemes by Federal Bank.

Federal Bank Loan Schemes for Abroad Studies

Federal Bank education loan for abroad studies are provided through two schemes, namely the Special Vidya Loan and the Federal Career Solutions Loan. Details of Federal Bank loan schemes are given below:

Special Vidya Loan:

In the Special Vidya Scheme, education loans from the Federal Bank can be availed for higher studies in India and abroad. Take note of eligible courses; you may study degree, diploma, or any course except vocational training and skill development study courses. Other features of the scheme include the following:

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  Maximum loan amount: INR 20 Lakhs
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  Interest repayment during the moratorium period is not mandatory
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  The allowed moratorium period is 15 years
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  Loan tenure is up to 15 years after the moratorium period
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  The guardian for the loan must be the student’s parent, sibling, or spouse

Federal Career Solutions Loan:

Federal Career Solutions Loan scheme helps you to fund higher education for courses such as pilot training, skill up gradation, diploma or degree courses offered in aviation, hospitality and travel management, executive development, etc.

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  Maximum amount: INR 1 Cr, or up to 75% of the estimated cost of the study
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  Interest repayment during the moratorium period is mandatory 
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  The moratorium period is the course period plus 6 months or 3 months after getting a job, whichever is earlier
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  The loan tenure is up to 10 years after the moratorium period
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  The guardian can be parents, siblings, spouse, or parents-in-law

Federal Bank Education Loan Schemes for Studies in India

Federal Bank offers various education loan schemes to support students pursuing higher education in India. These schemes are designed to help students manage their educational expenses like tuition fees, examination fees, accommodation, and other related expenses. Given below are the federal bank student loan schemes for studies in India.

Special Vidya Loan:

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  Purpose: The aim of this scheme is to finance higher education in India, covering courses from recognized institutions.
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  Loan Amount: Up to INR 10 lakhs for studies in India
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  Interest Rate: Starts from 11.95% and it varies based on the amount and type of course
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  Repayment Period: Up to 15 years
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  Moratorium Period: Course duration + 12 months
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  Accepted co-applicant: Parents/guardians
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  Loan Margin: up to 5% loan margin on loans above 4 lakhs

Federal Career Solution loan:

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  Loan Amount: Up to INR 70 lakhs

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  Interest Rate: Starts from 11.95%

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  Repayment Period: Up to 10 years
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  Moratorium Period: Course duration + 6 months or 3 months after getting a job
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  Accepted co-applicant: Parent, Parents-in –law, Spouse, Guardian

Fed Scholars (without collateral):

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  Loan Amount: Up to 20 lacs
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  Interest Rate: Starts from 11.95%
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  Repayment Period: Up to 15 years
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  Moratorium Period: Course duration + 12 months 
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  Accepted co-applicant: Parent, Parents-in-law, Spouse, Guardian, Close relatives 

Federal Bank Education Loan Interest Rate and Maximum Amount

From June 2023, the Federal Bank education loan interest rate is 12.55% onwards. The interest rate is calculated as the sum of the Repo rate and Spread. The repo rate is the interest rate determined by the RBI to lend money, and Spread is decided by the individual banks based on the difference in the interest rate for deposits and lending.

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  Federal Bank education loan interest rate is floating, meaning that it is subject to market changes
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  The current repo rate is 6.50% and Spread 6.05%, making the effecting interest rate on Federal Bank education loans 12.55%
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  The Marginal Cost of Lending Rate (MCLR) for Federal Bank is 9.30% per year. It means that the maximum possible lower interest rate for Federal Bank education loans is 9.30%

Federal Bank Education Loan EMI Calculator

Before applying for an education loan, it is important to know how much EMI you would be liable to pay each month. Federal Bank offers an online EMI calculator on its official website that will help you to make informed decisions. This tool allows you to calculate EMIs based on different loan amounts, interest rates, and loan repayment tenures. It will help you to determine how much you should borrow so that you can pay your EMIs according to your budget. 

Eligibility Criteria for Federal Bank Education Loans

Federal Bank has set eligibility requirements for education loan schemes to streamline the administrative burdens and manage the risks associated with each application. The eligibility criteria for education loans to study abroad are slightly different for Federal Bank loan schemes, as you can see in the sections below: 

Eligibility Criteria for Special Vidya Loan:

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  The student should be an Indian national
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  Secure admission to professional or technical courses through an entrance test or a selection process
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  The course and institution of study should have the necessary approval or recognition by the government and prominent organizations
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  The course certificate should be issued by the university, govt. dept, or a body formed by the enactment of parliament
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  Vocational training and skill development study courses will not be eligible

Eligibility Criteria for Federal Career Solutions Loan:

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  The student should be an Indian citizen
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  Show the proof of admission to the proposed course
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  Age of the student must be between 18 - 45 years
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  The net worth must be a minimum of double the loan amount. The guarantor’s collateral can also be added
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  The age of the guardian must not cross 60 during the currency of the loan (if post-retirement income justifies there is relaxation). If the age crosses 60, an additional guarantor with the same eligibility is needed

Documents Required to Apply for Federal Bank Education Loan

Documentation is crucial in your education loan application as the documents prove your credibility. The lender evaluates the documents and decides your eligibility for an education loan. Here is the concise list of documents required to apply for an education loan from Federal Bank:

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  Proof of identity - passport, voter ID card, driving license, or PAN card
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  Proof of address - ration card, bills (telephone, electricity, gas, etc.), lease agreement, passport, trade license, sales tax certificate, etc. 
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  Photograph of applicant and guardian
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  Mark list of qualifying examinations
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  Income proof of guardian
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  Details of admissible course-related expenses
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  Evidence for selection to the course of study

Expenses Covered by Federal Bank Education Loan

As the major point of taking an education loan is covering your expenses, see the expenses covered by the Federal Bank education loan and decide whether it satisfies you or not. The funds for studies are released initially for admission expenses, followed by regular disbursements on each semester of study.

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  Study-related fees: college school, hostel, tuition, examination, library, and lab
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  Purchase related to study: books, equipment, instruments, uniform, computer (if essential for the course)
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  Travel expenses
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  Expenses for study tours, project work, thesis, etc.
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  Other bills: caution deposit, the amount payable towards building fund, refundable deposit, etc., supported by bills or receipts but cannot exceed 10% of the tuition fee

Application Process of Federal Bank Education Loan

You can apply online or offline for education loans to study abroad. To apply online, you have two options: first, visit the official website of Federal Bank and redirect to the contact section to get in touch with the bank via email or a phone call. The second option is applying for an education loan via the Vidya Lakshmi portal.

To apply offline, you can visit the nearest Federal Bank branch with the required documents. The bank will verify your application and let you know the next steps if the application is accepted. 

In short, Federal Bank can be your companion for education loans of its affordable loan products. However, if your aim is finding the most affordable education loan, your exploration must not be limited to the Federal Bank. Consider the following situations:

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  What if you don’t have collateral to pledge? 
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  What if the Federal Bank does not accept your country or course of study? 
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  What to do if you want an education loan with no margin money, unlike the Federal Bank education loan?

As a matter of fact, the best education loan for your profile can be found only after a series of explorations, filterings, and selections based on various factors such as the loan amount, interest rate, margin money, collateral requirement, etc. In your exploration, consider taking help from GyanDhan, India’s first study abroad marketplace for students. Here’s an aid to check your education loan eligibility right now.

Federal Bank Loan Margin Calculation

Federal Bank student loan requires the borrower to pay the margin money for the education loan. Below are the margin money percentages depending on the loan amount. 

Federal Bank Education Loan Insurance

Federal Bank offers students the option to include education loan insurance by paying an insurance premium which generally amounts to 1-2% of the loan amount. In case if applicant meets an unforeseen event that results in an inability to repay the loan, this insurance safeguards parents or co-applicants. Moreover, it ensures that your dependents are safe, helping you to focus on your education.

Frequently Asked Questions