The Complete Guide to Education Loan Insurance

Posted date: 17 Oct 2022

For many, taking out an international student loan to pay for higher education may seem like assuming a great financial burden. Most students who consider using a study abroad loan to pay for their higher education abroad are frequently worried about the repayment process. Many of them are especially worried about who would pay back the student debt in the event of an unforeseen circumstance. In the case of an unfortunate event involving the loan borrowers, co-applicants are responsible for repaying the overseas education loan. The co-applicants of the impacted education loan borrower may be much relieved if there is education loan insurance in place.

Uncompleted information can be harmful! This is especially true in regards to an international student loan application process, which the majority of people interested in higher education are not fully aware of. Many students believe that obtaining loan insurance is required for those applying for loans. Many of them change their minds about taking out an international student loan simply by considering the whole cost of their loan insurance. Have you ever considered how loan insurance can be essential to the overall borrowing process for student loans? This article seeks to dispel certain misconceptions about it.

Lenders have different requirements for education loan insurance. It is not required to purchase education loan insurance in addition to the study abroad loan when applying for a government bank's international education loan. Most government banks let applicants choose whether to buy loan insurance as part of any of their programs for providing overseas education loan for higher education.

All applicants for an education loan without collateral must buy education loan insurance when it comes to the process for NBFCs and private banks offering loans for study abroad. This is a condition that all students who apply for an education loan without collateral must meet. Since none of them need students to put up any collateral security in exchange for an overseas study loan, this is the main reason NBFCs insist on the purchase of loan insurance. 

What are the Advantages of Purchasing Education Loan Insurance?

Any sort of loan implies assuming a significant financial burden. In the case of a loan program for international education, this is particularly true. Until and unless the student achieves financial independence, the financial responsibility of repaying the education loan automatically rests on the co-applicant/co-borrower when students apply for one to pay for their international studies. The obligation to repay the whole education debt must be taken on by the co-borrower in the wake of an event like the loan applicant's demise.

Students receive an additional 0.5 percent interest rate reduction on their school loans if they acquire the loan insurance plan at the time they apply for their student loans.

Many applicants would be relieved to receive an interest rate waiver given the expense of the current educational loan application process. The loan insurance program not only lessens the burden of your student loan payments, but it also helps to lower the overall interest rate.

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GSP Admin