Let banks vet and fund your foreign education dream

6 January 2016

Since the first week of December, a large number of students have been deported from US universities. While the reason for deportation is not clear, the only thing common among all these students is that they had opted for low profile universities like Silicon Valley University and NorthWestern Polytechnic University. This is not the first time Indian students gone to study abroad have faced deportation. For example, in 2011, 6,500 Indian students were deported from Australia though many of them were enrolled in accredited colleges.

With admission to a foreign university and getting a visa becoming easier, the number of students going abroad has tripled over the last two decades. And as a corollary, hundreds of unscrupulous edu-ventures have popped up to meet this demand. And students are landing in trouble. While countries have been waking up to the problem and streamlining their processes, for a student in a foreign land it can be a rude shock. They not only lose money in the form of fees, dealing with the authorities can be distressing

The only solution to avoid this is better due diligence. It goes without saying that you, at your individual capacity, should investigate before enrolling. But your resources and knowledge may be limited. So, you can take professional help. A simple way out is to approach a bank and see if they are willing to fund the full course fee and living expenses. The bank won't sanction a loan unless it is sure of recovering its money, which is only possible if you have signed up for a good college whose degree has a market value and can get you employed.

As part of a bank's NPA, education loans are right there on top. This makes lenders extremely cautious in their credit assessment of education loans. The country of study, the level of study, the course chosen by the student, the university the institute is affiliated to and it's accreditations, the value of the degree earned and placement records are some of the points considered to arrive at the lending decision.

Accreditations & Affiliations

The job can be tedious for an individual as each country has its own educational system, apart from different university and institute structures. However, the Indian Bank Association (IBA) has a pre-vetted list of 1,100 accredited institutions. The list is not limited to these institutes only. Individual lenders have their own and more extensive list based on the due diligence done on a case-to-case basis. Plus, there are many regulatory, compliance or legal issues related to particular institutes, which get flagged periodically. Moreover, for MBA courses, there are more than one accreditation agency. The lenders are up to date with all these data, which may not be possible at individual level.

"Typically each university has multiple courses offered by various 'schools' or 'departments'. Even if they are under the same university or the same institute, these courses and departments/schools have their own admission nuances since they have lots of operational autonomy. It's therefore, important to evaluate each case separately," says Ajay Bohora, cofounder, HDFC Credila Financial Services, an HDFC subsidiary. Immigration Policy Immigration laws too are dynamic and complex.

Among the students deported, there were many who had flouted visa norms. One of the critical points in a banker's checklist is the prevalent, and potential, trends in the immigration laws as well as applicable guidelines of a given country. So, a lender will do this check too, for you. Insurer's too do a basic 'safe country to study in' check. "Our underwriting check involves evaluating the country to which the student is going. We ensure the destination is not on a 'Do Not Travel List' of government of India," Shreeraj Deshpande, head - health insurance, Future Generali India.


For the bank, assessment of employment potential or future prospects is an important criterion, considering the high cost involved in studying abroad. Apart from the general placement track-record, the lender also looks at the macro state of the economy of the given country.

Type of Degree

Level of the course and the specialisation chosen by the student are important parameters too.