An education loan is one of the best sources of higher education funding. However, a lot of aspirants are sceptical about funding their higher studies with a big amount of education loan due to the fear of not being able to repay the same well in time. This is one of the major reasons why it is important to conduct thorough research on your lender’s education loan policies, especially with respect to the repayment process. If you are fearing your education loan repayment, an education loan takeover may be the answer to your woes. This article aims to give you the complete information about an education loan takeover and when you should consider switching your education loan lender.

What is an Education Loan Takeover?

An education loan takeover is one of the best parts about funding higher education with a student loan. If you are someone who has borrowed student loan to fund your higher education abroad and are finding your lender’s policies regarding education loan repayment to be too costly, you have the option of changing your lender to a new one. There are certain terms and conditions which you may have to follow before making the move. However, this provision is a boon to the many students who are unable to afford their education loan repayment and require an extension of their tenure.

How is an Education Loan Takeover Conducted?

Here’s a small peek into how Education loan takeover works.

1. Let’s assume that you took an education loan from an NBFC because of their shorter processing time and a year later, you are not satisfied with their education loan repayment policy and would like to opt for a student loan refinance from a public bank.
2. In such a situation, you may apply for an Education loan takeover from your NBFC to a nationalized bank. Here’s how it can be done.
3. Once you decide to opt for an Education loan takeover, your old lender gives you a statement of the remaining loan amount to be repaid.
4. This statement has to be submitted to the bank providing the student loan refinance.
5. Once the new bank receives this statement, they begin your loan process as usual. 
6. Once your loan is sanctioned, the new bank issues a cheque which will clear your pending dues with your former lender.

So How Does an Education Loan Takeover Help?

Most of you who are currently reading this article may not know this. The interest rates of takeover loans are always less as compared to the interest rate of a fresh loan. For eg. let’s consider the case of a major bank like SBI. 

The interest rate for male candidates applying for a new education loan is 10.33%. This is along with the loan insurance concession. However, in the case of an Education loan takeover, the interest rate is only 10.05% for male candidates. 

Similarly, for female candidates, the interest rate for a fresh abroad education loan is 9.8% with the loan insurance concession. However, if it is a take over loan, the interest rate for female candidates comes down to 9.55%. 

Takeover loans are cheaper, because the risk factor for the new bank is really low. Let’s see how.

What is the eligibility criteria for an Education loan takeover?

1. A loan applicant may opt for an Education loan takeover only when
2. There are no more disbursements to be taken from their current lender’s loan by the loan applicant. It means that whatever loan amount had to be disbursed from your previous bank has already been disbursed and the loan applicant cannot borrow any more money from the previous loan.
3. The loan applicant has at least started the repayment to the previous lender and regular EMI payments have begun towards your loan.

Terms and Conditions for an Education loan Takeover

1. While transferring collateral education loans, If you plan on transferring your current education loan from one bank to another, the new bank will take over your existing collateral. 
2. If you have an existing non-collateral loan with your current lender and you wish to transfer education loan to a public bank, which mostly lends collateral-based loans, you may have to place valuable collateral with the particular public bank.
3. There is no loan margin. The public bank to which you wish to transfer the education loan will give you a 100% loan on the collateral value.
4. The rest of the terms and conditions are similar to those of a regular abroad education loan. If you are still facing any doubt regarding your eligibility for a takeover loan, Please feel free to request our financial team for a callback. Our team will respond at the earliest.

When Should You Consider Applying for an Education Loan Takeover?

Although an education loan transfer is a much-needed relief to your education loan repayment troubles, it is important to have a thorough understanding of when one should opt for an education loan takeover.

• If your Lender Has Hiked Your Education Loan Interest Rate

This is a frequent complaint expressed by the borrowers of an education loan without collateral, especially those who had borrowed an HDFC Credila education loan. One of the biggest risks that borrowers face when they deal with private loans is that the interest rate offered to them at the beginning of their loan tenure may change depending on the modifications in repayment policies made by the respective lenders. This was a major cause of concern for a lot of students back in 2018 when NBFCs all over the country had faced a major financial crisis. 

• If you Find The Interest Rate to be Less Affordable

It is no secret that the interest rates charged by private lenders are way higher than that charged by government banks in India. Most of the public banks charge 9% to 10% as education loan interest rates while on the other hand, private lenders charge 11.9% to 14.5%. This factor plays a crucial role in determining the nature of your education loan repayment process. So, if you are finding the education loan interest rate offered by your lender to be exorbitant, you may very well consider an education loan refinance.

• Education Loan Repayment Policies of Your Lender

Repayment is one of the major reasons why a lot of higher education aspirants still hesitate to borrow an abroad education loan to fund their higher studies. One of the major factors that you must consider while planning your abroad education loan process is the repayment policies of any lender. If you are borrowing from an NBFC, you must understand that the repayment of interest has to be done before your course of study gets over. Post that you are expected to complete the repayment of the principal loan amount. If you find this clause to be unachievable, consider transferring your unsecured education loan to a government lender. 

The government bank repayment policies provide students with ample time to gather funds for their education loan repayment in the form of a moratorium period. Hence, you may find it helpful to refinance your loan and switch your lender.

How Can You Benefit From an Education Loan Takeover?

A takeover of your education loan by another lender brings with it a lot of financial benefits. 

• Lesser Interest Rates

If you are switching to a government bank from a private lender, you are in for a treat! The biggest takeaway is that your education loan interest rate will be considerably lower than what would have been had you chosen to continue with your private lender.

• A Payment- free Moratorium Period

One of the major factors that attracts borrowers to government bank education loans is the moratorium period on education loan repayments. In order to know further details on this particular benefit, get in touch with our financial team at WeMakeScholars.

• Eligibility for Education Loan Subsidy Under Government Schemes

If you qualify for an education loan interest subsidy under the several government schemes, you can avail it when you switch your lender from a private one to a government lender. Watch episode 13 of the YouTube web series, Loanflix to get a deeper understanding of these schemes.

• Longer Education Loan Repayment Tenure

Most NBFCs have limited the education loan repayment tenure to ten years. Public banks allow students to avail a total of 15 years as repayment tenure. This is excluding the moratorium period which comprises a candidate’s entire course duration, plus six months to a year after the course.

Read about SBI abroad education loan schemes- Interest rates @8.99%*

How does WeMakeScholars help?

Along with providing support for regular abroad education loans, our financial officers also help you with Education loan takeover. Our team has processed close to 20,000 student loan applications in the past year itself. No one in the market has as much expertise as our team in the market, due to the large amount of loan applications processed by us. We can proudly claim this because if you happen to walk in to any of the bigger branches of a huge organization like SBI, which is one of the biggest banks in India, you may observe that they do not process more than 20-30 abroad education loan applications annually. Our expertise comes from the huge number of applications processed by our team every year.

So if you are someone who is stuck with the wrong lender who is charging you a bomb in the form of your interest amount, do approach our team to help you get an Education loan takeover to a bank which charges you a relatively small amount as interest. Even if you are studying abroad and if you wish to switch your lender, our team can help you with your loan takeover by coordinating with the respective bank on your behalf and with a little help from your parents.

Note: WeMakeScholars is an organization funded and supported by the Government of India that focuses on International Education finance. We are associated with 10+ public/Pvt banks/ NBFCs in India and help you get the best abroad education loan matching your profile. As this initiative is under the Digital India campaign, it’s at free of cost. The organization has vast experience dealing with students going to various abroad education destinations like the US, Canada, UK, Australia, Germany, Sweden, Italy, China, France among others