Financing Higher Education in Germany: A Complete Guide for Indian Students | Secure Your Study Abroad Dream with Education Loans

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Apr 17, 2023 07:15 AM

If you are an Indian student who is considering higher education in Germany, there's no doubt that you are not alone. Germany has been a popular destination for international students, especially Indian students, due to its world-class education facilities, professional educators, impeccable research environment, minimal education fees, and great placements. In fact, Indians are the third-largest group in the world to prefer Germany for higher education. However, one of the most significant concerns that come to mind when thinking of studying in Germany is the cost of studying abroad. In this article, we will discuss the cost of studying in Germany, the different types of education loans available for Indian students, and how to secure these loans.

What is the cost of studying in Germany?

The cost of studying in Germany can be divided into two parts: tuition fees and living expenses. Luckily, most universities in Germany are state-funded and charge a minimal/affordable tuition fee. Additionally, some international students interested in studying in Germany usually find suitable scholarships to fund their education abroad. The State provides plenty of them for various courses. However, scholarships for private universities are relatively harder to come by, which also charge comparatively higher tuition fees.

University	Tuition Fees (Approx.)	Additional Notes
Technical University of Munich	258 Euros per year	Additional fees for admin & services
Ludwig Maximilian University of Munich (LMU)	258 Euros per semester	Tuition may apply for some English-taught courses
Heidelberg University	1,500 Euros per semester (for non-European students in bachelor's or master's programs)	ㅤ
Humboldt University of Berlin	No tuition fees	International students pay approx. 300 Euros per semester for other expenses, incl. public transportation

In addition to tuition fees, students should also consider living expenses. While the cost of living in Germany is relatively affordable, students should budget a minimum of 11,208 Euros (Blocked Account Amount) per year to cover their living expenses.

Financing Your Education: Types of Education Loans

Having noted the above-mentioned estimates of the semester and living charges in Germany, despite the minimal cost, it can still be taxing and difficult for some students to meet these financial requirements. In such cases, education loans can help you bring your dream of studying abroad to reality. They are student-friendly, easily accessible, and simply exist to overthrow financial burdens that create hurdles between students and their dreams. There are two types of education loans available in the market for students interested in studying abroad. Let's take a closer look at both these options.

Secured Education Loan to Study in Germany

Secured Education Loans demand collateral for security. In such cases, students must attach collateral, such as an asset (e.g., property, mutual funds, FDs, etc.), along with the loan application. The bank then introspects the collateral, which may be used by the bank to retrieve the loan in case the student fails to repay the loan in the future.

Education Loan Provider	Loan Features	Website
State Bank of India (SBI)	Competitive interest rates and flexible repayment options.	www.sbi.co.in
Axis Bank	Loans for tuition fees, living expenses, and other education-related costs.	www.axisbank.com
HDFC Credila	Customized loan solutions with fast approval and doorstep service.	www.hdfccredila.com
ICICI Bank	Education loans with attractive interest rates and easy repayment options.	www.icicibank.com
Punjab National Bank (PNB)	Loans for higher studies abroad, covering various expenses.	www.pnbindia.in

Unsecured Education Loan to Study in Germany

Unsecured Education loans are loans without any collateral/security. The student need not attach any collateral while applying for the loan. Since there isn't any asset kept in security, most banks do not sanction unsecured loans of more amounts than INR 7.5 L. For amounts more than that, private banks/NBFCs can be approached.

Loan Provider	Loan Features	Website
GyanDhan Unsecured Loan	Unsecured personal loan for higher studies abroad.	www.gyandhan.com/unsecured-education-loan
Avanse Unsecured Loan	Unsecured loan for abroad studies, no collateral needed.	www.avanse.com/unsecured-loans
InCred Unsecured Loan	Unsecured education loan for studying overseas.	www.incred.com/personal-loan/education-loan

Applying for an Education Loan to Study in Germany

When considering an education loan to study in Germany, navigating the application process can be challenging and time-consuming. To simplify the procedure and find the best loan options, consider using a reputable marketplace like GyanDhan, our education loan partner. GyanDhan collaborates with major banks like SBI and BOB, private-sector banks like Axis and ICICI, and various NBFCs. Their education loan assistance service is free, providing support for both secured and unsecured loans. Reach out to them for a smoother experience in securing financing for your education in Germany.

Documents Required for an Education Loan to Study in Germany

Listed below are the most common documents required for a secured/unsecured education loan to study in Germany. However, document requirements differ from lender to lender. When applying for an education loan to study in Germany, you will typically need to provide the following documents:

Admission Letter: Proof of admission or offer letter from the German university or institution where you have been accepted for your course.

Academic Documents: Copies of your academic records, including high school transcripts, and any relevant diplomas or degrees.

Course Details: Information about the course you are going to pursue in Germany, including the duration and cost of the program.

Cost of Living Estimate: An estimate of your living expenses in Germany, including accommodation, food, transportation, etc.

Collateral Documents (if applicable): If the loan requires collateral, you may need to provide documents related to the collateral, such as property papers or bank statements.

Passport and Visa: A valid passport and a student visa to study in Germany.

Identity Proof: Any government-issued identity proof, such as an Aadhar card or driver's license.

Residence Proof: Proof of your permanent address, such as utility bills or rental agreement.

Income Proof: Documents showing the income of your parents or guardians, which may be required if they are co-applicants for the loan.

Bank Statements: Bank statements of the last 6 months or a year to assess your financial stability.

Income Tax Returns: Income tax returns of your parents or guardians for the last 2-3 years.

Letter of Intent: A statement explaining why you chose the specific course and how it aligns with your career goals.

Letter of Collateral: In case of collateral, a letter from the person providing the collateral.

It's essential to check with the specific bank or financial institution you are applying to for an education loan, as the document requirements may vary slightly depending on their policies and your individual circumstances. Additionally, some lenders may have specific application forms and additional documents unique to their loan application process. Always make sure to start the application process well in advance and gather all the required documents to avoid any delays.

Additional Factors to Consider

Apart from the documents mentioned above, several other aspects need to be taken into consideration while estimating the expenditure of studying abroad. These include the period of loan processing, the expenses included in the loan, the repayment period, and co-applicant's income details, among others. It's essential to understand the details of your loan before signing on the dotted line.

The loan processing time: NBFCs take the least time to process loans and usually sanction them within a short period of 4-5 days. Unsecured loans, on the other hand, require 7-10 working days to be sanctioned by a private bank, while secured loans take much longer to be sanctioned/processed because of the involvement of collateral.

Expenses included: NBFCs and some public sector banks cover 100% of student education-related expenses. Some public banks and most private banks cover only 90% of the student's education-related expenses. A student must chart out the possible expenses and produce the list before the lenders to get the required remuneration.

Co-applicants income details: Secured loans do not require the co-applicant's income details. However, it is mandatory for the sanctioning of unsecured education loans. The requirement varies between lenders.

Repayment process: The repayment process and period vary between institutions and lenders. Most public banks offer a repayment period of 10-15 years, wherein the student is required to begin paying his/her EMIs after 6 months of course completion. Private banks offer a comparatively shorter repayment period wherein the student is required to begin his/her EMIs after a year of course completion. Similarly, NBFCs offer a further short repayment period and require a student to begin paying his/her EMIs soon after the sanctioning of his/her education loan.

Common reasons for loan declination: There are innumerable reasons that can factor in loan refusal, some of which can be a poor CIBIL score, incomplete documentation, low co-applicant's income, etc. However, proper counseling and support can help you increase the probability of loan approval.

Conclusion

Studying in Germany can be a life-changing experience, but it can come with its fair share of financial hurdles. By understanding the cost of studying abroad and the different types of education loans available, Indian students can make their dream of studying abroad in Germany a reality. Remember to consider all the necessary factors, including the documents required and the application process, to secure the education loan successfully. At MS in Germany, our study abroad consultancy, we're here to help you every step of the way, from selecting the right course and university to securing your education loan. We work closely with our education loan partner, GyanDhan, to ensure that our students get the best possible support and guidance when it comes to financing their studies abroad.

In conclusion, we hope that this blog has been informative and helpful in giving you a better understanding of the cost of studying in Germany and the different types of education loans available to Indian students. We wish you all the best in your journey to studying abroad and encourage you to reach out to us or GyanDhan for any assistance or guidance that you may require.

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FAQs

Can I get an education loan to study in Germany without collateral? Yes, some banks and financial institutions offer unsecured education loans for studying abroad, including Germany. However, unsecured loans may have higher interest rates compared to secured loans that require collateral.

What documents do I need to apply for an education loan to study in Germany? Commonly required documents include admission letter, academic records, passport, visa, income proof, collateral documents (if applicable), and bank statements. Specific document requirements may vary by lender.

Is there an age limit to apply for an education loan for studying in Germany? The age limit for education loans may vary by lender, but many have a maximum age limit for loan applicants, typically around 35-40 years.

What is the loan repayment period for education loans to study in Germany? The loan repayment period can range from 5 to 15 years, depending on the loan amount and the terms offered by the lender.

Can I apply for an education loan before receiving the admission letter from the German university? Yes, you can apply for a loan before receiving the admission letter, but the final approval and disbursement of the loan may be subject to providing the admission letter as proof of acceptance.

How much loan amount can I get for studying in Germany? The loan amount you can get depends on various factors, including the course, university, your academic profile, and the lender's policies. Typically, loans cover tuition fees, living expenses, and other educational costs.

Can I apply for multiple education loans from different lenders? Yes, you can apply for education loans from multiple lenders. However, make sure to consider the terms, interest rates, and repayment conditions offered by each lender before finalizing any loan.

What are the interest rates for education loans to study in Germany? The interest rates can vary depending on the lender, the loan amount, and your creditworthiness. Interest rates for secured loans are generally lower than those for unsecured loans.

When should I start repaying the education loan? Loan repayment typically starts after the completion of the course, and there is usually a moratorium period during the study duration. The exact repayment terms will be specified by the lender.

Can I apply for scholarships along with an education loan for studying in Germany? Yes, you can apply for scholarships to fund your education along with an education loan. Scholarships can help reduce the overall financial burden.

Financing Higher Education in Germany: A Complete Guide