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Education Loan Options for MS in Germany

Education Loan Options for MS in Germany

With more than 500 universities, 19000 degree programs, low tuition fees, and some 17 universities ranking among the top 250 universities in the world, it is quite understandable why Germany is becoming a popular study destination for Indian students aspiring for higher studies abroad. India ranks second when it comes to countries with the largest group of international students enrolled in Germany. An increasing number of Indian students with study abroad dreams are choosing Germany as their host country. In fact, the number of Indian students studying in Germany in 2017-2018 was 17,570. This was 13.14% higher than the preceding year. Statistics also say that 82% of Indian students going to Germany for higher studies opt for a STEM (Science, Technology, Engineering and Mathematics) program. If you too are a student who is aiming for higher education in Germany and looking for viable funding options, then read ahead and know about the various education loan options for higher study in Germany. 

What is the average cost of studying an MS in Germany?

The state subsidizes the cost of education in Germany. Therefore, institutions that are funded by the state charge no tuition fees for higher education – even for international students! However, students must remember that there are certain private universities too in Germany, offering specialized courses and programs. The Technical University of Munich, the top-ranked university in Germany, has a semester fee of 115€ which includes Student Union fee and the basic semester ticket for public transportation in Munich.  Ludwig Maximilian University of Munich, RWTH Aachen University and Karlsruhe Institute of Technology on the other hand charge no tuition fees.

International students have to pay a semester contribution of approximately €300. This will vary from university to university and as per the benefits being provided. Students might also need to pay a slightly higher fee for some specialized courses.

The cost of living in Germany is on the higher side, and students need to keep aside approximately €800 per month for their food, housing, study material, clothing and other miscellaneous expenses like leisure activities, health insurance, etc.

Financing your education

Even though the cost of studying in Germany is substantially lower than that of the other popular countries like U.S, U.K, Australia, etc., it is still not trivial. Several students need help with their finances to study in Germany. For such students, an education loan for studying abroad is the best option. With tuition fees at international universities skyrocketing and cost of living increasing by the day, education loans have become a lifesaver for all those students who dream about studying abroad but face financial constraints. 

How can an education loan help you study abroad?

Started in 1995 by SBI, an education loan acts as a bridge that helps students overcome the financial hurdle that stands between them and their higher education dream. Most banks, NBFCs and private entities today offer education loans that cover the cost of tuition as well as other course-related expenses. An education loan is of two types – secured education loan and unsecured education loan, and depending on their individual case, students can apply for either of these.

Students who are desirous of studying in Germany must remember that they need to present a Blocked Bank Account while applying for a German Visa. A Blocked account, also called Sperrkonto, is a special type of bank account maintained by international students in Germany to prove that they have enough financial resources to cover their cost of living in Germany for one year. Students need to open a Blocked Bank Account as soon as they get their university acceptance letter.

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They need to have 10,236 euros in this account from which they are allowed to make monthly withdrawals.

Types of loan available for students headed to Germany

1. Education loan without collateral

An education loan without collateral is also called an unsecured loan. In this case, the student does not have to pledge any tangible or intangible assets in order to get a loan. Several banks and NBFCs offer unsecured loans. Below is a list of the key features of such loans – specific to the target destination being Germany.

Educational Loan Options for MS in Germany (Without Collateral)

FeaturesPublic BanksPrivate BanksNBFCs
Example LendersSBI, Bank of BarodaAxisAvanse,Incred
Loan AmountPublic banks do not offer loans without collateral more than 7.5 LakhsUpto 40 lacsUpto 20 lacs (Based on Income of the co-applicant)
Interest Rate Range11.5%-12.5%12.5%-14%
Processing FeesLess than INR 170001%-2% of the loan amount
Number of Colleges SupportedUpto 10More than 50

Depending on the type of lender, the repayment period, processing time, expenses covered and other aspects of an education loan without collateral vary. 

  • Repayment Period – For education loans without collateral from private banks, the repayment period is 20 years, while in the case of NBFCs, it is 10 years.
  • Processing Time – The processing period for education loans without collateral in private banks is 7 working days, while NBFCs take 3-4 working days to process the loans.
  • Expenses Covered – Loans from private banks cover 85% of the expenses including blocked accounts, while loans from NBFCs cover 100% of the expenses including blocker accounts.
  • Co-applicant Income Requirement – The co-applicant income requirement for MS in Germany education loans without collateral from private banks is more than 35k per month, whereas that for NBFCs is more than 25k per month.
  • Common Decline Reasons – Both private and NBFCs cite low income, poor CIBIL scores, and other loan obligations as common decline reasons for education loans without collateral.
  • Number of Documents Required – Most banks and NBFCs require a number of documents when a student applies for an education loan. Some of the common documents are student’s and co-applicant’s KYC (know your customer), relevant marksheets, admission letter from the university, fee structure, income certificate of co-applicant, etc. Many times, students are unaware of the list of documents required to apply for a loan, and thus their loan sanction takes a lot of time. GyanDhan can help them with a customized list of documents that have to be submitted with their loan application.

2. Education loan with collateral

An education loan with collateral is also called a secured loan. In order to avail this loan, the student has to furnish a tangible or intangible asset, such as immovable property, FDs, etc. A secured loan has a significantly lower rate of interest and has a higher chance of approval. There is no repayment to be made during the period of study in this kind of loan, and the loan repayment period is also longer. Some salient features of a secured loan are as follows:

Education Loan Options for MS in Germany (With Collateral)

FeaturesPublic BanksPrivate BanksNBFCs
Example LendersState Bank of India, Bank of BarodaAxisAvanse, Incred
Loan AmountUpto 1.5 crUpto 60 lacsUpto 60 lacs
Interest Rate Range10-10.5%11-12%12-13%
Processing FeesINR 11800INR 15000 to INR 200001-2% of loan amount
Payment During Study PeriodNo paymentSimple interestSimple interest / Partial Simple Interest

Depending on the type of lender, the repayment period, processing time, expenses covered and other aspects of an education loan without collateral vary. 

  • Repayment Period – The repayment period for education loans with collateral in the case of public banks is 15 years. In the cases of private banks and NBFCs, the repayment tenures are 20 years and 10 years respectively.
  • Processing Period – Public banks take 12-17 working days to process education loans with collateral. Private banks take 10-15 days for processing, while NBFCs take 10 working days.
  • Expenses Covered – Loans from public banks cover 90-100% of the total expenses, while private banks cover 85% of the total expenses. NBFCs cover 100% of the total expenses.
  • Common Decline Reasons – Both public and private banks decline with collateral education loan applications for two key reasons – incomplete collateral documents and poor CIBIL. NBFCs generally decline applications for low income and poor CIBIL score. However, if you want to increase your chances of getting an education loan , contact an expert like GyanDhan, who works closely with the banks and can help you with the process for free in partnership with MS in Germany
  • Documents Required – Some of the common documents required for a secured loan are the student’s and co-applicant’s KYC documents (know your customer), relevant marksheets, admission letter from the university, documents related to security being pledged, fee structure, etc. Again, students can get in touch with GyanDhan to know the customized list of documents that have to be submitted with their loan application.

3. State funding for students in Germany

One financial aid program is available in Germany for international students – however it is limited to students who are resident in Germany at the time of their application. Indian students based in Germany can get federal student loans. They have to meet certain criteria related to citizenship and resident status to avail such loans. Federal Training Assistance Act or BAföG is the most popular government-funded student loan in Germany, and students who meet any of the following criteria can apply for it:

  • At least one of their parents has been working in Germany for at least 3 years.
  • The students have got a German education and have been living in Germany since the last five years.
  • They have pursued a graduation or post-graduation degree from a German school while staying in Germany for at least 3 years in the last 6 years.
  • Students who are working in Germany have had a minimum annual income of €48,000 for the last 3 years.
  • Students who have a permanent residence in Germany and have been working in Germany with an annual income greater than €48,000.

Confused which loan option to choose?

Confused as to which kind of loan you should apply for to study in Germany? If yes, then get in touch with GyanDhan for help. GyanDhan assigns a dedicated loan counselor to the student. The loan counselor conducts a detailed analysis of the student’s profile and his/her requirements and then suggests the best kind of loan and the best lender for the loan too. Students can also make use of their Education loan EMI calculator to find out the EMI they would have to pay when they take an education loan. 

Application procedure for loans for MS in Germany

The loan application process for MS in Germany is similar to that of the other countries. Students have to first finalize the lender and the kind of education loan they want and then apply directly to the lender. However, many times, this process is long and cumbersome. If you need to get your loan sanctioned in minimum time, take the help of GyanDhan – India’s first student financing platform. GyanDhan helps students finalize the lender and even help them submit the documents from the comfort of their home. Their dedicated team also follows up with the lender, negotiates for the lowest rate of interest and also ensures quick sanction of the loan. Using this tool of GyanDhan’s, you can also check if you are eligible for an education loan. With so many benefits, why wait any longer? Just get in touch with GyanDhan and fly off to Germany for your higher education in the coming season. 

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