The Education Loan disbursement is the final leg of the journey towards attaining your Education Loan. It involves the transfer of funds from the lending bank to the applicant’s bank account.
Education Loan disbursement is quick and simple if you provide the necessary information to your bank on time. To expedite your Student Loan disbursement, it's essential to provide accurate details about the loan amount, timeline, and the designated university account for transferring tuition fees to the bank.
The loan disbursement process
1. Get your sanction letter
Once you provide all documents and collateral like Fixed Deposits or property, the bank will verify and confirm if everything is in order. Make sure you pay the requisite fees, like processing fee, stamp duty, etc. and margin money (if applicable) in time. This will avoid delays in Student Loan disbursement. The bank will issue a sanction letter as approval.
2. Sign the Education Loan agreement
You need to sign the loan agreement prepared by the bank, along with the co-borrowers and guarantors, if any. Ensure that everyone is present to prevent delays in your Student Loan disbursement.
3. Provide disbursement details
Inform the bank about the date you need the funds — mostly after you get your Visa or the last date of tuition fee payment. You should also inform your lender whether you need a partial or full disbursement.
4. Inform the mode of disbursement
The bank will pay the tuition fee to the university or prepare a Demand Draft, as per your instruction. Some universities, especially in the USA, prefer tuition fee payment through third-party services like Flywire, Globalpay, etc. You should inform the bank of the same in advance.
Problems faced by students in the Education Loan disbursement process
1. Sanctioned loan not enough: In Education Loans, banks include all kinds of expenses, such as tuition fees, living expenses, travel (abroad), etc. Ensure that you include the applicable expenses in your loan application to avoid falling short of funds later.
2. Pre-visa disbursement: Some universities, especially in countries like Canada and Australia, want you to pay living expenses before you apply for a student visa. Inform this to your bank beforehand to avoid delays in loan disbursement.
3. Providing collateral: A collateral is required for Education Loans exceeding ₹7.5 lakh. The loan typically ranges from 70% to 100% of the collateral's value. Ensure the original papers of the collateral are in order and there is no legal dispute in case of a property.
Axis Bank Education Loan is an excellent product in this regard, providing collateral-free loans up to ₹75 lakh for premier courses abroad.
Also Read: How to get an Education Loan in 6 easy steps?
FAQs
How does the disbursement process work for an Education Loan?
Once all necessary formalities are completed, the bank will disburse or transfer the tuition fee to your university's account or hand it over as a Demand Draft to you.
When can you expect to see funds in your account after the loan is disbursed?
You can expect to see the funds in your account within a few hours of the disbursement.
Can I get my disbursement done whenever I want?
Disbursement is done when you submit a demand letter from your university for the semester fee or the annual fee payment.
What are the steps for loan disbursement?
Once you submit all the necessary documents and sign the loan agreement, you need to provide the disbursement details, such as the initial loan amount and the mode of payment to your university.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
