Education Loan Disbursement Process: A Step-by-Step Guide

Education Loan Disbursement Process

Loan disbursement is the final stage of taking an education loan for study abroad. Before disbursement, the bank issues the education loan disbursement letter. Loans to study abroad are one of the most crucial parts of your application that shall be considered in the beginning. The students must proceed with the disbursement process per the university norms as the letter is usually valid only for 6 months. 

In the final stage of the disbursement process, the funds are directly transferred from the bank to the concerned university. Both private and PSU banks have a similar process of disbursement of education loans. Read the complete blog to understand the education loan disbursement process in detail.

Education Loan Disbursement Process: Government Banks

Most of the students tend to get an education loan from government banks. SBI is one of the most popular government banks for education loans. The bank approves the education loan after verifying all the documents and issues a sanction letter after verification. The process for most of the banks are similar. Some of the popular government banks and their disbursement process is stated below- 

Document Verification

Once you submit the documents required for the loan the bank initiates the verification process. A demand letter from the concerned university is required to be submitted. In case the student is getting an accommodation provided by the university a free breakup letter is required. 

Sanction Letter by the Bank

After successful verification of all the documents, the bank will issue an education loan sanction letter. The sanction letter contains all the details of the loans such as the sanctioned amount, rate of interest, repayment period and mode of payment, name of the guarantor etc. The condition and process of loan disbursement are also mentioned in the sanction letter.

Also Read: Going abroad for studies? Check out this useful information on how the exchange rates are calculated and stay informed while exchanging currency abroad.

Letter of Disbursement

The SBI Education loan disbursement process will involve the issue of a loan disbursement letter. After getting the letter which will show the final amount to be paid by the bank the students are required to initiate further process. The bank will transfer the funds directly to the university. In case you have asked for an off-campus accommodation cost, the bank may transfer the funds required for accommodation and others directly to your account. Students are suggested to finish the process as soon as possible to avoid last-minute inconvenience. 

Note: There are some universities in the USA which accept payments of fees through third-party merchants. You are suggested to check the process of acceptance of fees properly before applying for the education loan. 

Transfer of Funds

It shall be noted that the bank will not transfer all the amounts mentioned in the fee structure together. It will be released partially according to the semesters. When one semester or year ends the university will ask you to initiate the process of the next installment. All these conditions are stated in the loan agreement and the sanction letter. 

Education Loan Disbursement Process: NBFCs/Private Banks

NBFCs and private banks are known for fast approval and disbursement of education loans to international students. All the other processes are similar to the SBI Education loan or any other bank. Though the interest rates are higher as compared to the government banks, there are a lot of other benefits. 

NBFCs and private banks usually provide collateral loans. You can even customise the process of disbursement of the education loan. For example, if you need the entire amount of cost of living expenses in your account they will provide the same. One of the most famous private banks for education loans is HDFC. They have a separate segment for education loans known as HDFC Credilla. 

Also Read: Check out our blog on one of the most flexible alternatives to finance your study abroad dreams- gold loan for education: benefits, criteria, documents & process.

Education Loan Process Time

The education loan for study abroad involves a lot of steps. The education loan process time depends upon various factors such as lender bank, university for which you have applied, fees required, cost of living of the particular place etc. The government bank may take some time to disburse the loan as the verification process is lengthy. However, the education loan process time is much faster when you take it from NBFCs or private banks. 

Also Read: Learn about SBI Education Loan Processing Time and check for approval and verification time in our blog. 


Which is the best bank for education loans to study abroad?

The choice of the bank shall be based upon your requirements. However, among the public sector or government banks the SBI, Bank of Baroda etc. are the most preferred banks. HDFC Credilla is also a good option if you want to avail a loan from private banks.

How much time does it take to get an education loan sanctioned from SBI?

The education loan process time depends on several factors. If you have submitted all the required documents and the stated collateral then the bank will take around 15-20 working days to sanction the amount. 

Can I get the amount of the education loan in my personal account?

The amount of the education loan is usually transferred directly to the concerned university. You cannot get the loan amount in your bank account.

Do educational loans cover the cost of living and accommodation expenses?

The answer is yes. Most of the educational loan for international students provides an amount that covers accommodation costs (both inside and outside of the campus) and the cost of living. 

How is education loan disbursed?

For the banks to initiate the education loan disbursement process, the applicant must submit the disbursement-related documents. The bank will issue the disbursement letter stating the amount, date and method of disbursement after document verification. On signing it, the bank will disburse the funds directly to the university’s account. 

The education loan disbursement process is the final step in your study abroad journey. Most of the banks will offer you pre-visa disbursement of the loan. You are strongly suggested to check all the processes involved from application to disbursement of the loan. Check all the details of the university about how they are accepting the loan and also go through the loan agreement provided by the bank. 

To know more about the loan disbursement process, and the best bank accounts for students or international money transfers, subscribe to Fly.Finance or reach out to our experts to help ease your study abroad experience.

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About Shekhar Suman

Shekhar is a versatile writer with a passion for sharing knowledge and creativity. With expertise in crafting informative blogs on study abroad and finance, Shekhar helps readers navigate the complexities of education and financial planning. Most of his writings blend the practicality of finance and the beauty of language, making a meaningful impact in both spheres. Beyond his professional pursuits, he finds solace in the writing Shayari.

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