Since 2016, ExTravelMoney has helped thousands of Indian students transfer money affordably for their overseas education.

However, we’ve encountered many cases where we couldn’t assist students with their international remittances, especially those with education loans. This was because banks often misled them into believing they must transfer loan amounts exclusively through the bank.

In this article, we share insights on the reality of transferring education loans abroad via banks. We also suggest a better alternative to save on international remittances.

Also Read: All You Need To Know About Paying US University Fee From India

How Banks Trick Indian International Students

Banks are very much aware that students are scared of 2 things when it comes to educational loans and those are;

1. Chances of loan rejection if they disagree with the bank’s policies and proposals.
2.  Safety concerns in transferring money abroad via third-party services since the amount is huge.

Banks capitalise on these fears of the students. 

Thus, banks brought up this strategy of saying no to third-party money transfer agents.

International students have to transfer the loan amount abroad to pay university fees, hostel fees and other related expenses. By blocking third parties from transferring the disbursed loan amount and then doing it themselves, banks ensure they gain even more profit with high exchange rate margins and processing fees.

Can Education Loan Amount Only be Transferred Abroad by ‘the Bank’?

The answer is an absolute ‘NO’. 

There is no such rule specified in the ‘IBA (Indian Banks’ Association) MELS (Model Educational Loan Scheme) for Pursuing Higher Education in India & Abroad 2022’.

No regulation is issued by the RBI that makes it mandatory for students to do international transactions of loan amounts through their lender bank.

The terms and conditions of the RBI Educational Loan Scheme quote that the education loan amount must be exclusively used for educational purposes and must be paid to the university or concerned authority.

Source: RBI Educational Loan Scheme 

Often banks rephrase this clause and claim the RBI instructs that the payment must be done directly to the university and not through a third-party payment channels. Hence, they persuade students to do money transfers through them.

However, ExTravelMoney or any other forex service provider pays the fees to the university abroad directly just like how the bank would. The SWIFT copy which is generated after the transaction proves the authenticity of the payment.

A SWIFT Copy is a document generated by the SWIFT network that contains all the information regarding a remittance such as the sender, beneficiary, account details, amount, and date of transaction. 

The SWIFT (Society for Worldwide Interbank Financial Telecommunications) network is a channel for accurate and fast passage of money transfer messages/instructions.

This is the same Network/Mode of money transfer used by banks, ExTravelMoney and any other remittance provider in India.

Here is an example of a SWIFT Copy issued for a student who paid his tuition fee through ExTravelMoney to the University of Bedfordshire, UK from his ICICI Bank, Maharashtra loan account-

The Steps Involved in Transferring Education Loan Abroad

1. Produce the bank with the university letter stating the amount and date to be disbursed.
2. The bank issues a loan sanction and disbursement letter to initiate the loan disbursement.
3. The bank transfers your money to the university/ college or you can do it through an authorised forex service provider.
4. On successful payment, the university sends a receipt to the student.

Wire transfer through forex service providers like ExTraveloney is equally safe as banks. ExTravelMoney is in no way inferior in terms of providing competitive rates and helping you save money.

Here is the information regarding education loan disbursement and its money transfer from a popular Indian bank;

As you can see the terms and conditions of the bank are worded a bit vaguely. However, the highlighted 2 sentences

1. For all abroad cases, work with the X team to complete your forex process where you can get your traveller’s cheques, foreign currency wire transfer/demand drafts/bank notes as per your requirements.
2. X will disburse the tuition fee to the educational institute either directly or through an authorised servicer.

make it clear that the bank is flexible to do third-party money transfers of education loan amounts. And this is the same for any bank in India.

Bank Transfers VS Third-party Transfers

Most loan provider banks are not student-friendly in money transfers as they charge exorbitant exchange rates.

Let’s consider ExTravelMoney as the third-party money transfer agent and do a rate comparison.

Region	Currency	Bank Rate (in INR)	ExTravelMoney Rate (in INR)	Difference(in INR)
USA	USD	86.56	84.12	2.44
UK	GBP	110.67	106.44	4.23
Europe	EUR	93.03	90.24	2.79
Canada	CAD	64.00 30	61.46	2.74
Australia	AUD	58.28 25	56.19	2.34

You may wonder, “What’s the big deal with these minor differences?”

But before concluding, multiply the values by your payable tuition fee amount and find the undeniable difference between the bank rate and ExTravelMoney.

For instance, a student planning to do a master’s course in the USA has to pay a total tuition fee of $80,000.

Want to Transfer Loan Amount Abroad? ExTravelMoney.com Has You Covered

ExTravelMoney gives the best rates in the Indian forex market for students. We realise the students’ financial burden and therefore offer favourable, safe and secure service.

ExTravelMoney helps students by offering an online marketplace to independently explore and select the best service provider for foreign currency exchange and overseas money transfers.

Also Read: 5 Smart Hacks For Saving Money On Study Abroad!

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