What are Education Loans?
Education loans are extended to meet the requirements of tuition fees for studying in various educational institutes located in UAE or abroad. Until a few years ago, most expatriate students had no other option to fund their studies than fall back on family finances. However, globalisation has resulted in many banks and educational institutes offering new avenues for education finance in UAE. Many banks in UAE offers personal loans which may be used for any purpose including education. However, several banks such as Abu Dhabi Islamic Bank (ADIB) and ADCB and Union National Bank offer education loans specially designed for education purposes.
Features of Education Loans
The following are some of the features of education loans offered by banks in the UAE
- Loan Amounts: Amounts may vary depending on the bank. For instance, Abu Dhabi commercial bank may offer a minimum amount of Dh 10,000 while the maximum is Dh 150,000. The sanctioned loan amount will depend on the parents or students’ eligibility
- Loan Tenure: Sanctioned loan amount be repaid for up to 60 months.
- Interest Rates: Rates may vary depending on the bank. In many cases, the rate depends on the salary of the customer and if is transferred to the lender. ADIB charges a reducing interest rate of 6.75% while Union National Bank Education Loan charges 9% (reducing).
- Processing and early settlement fees: Most banks have a fixed percentage as processing and early settlement fees.
- Minimum Salary: This may vary from bank to bank. The minimum salary requirement of Abu Dhabi Islamic Bank is AED 5,000 while that of Union National Bank Education Loan is AED 10,000.
Benefits of Educational Loans
- Financial constraints: Customers can avail of various education loans offered by banks to ensure that education prospects of their children is not jeopardised owing to financial constraints
- Higher studies: Education loans help the applicants to fulfil their dreams of acquiring higher education or enrol their children for higher studies
- Takaful: Takaful cover, in most cases, is optional. Some banks such as Noor Bank’s children future plan offer family takaful protection. ADIB offers takaful cover which is usually 1.25% of the loan amount.
Top Banks offering Education Finance in UAE
Several banks offer education finance to customers. For instance, Barclays offers education loans for MBA courses in top international business schools. To avail of the education loans, the salary of the applicant should be around AED 8,000. However, Abu Dhabi Commercial Bank (ABCB) provides education loans for non-account holders as well, provided their salary is not less than AED 8,000. Mashreq Bank and Abu Dhabi Commercial Bank (ADCB) have tie-ups with educational institutions to offer finance to families to facilitate higher studies. Education finance offered by Mashreq bank cover the total tuition fees while Abu Dhabi Commercial Bank offers loans for up to Dh 150,000.
Some of the top banks offering education finance are as follows:
- Mashreq bank
- Abu Dhabi Commercial Bank (Banking on Education)
- Abu Dhabi Islamic Bank
- Noor Bank (Children Future Plans)
Comparison of Some of the Salient Features of Top Banks offering Education Finance
|Bank||Minimum Salary||Maximum Loan Amount||Maximum Tenure||Reducing Interest Rate||Flat Interest Rate||Early Settlement fee|
|Union National Bank Education Loan||AED 10,000||AED 200,000||12 months||9%*||4.86% p.a.||1%|
|ADCB Educational loan||AED 8,000||AED 250,000||48 months||10%||5.51%||1%|
|ADIB Education Finance||AED 5,000||AED 250,000||48 months||6.75%||3.72%||1%|
*Interest Rates are subject to change