Education Loan Disbursement Letter to Bank: Format & Sample

An education loan disbursement letter is the formal request you submit to your bank to release funds from your sanctioned study abroad loan. While your sanction letter confirms approval, the disbursement letter triggers the actual transfer of money to your university or personal account.

This “moving of money” is governed by a formal document known as the Disbursement Request Letter. In the world of an overseas education loan in India, your sanction letter is a promise, but the disbursement letter is the trigger.

Many students mistakenly believe that once a loan is sanctioned, the bank automatically pays the university. In reality, Indian banking regulations require a specific, written mandate for every installment. Whether you are paying for your first semester at Harvard or securing a GIC for

A well-drafted education loan disbursement process begins with this letter. It instructs the bank to release a specific portion of your sanctioned limit.

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What is an Education Loan Disbursement Letter?

When your education loan gets sanctioned, the bank doesn’t just hand over the money — there’s a formal process that follows, and the disbursement letter is right at the centre of it.

A disbursement letter is an official document issued by your lender — bank or NBFC — confirming that your sanctioned loan amount has been released, either fully or in part, to the designated recipient. For education loans, that recipient is usually the university directly, not the student’s personal account.

Think of it as the bank’s written confirmation saying: “We’ve sent the money, here’s the proof.”

Decoding the Education Loan Disbursement Process

The education loan for study abroad follows a “need-based” release system. The banks hardly release the full 50 lakh or 1 crore at once. Instead, you receive the funds in tranches based on your school schedule. This is done strategically so that you do not have to pay unnecessary interest on the money that you do not require at this moment.

Typically, the process follows these stages added to the education loan for abroad eligibility:

• Sanction: The bank will issue a sanction letter.
• Signature of the final loan contract: You and your co-applicant sign the final loan contract.
• Disbursement Request: You send a letter of present day, and a fee demand note of your college.
• Confirmation: The bank will cross-test the SWIFT/BIC codes and the exchange rates of the university.
• Remittance: The money is sent by wire, often taking 3-7 working days in case of international remittance.

Check our complete guide on education loan eligibility for abroad

Disbursement Process: Timeline Breakdown

Note: Timelines may vary depending on the receiving country, bank policies, and public holidays.

Anatomy of a Perfect Disbursement Letter: Essential Elements

When drafting a letter for a student education loan for study abroad, precision is your best friend. A single-digit error in a SWIFT code can cause funds to remain in “intermediary bank limbo” for weeks.

Your letter must include:

• Loan Account Number: Your unique ID with the bank.
• University Details: Full name, campus, and student ID.
• The “Purpose”: Clearly state if it’s for tuition, insurance, or living expenses.
• Beneficiary Bank Details: SWIFT code, IBAN, and the exact account name.
• Forex Instructions: indicate whether you would prefer to use the internal of the bank or a particular locked-in rate.

How to Write a Disbursement Letter (Step-by-Step Format)

Writing a disbursement letter needs to be precise — here’s the simplest way to get it right.

Step 1 — Use the Bank’s Official Letterhead The letter must be on the bank’s printed letterhead with branch address, contact details, and logo. No letterhead, no credibility.

Step 2 — Add Date and Reference Number Mention the issue date and a unique reference number at the top for tracking purposes.

Step 3 — Address It Correctly Direct it to the university’s finance office or to the student — depending on who needs it and why.

Step 4 — Write a Clear Subject Line Example: Subject: Confirmation of Education Loan Disbursement — [Student Name] — A/c No. XXXXXX

Step 5 — Mention Borrower Details State the student’s full name, co-applicant name, loan account number, sanction date, and total sanctioned amount.

Step 6 — State the Disbursement Specifics This is the heart of the letter. Include:

• Amount disbursed
• Date of transfer
• Recipient (university name or student)
• Mode of transfer (SWIFT, NEFT, DD)
• Transaction reference number

Step 7 — Mention Remaining Loan Balance State clearly how much of the sanctioned amount is still pending disbursement — universities abroad often need this for multi-year enrollments.

Step 8 — Close with Authorized Signature End with the branch manager’s name, designation, signature, employee code, and branch stamp. Without this, the letter holds no official value.

Disbursement Letter Samples:

Template 1: Requesting Funds Directly to the University

Template 2: Requesting Funds for Living Expenses

For a student loan for overseas education, you often need funds for rent or a Forex card. Use this format:

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Common Mistakes That Delay Your Funds

• Lacking Fee Invoices: Banks will not release such amount of money estimated; they require the real bill on the university portal.
• Currency Confusion: Always specify whether the amount is in INR or in a foreign currency (USD, CAD, EUR).
• Signature Mismatch: Signature: Sign the letter when it is a joint loan.
• Disregard of Margin Money: The majority of banks have no choice but to first charge your 15 percent of the margin money.

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