Education loan is one of the best ways to fund your higher education abroad or in India. So it is important to understand how to apply education loan for abroad studies. The cost of tuition, living expenses, and travel is usually high and everybody cannot afford it without the loan. This is where education loans come to the rescue. Before getting the loan you must understand which bank is best for education loan for abroad. If you’re a student planning to study abroad, here’s a step-by-step guide to applying for an education loan.
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How to Apply for Education Loan for Abroad Studies?
Applying for an education loan for abroad studies involves several key steps. You need to start by researching banks and financial institutions that offer loans for international education. Compare interest rates, loan tenures, and terms. Ensure you meet the eligibility criteria, which typically include admission to a recognised foreign university and a co-applicant with a stable income.
- Gather essential documents like your admission letter, academic records, proof of identity, and income details of the co-applicant.
- Submit the loan application along with the required documents, and upon approval, the lender will issue a sanction letter.
- Once the loan is sanctioned, the funds are disbursed directly to the university as per the payment schedule.
Also Read: Check here all the major features and benefits of YONO SBI Education Loan to study abroad
Step-by-Step Guide to Applying for an Education Loan
Public and private banks like SBI, HDFC, and ICICI offer education loans customised for overseas studies. You need to compare the loan offers provided by the lender so that you can find the best-suited offer for you. Check some of the important steps involved in applying for an education loan to study abroad below:
Check Your Eligibility
Eligibility criteria is one of the major factors which should be considered while applying for an education loan. The approval of the loan is entirely based on the eligibility criteria. It involves courses, type of university, credit score or applicant and co-applicant, monthly income etc. Check more details below:
- Admission confirmation from a recognised foreign institution is mandatory.
- Co-applicants (parents or guardians) with a stable income are often required.
- Ensure a good academic record, as some lenders prioritise this.
Estimate the Loan Amount
Banks in India usually offer education loans starting from INR 50,000 with a maximum amount of INR 1.5 crore or more, based on the requirement. You can get a collateral-free loan up to INR 7.5 lakhs as per the IBA Model education loan scheme. Before applying for the loan, calculate tuition fees, living expenses, travel costs, and other miscellaneous expenses. Most banks provide up to 80-90% of the total expenses.
Gather Required Documents
Documents required for an education loan must be submitted properly. All the documents must be self-attested and clearly visible. Check the details of all the major documents required to get an education loan to study abroad below:
- Admission letter from the university
- Proof of identity (Aadhaar, passport, etc.)
- Academic records (mark sheets, certificates)
- Proof of income (for co-applicant)
- Collateral documents (for secured loans)
- Bank account statements
Also Read: Worried about increasing interest rates? Check here all the details on YES Bank Education Loan Transfer and make your loan cheaper
Apply for the Loan
To apply for an education loan, start by filling out the loan application form, either online or at the lender’s branch. Submit all required documents, including your admission letter, proof of identity, academic records, and co-applicant income details. If applying for a secured loan, provide collateral documents for verification.
- The bank will evaluate your application, creditworthiness, and eligibility. Once verified, you’ll receive a sanction letter outlining the loan amount, interest rate, and repayment terms.
- Following approval, the funds are disbursed directly to your university in multiple instalments.
- For faster processing, opt for pre-approved loan options if available.
Wait for Loan Sanctioning
Once your application is verified, the bank issues a sanction letter detailing the loan amount, interest rate, and repayment terms. The bank will provide you with an education loan sanction letter which contains all the terms and conditions of the loan. Check the details of the loan properly and then sign the loan sanction letter.
Disbursement of Funds
The disbursement of funds for an education loan typically occurs after the loan is sanctioned. The lender releases the approved amount directly to the university in instalments or as a lump sum, depending on the fee schedule. Some loans also cover living expenses, which may be transferred to the student’s account periodically. Ensure you provide the necessary details, such as the university’s payment schedule and bank account information, to avoid delays in disbursement.
Types of Education Loans for Abroad Studies
Education loans for abroad studies are primarily categorised into secured loans and unsecured loans. Secured loans require collateral, such as property, fixed deposits, or bonds, offering lower interest rates and higher loan amounts. On the other hand, unsecured loans do not need collateral but come with higher interest rates and stricter eligibility criteria. You must understand how to get education loan for abroad studies without collateral. Depending on your financial situation, you can choose the type that best suits your needs, ensuring it covers tuition fees, living expenses, and other costs associated with studying abroad.
Repayment and Tax Benefits
Repayment of education loans typically begins 6-12 months after course completion or upon securing a job, with flexible tenure options ranging from 5 to 15 years. Most banks provide a repayment holiday or moratorium period of course duration plus one year or six months after being employed, whichever is earlier. Students can also enjoy tax benefits under Section 80E of the Income Tax Act, which allows deductions on the interest paid for up to 8 years.
Applying for an education loan to study abroad requires careful planning and research. By following the steps mentioned above, Indian students can secure the necessary funds and focus on their academic goals. Check some common FAQs based on how to apply education loan for abroad studies below.
FAQs
You must have secured admission to a recognized foreign university, have a co-applicant with a stable income, and meet the lender’s creditworthiness criteria.
Most banks offer loans covering up to 80-90% of total expenses, with amounts ranging from INR 20 lakhs to INR 1.5 crore, depending on the lender.
Key documents include your admission letter, academic records, proof of identity, co-applicant income proof, and collateral documents (for secured loans).
Yes, unsecured loans are available, but they often have stricter eligibility criteria, lower loan amounts, and higher interest rates.
It typically takes 2-3 weeks for loan approval after submitting all required documents, though secured loans may take longer due to collateral evaluation.
Repayment usually starts 6-12 months after course completion or once you secure a job, whichever is earlier.
Yes, under Section 80E of the Income Tax Act, you can claim deductions on the interest paid for up to 8 years from the start of repayment.
Yes, most education loans cover tuition fees, living expenses, travel costs, and other related expenses, depending on the lender’s policy.
Interest rates vary between 7% and 15%, depending on the loan type, lender, and your eligibility. Secured loans generally have lower rates.
No, you need a confirmed admission letter from a recognized university before applying for an education loan for abroad studies.
To know more about education loans, the best bank accounts for students, forex and banking experience for global students or international money transfers, reach out to our experts at 1800572126 to help ease your study abroad experience.
