There are numerous costs associated with studying abroad. These costs might constitute a financial burden for students. Among the many funding choices accessible, an education loan is a fantastic way to overcome this barrier. Taking out an education loan, on the other hand, is a process that incorporates several factors, including loan eligibility. The profile of the co-applicant is a significant consideration. In most circumstances, the loan co-applicant is the applicant’s parent. However, not every parent has a good financial background that qualifies them to be a co-applicant. Taking an abroad education loan without parental income is still conceivable in this situation. This post will provide you with all of the information you need about an overseas education loan without parental income.
Must Read: How To Get An Education Loan For Studying Abroad?
Importance of Parental Income for Taking an Education Loan
Before we go into the alternative alternatives for acquiring an education loan abroad with minimal or no parental income, let’s first understand the significance of co-applicant/parental income. Parental income is important in securing an education loan while studying abroad for numerous reasons:
- Financial Stability: Lenders consider parental income to be an indicator of financial stability and ability to repay the loan. The income of the borrower’s parents ensures the lender that the borrower has a solid source of repayment.
- Creditworthiness: The income and credit history of the parents contribute to the loan application’s overall creditworthiness. Lenders look at the applicant’s parents’ financial situation to judge his or her capacity to handle and repay the loan.
- Financial Responsibility: Showing parental income demonstrates the borrower’s sense of financial responsibility. It demonstrates the ability to manage financial commitments and gives the lender confidence.
Must Read: Things To Know Before Applying For A Study Abroad Education Loan For Your Child
Alternative Options
When applying for an education loan overseas, having a financially viable co-applicant, such as parents, is usually favourable. However, if your parents are unsuitable or unable to serve this duty owing to a lack of or inability to earn a living, other variables can help you acquire an abroad education loan without parental income.
Secured Education Loan
The first alternative is an education loan with collateral, in which you pledge an asset as collateral for the loan amount. As the collateral acts as a guarantee for repayment, there is no requirement for parental income. A normal co-applicant is usually necessary, although a financial co-applicant is not always required. Secured abroad education loans are available from lenders such as SBI and UBI, which provide up to 80% of the collateral’s valuation as the loan amount. This enables you to obtain the cash required for studying abroad without relying on parental financial assistance.
Blood Relative as a Co-Applicant
When it comes to securing an education loan abroad with little or no parental income, an unsecured education loan is one of the most practical solutions. Private banks and Non-Banking Financial Companies (NBFCs) provide unsecured education loans with loan amounts ranging from INR 30 to 70 lakhs. This loan amount may vary depending on factors such as your applicant profile, chosen course, targetted university/college, and more.
While these loans normally demand a financial co-applicant as security, they are not restricted to financially strong parents, i.e. parental income. A close blood related, such as a sibling, can also be a co-applicant if they match the lender’s minimum income criterion, which is normally between INR 35,000 and 40,000.
The co-applicant mustn’t have any outstanding EMI obligations. If there are particular EMI responsibilities, the lender will raise the minimum income criteria. Consider the chart below for different lenders and suitable co-applicants when parental income is limited or non-existent.
| Lender | Eligible alternative financial co-applicant |
| Axis Bank | brother |
| ICICI Bank | brother, spouse, maternal uncle, or paternal u2ncle |
| IDFC FIRST Bank | Brother, or spouse |
| Avanse | legal guardian, sibling, or blood relatives |
| HDFC Credila | siblings or blood relatives |
| Incred | siblings, spouse, or blood relatives |
| Auxilo | sibling, legal guardian, or blood relative |
Relevant Read: How Much Education Loan Can You Get To Study Abroad: Check The Limit Here!
Self Co-Applicant
Certain lenders offer abroad education loans that use your professional experience as the foundation for loan acceptance, eliminating the need for a standard co-applicant and thus not requiring any income, i.e. it makes no difference if your parents have a low income or no at all. One such lender is ICICI Bank, which offers education loans for studying abroad based on your work experience. This novel approach enables you to acquire a loan on your own, relying on your own qualifications and job history rather than parental income.
International Lenders’ Loans
If you are unable to pledge collateral or arrange an alternative financial co-applicant, as previously advised, there are still options for pursuing an abroad school loan with minimal or no parental income.
International lenders such as Fly.Finance specializes in providing loans without the requirement of collateral or financial co-applicants, hence avoiding the consideration of parental income entirely. These lenders can provide loans of up to USD 100,000, making them a realistic option for students in need. When applying for an education loan, it is critical to carefully analyse and adhere to any additional requirements or conditions imposed by these lenders.
- Loan currency: These lenders offer loans in USD or CAD rather than Indian rupees.
- Interest rate: These loans normally have interest rates ranging from 12% to 14%.
- Fees for processing and origination: Although processing fees, also known as origination fees, can be considerable, they are usually rolled into the loan amount. It will also be levied with each loan disbursement.
Note: A solid candidate profile, including good grades, university entrance proof, a positive credit history (where available), and other relevant considerations, is required in all of the alternatives listed above.
Must Read: Study Abroad Loan: Ease Your Study Abroad Financial Burden With Experts Tips From Fly Finance
Financial Institutions that Offer Abroad Education Loan Without Parental Income
Here are some financial institutions that offer abroad education loans without parental income to students who want to study abroad:
State Bank of India (SBI)
SBI, a renowned nationalised bank and one of India’s largest suppliers of secured overseas education loans, offers overseas education based on the loan’s project cost. This bank offers secured loans of up to Rs 1.5 crore and more if the cost of education exceeds Rs 1.5 crore and the security offered exceeds the cost of education.
In this case, the applicant will be approved for an overseas education loan based on collateral security. The loan will be approved based on the co-applicants average salary.
Union Bank of India (UBI)
UBI, one of India’s largest state-owned banks, recently established “Special Union Education Loan Schemes for Premier Institute Abroad Studies.” If the applicant is studying at any of the top 159 premier institutes identified by the bank, he or she will be eligible for overseas education loans without parental income under this scheme.
The applicant is eligible for a collateral-free loan up to Rs 40.00 lakhs and a collateral loan above Rs 40.00 lakhs. This scheme has no income requirements. You can reach out to Fly Finance experts as they can help you secure the best loan from UBI, given the recent tie-up between Union Bank of India and Fly Finance.
ICICI Bank
ICICI Bank, India’s largest private sector bank, offers education loans without regard to parental income. This bank only makes school loans based on the academic profile, job profile, and compensation package of the student.
The student can easily receive a loan amount of up to Rs 50.00 lakhs based on previous work experience and ITR documentation. During the loan application process, only the parent’s basic documentation will be requested.
Must Read: Ways For Students To Finance Masters Abroad In 2023
Avanse Financial Services Limited
Avanse Financial Services Limited is a premier NBFC and is well-known for offering unsecured overseas education loans of up to Rs 50 lakhs. This loan is approved based on the student’s GRE score for the United States. As a result, if the GRE score is above 300, the student is qualified for unsecured international education loans.
While no parental income verification is necessary, the applicant must produce 6 months of bank statement proof when applying for an education loan. Avanse provides 100% funding.
International Lenders
International lenders are the best source of money for countries such as the United States and Canada. These financial companies offer unsecured or collateral-free education loans for international students based on their profile and eligibility. If there is no proof of parental income, the applicant may enlist the documents and ITR of any third party for the loan application. International lenders offer a 100% funding option.
Some of India’s top international lenders are listed below.
- MPower Financial
- Prodigy Financial
- Leap Financial
Relevant Read: How Do You Pay Student Loans While Working Abroad?
Conclusion
To summarise, it is feasible to receive an international student loan without providing proof of income or an ITR. As you can see, there are numerous solutions accessible to students who may not have access to these papers.
Aspiring students must investigate these many possibilities and comprehend the unique criteria and restrictions set forth by various loan providers. Planning and researching ahead of time can enable students to make informed decisions and get the required funding to achieve their goals of studying abroad.
FAQs
Ans. The best alternative is an education loan with collateral, in which you pledge an asset as collateral for the loan amount. As the collateral acts as a guarantee for repayment, there is no requirement for parental income.
Ans. Full-time students must have a co-applicant, who can be either a parent/guardian or a spouse/parent-in-law (in the event of married candidates). The co-applicant must have a steady source of income. A solid academic record speeds up loan acceptance.
Ans. Certain private banks offer abroad education loans without severe income evidence or ITR requirements, notably to students attending universities in the premier category recognised by these banks. In such circumstances, the student may be eligible for a loan based on the co-applicants most recent six-month bank statement.
This was all about how you can get an abroad education loan without parental income. To know more about the loan application 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.
