Many Indian students planning to study abroad prefer taking education loans without collateral (also called unsecured loans). These are often easier to obtain for those without property or significant assets to pledge. ICICI Bank and Axis Bank offer the highest amount for unsecured loans of up to INR 1 crore and INR 75 lakhs respectively. Interest rates on such loans are usually high as the absence of collateral can be risky for the lender. Let’s explore all the details about education loans without collateral.
Table of contents
What is an Education Loan without Collateral?
Education loans without collateral are the financial assistance provided by banks and NBFCs to cover the expenses related to higher studies. They are also called non-collateral or unsecured loans as the applicant is not required to pledge any asset with the lender.
Unsecured education loans offer a flexible financing option for students without the need for collateral. While interest rates might be slightly higher compared to secured loans, they provide accessibility and convenience. These offer several features and benefits that make them an attractive option for students seeking financial support for their education.
- No Asset Requirement: These loans do not require borrowers to pledge any assets.
- Higher Loan Amounts: Many lenders offer substantial amounts, often ranging from INR 50 lakhs to INR 1 crore for studying abroad, based on the applicant’s academic record and potential future earnings.
- Flexible Co-applicant Options: Unlike secured loans, which may require immediate family members as co-applicants, these loans can allow distant relatives or friends.
- Quick Processing: The absence of collateral requirements often leads to faster loan approval and disbursement, making funds available more quickly.
- Coverage of Various Expenses: These loans typically cover tuition fees, living expenses, travel costs, and other study-related expenses.
- Greater Accessibility: They make higher education more accessible to students who may not have significant assets but possess strong academic records.
- No Risk to Assets: Families do not have to worry about losing assets in case of financial difficulties or loan repayment challenges.
- Flexible Repayment Terms: Many lenders provide grace periods during the study phase, allowing students to start repayments after securing employment.
- Post-Study Grace Period: Many loans offer a grace period after graduation, giving students time to find a job before repayments begin.
Interest Rates on Non-Collateral Education Loan
Interest rates on education loans without collateral for abroad generally range from 9% to 15% p.a. The exact rate can vary based on the lender, the borrower’s profile, and the loan amount.
A strong credit score and excellent academic performance can positively affect loan interest rates and terms and conditions. Usually, loans for high-demand courses at reputable institutions with higher job prospects may have more favourable rates.
- ICICI Bank collateral-free loan interest rates range from 11% to 12.75% p.a for studies in the USA.
- HDFC Bank interest rates on unsecured loans range around 11% to 14% p.a depending on the loan amount and profile.
- Interest rates from NBFCS and international lenders like Prodigy Finance can go from 11.50% to 16% p.a.
Also Read: Embarking on higher studies to Germany? Check out the details of education loans without collateral to study in Germany. The blog includes multiple lenders like public and private banks, and NBFCs offering collateral-free loans abroad.
Education Loans without Collateral Eligibility Criteria
An Indian student who is above 18 years of age can apply for education loans without collateral. However, other criteria related to academic background, course and university, entrance test scores, and minimum family income requirements for an education loan must be fulfilled.
- You must score at least 60% marks in class X and class XII.
- A bachelor’s degree from a recognized university university is required if you are planning to take an education loan for a master’s abroad. Likewise, a master’s degree is mandatory for higher studies in PhD courses.
- A financial co-applicant (usually a parent or guardian) is needed. They must have a stable income and a good CIBIL score (generally a minimum of 650).
- You must have a confirmed admission letter from a recognized university abroad. The university must be on the list of approved universities for education loans.
- Usually, admission to STEM (Science, Technology, Engineering, and Mathematics) courses are preferred. Most lenders focus on major study-abroad destinations like the USA, UK, Canada, Australia, Germany, and Ireland.
- Admission should be secured via merit-basis or entrance examinations. Good scores in relevant entrance tests (e.g., GMAT, GRE, TOEFL, IELTS) can enhance eligibility.
- The co-applicant’s annual income should typically range from INR 25,000 to INR 30,000 per month) to ensure repayment capability.
Make sure to fulfil these criteria and it helps the lenders to assess the applicant’s repayment capacity, given that no collateral is provided. Meeting all these requirements increases the chances of securing an education loan without collateral.
Documents Required for Education Loan without Collateral
To apply for an unsecured education loan, you’ll typically need to provide the documents related to identity, address, academics, and course details. However, some lenders may require additional documents, such as proof of address or co-applicants’ employment details.
KYC Documents
- Aadhaar card
- PAN card
- passport-sized photographs
- Birth certificate for personal identification
Academic Documents
- Class X and XII mark sheets
- Graduation mark sheets (if applying for Master’s courses)
- Entrance exam scores (if applicable)
Income Documents
- Pay stubs and salary slips for the last 3 months
- ITR statements for the last 2 years
- Bank statements for the last 6 months
University Documents
- Letter of admission from the university
- Course details documents like fee structure, course duration
- Breakdown of accommodation expenses
List of Banks Giving Education Loans Without Collateral
While most banks in India provide unsecured education loans only up to 7.5 lakhs, others provide up to INR 40-50 lakhs. Multiple banks also offer loans without collateral of up to INR 1 crore. The loan amount depends on various factors like creditworthiness and eligibility criteria of the applicant.
We have compiled a list of major banks that are known for offering trusted and hassle-free services to borrowers looking to avail education loans without collateral for abroad.
| Education Loans without Collateral from Abroad- List of Banks | Maximum Loan Amount |
| ICICI Bank | Up to INR 1 crore |
| Axis Bank | Up to INR 75 lakhs |
| HDFC Bank | Up to INR 50 lakhs |
| IDFC First Bank | Up to INR 50 lakhs |
| Union Bank of India | Up to INR 40 lakhs |
| YES Bank | Up to INR 40 lakhs |
| State Bank of India | Up to INR 7.5 lakhs |
ICICI Bank
ICICI Bank is one of the best and most renowned private sector banks in India offering education loans without collateral up to INR 1 crore for premier institutes.
- The loans are sanctioned based on pre-admission sanctions, academic records, entrance exam scores like GRE/ GMAT/ IETLS/ TOEFL, and confirmed admission to the university.
- Borrowers can apply by visiting the nearest bank branch, online, or through Vidya Lakshmi Portal.
- If you are an existing ICICI Bank customer, you can check your eligibility for instant sanction of the ICICI Bank education loans without collateral for abroad.
- You can claim for the interest paid on education loans by obtaining an ICICI interest certificate from the bank.
Axis Bank
Axis Bank is another best option to avail of higher education loans without collateral for abroad. The bank provides education loans up to INR 75 lakhs at competitive interest rates starting from 13.70% p.a.
- Applicant has to pay a processing fee of 2% of the loan amount + GST charges.
- Axis Bank education loan processing time is 15 days during which the bank verifies the documents submitted and ascertains the loan sanction amount along with loan terms and conditions.
- Students can open an Axis Bank student account. This offers multiple benefits and can be used for various purposes such as depositing scholarship money, usual savings etc There is no minimum balance requirement.
- Applicants can get pre-admission sanctions based on their profile and avail of income tax rebates on education loans under Section 80E of the Income Tax Act.
HDFC Bank
Education loans without collateral from HDFC bank are provided up to INR 50 lakhs for selected institutes. The bank requires minimal documentation and not-so-strict eligibility criteria for HDFC Bank education loans to study abroad.
- There are no hidden charges as the education loan process is completely transparent.
- Applicants can easily apply through the HDFC Bank Vidya Lakshmi Portal or online through their official website. You can also visit the nearest bank branch.
- You get pocket-friendly EMI options at interest rates starting from 9.50% p.a.
- HDFC Bank’s education loan disbursement process is completely online with simple documentation and speedy transactions.
Also Read: Check out all the details about education loans for MBA without collateral and discover the benefits, best banks, and eligibility criteria.
IDFC First Bank
Another bank that provides education loans with collateral for abroad up to INR 50 lakhs is IDFC First Bank. The loan is provided for 30k+ courses across 4000+ universities across the globe. The bank is renowned for providing faster loan sanctions via its seamless application process.
- IDFC First Bank EMI Payments on education loans are started after the completion of the moratorium period (course duration + 1 year).
- Students admitted to desired institutions who fulfil the eligibility criteria can apply for collateral-free loans from IDFC First Bank.
- Applicants can also opt for an IDFC First Bank Forex card that allows them to make payments in local currency in any country.
- IDFC First Bank’s disbursement process is streamlined and efficient, which makes it a preferable choice among many to opt for education loans from this bank.
Union Bank of India
Union Bank of India provides education loans up to INR 40 lakhs without collateral for abroad. Under various schemes like the ‘Special Union Education Loan Scheme for Premier Institute Abroad Studies’ and ‘Union Education Abroad’, applicants can apply for loans.
- The application process is simple and hassle-free to apply for Union Bank education loans to study abroad.
- The bank takes less than 7 days to process an education loan which depends on factors such as submitting the loan application, providing relevant documents, collateral etc.
- Union Bank education loan interest rates are competitive and range between 8.55% to 9.50% on collateral-free loans.
- Applicants who have taken an education loan from another bank or financial institution can opt for Union Bank balance transfer on education loans at a competitive interest rate and a flexible repayment period.
YES Bank
YES Bank education loans without collateral can be availed up to INR 40 lakhs. Interest rates start from 10.99% p.a. The loans can be repaid for up to 15 years, however, the applicant can foreclose the education loan at any time after paying 12 EMIs.
- Documents required for YES Bank education loan related to identity, academics, address, and income must be submitted along with a duly filled application form.
- Applicants can opt for YES Bank education loan top-up if they decide to take admission to another course soon after they complete their existing course.
- Female students can enjoy attractive interest rate concessions on education loans from YES Bank.
- YES bank education loan disbursement process is very smooth. The fast-paced document verification process, allows students to receive the education loan amount without any hassle.
SBI Bank
Public banks like the State Bank of India follow the IBA model education loan scheme for abroad studies. This means that they only offer collateral-free loans up to INR 7.5 lakhs. For loans above this amount, you must pledge a security. Also, one is required to contribute a margin money of 15% for a study-abroad education loan with SBI. Other public banks like the Indian Overseas Bank also follow the same guidelines on non-collateral education loans.
FAQs
Banks such as ICICI Bank, Axis Bank, HDFC Bank, IDFC First Bank, Union Bank of India, and YES Bank offer education loans without requiring collateral for students pursuing higher studies abroad.
Can I get a 50 lakh education loan without collateral?
Absolutely. Many Indian banks and NBFCs offer collateral-free education loans up to INR 50 lakhs. These are HDFC Bank, HDFC Credila, Avanse, IDFC Bank, etc.
The maximum loan amount varies among banks, ranging from INR 40 lakhs to INR 1 crore, depending on factors like creditworthiness and the chosen educational institution.
Applicants can apply for these loans by visiting the nearest bank branch, applying online through the bank’s website or portals like Vidya Lakshmi, or specific application channels provided by the bank.
Typically, applicants need to submit documents related to identity, academic records, address proof, and income details, along with a duly filled application form.
The processing time varies among banks but generally ranges from 10 to 15 days, depending on factors such as document verification, loan amount, and the bank’s internal procedures.
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.
Follow Us on Social Media
