Studying abroad is a dream for many students, but the high cost of tuition, accommodation, and living expenses can be a significant challenge. Fortunately, study loans for abroad help bridge this financial gap, making international education accessible to students.
In this blog, we will walk you through the study loan procedure for abroad, covering everything from eligibility and application to loan repayment and interest rates.
Table of contents
- What is a Study Loan for Abroad?
- Types of Study Loans for Abroad
- How to Apply for a Study Loan for Abroad: Step-by-Step Process
- Eligibility Criteria for a Study Loan for Abroad
- Documents Required for Study Loan Procedure for Abroad
- Best Banks and Financial Institutions Offering Study Loans for Abroad
- Education Loan Repayment and Interest Rates to Study Abroad
- Alternatives to Study Loans for Abroad
- FAQs on Study Loan Procedure for Abroad
What is a Study Loan for Abroad?
A study loan for abroad is a financial aid option that helps students cover their educational expenses in foreign countries. These loans typically include tuition fees, accommodation, travel, and living costs. Many public and private banks, along with Non-Banking Financial Companies (NBFCs), provide education loans for international students based on eligibility criteria and repayment capabilities. Understanding the right loan options can make studying abroad financially manageable.
Types of Study Loans for Abroad
When considering the study loan procedure for abroad, it is essential to understand the different types of education loans available. There are two primary categories of study loans that students can avail of based on their financial status and repayment capability. Let’s understand them one by one.
- Secured Education Loans (Collateral-Based Loans)
- Requires the borrower to pledge assets such as fixed deposits, property, or government bonds as security.
- It is offered by public sector banks like State Bank of India (SBI), Punjab National Bank (PNB), and Bank of Baroda (BOB).
- Lower education loan interest rates (typically 8-10%) and higher loan amounts.
- Unsecured Education Loans (Non-Collateral Loans)
- Does not require collateral but depends on the applicant’s financial background and creditworthiness.
- Provided by private banks and NBFC Education Loan for Studying Abroad like HDFC Credila, Avanse, and ICICI Bank.
- Higher rates of interest (10-15%) in comparison to secured loans.
Also Read: NBFC vs Bank Education Loan
How to Apply for a Study Loan for Abroad: Step-by-Step Process
The study loan procedure for abroad follows a structured process that requires students to complete several essential steps. It is crucial to follow each step carefully to ensure a smooth and hassle-free loan approval. Understanding the process will help applicants avoid common mistakes and delays. Here’s a step-by-step guide to applying for a study loan for abroad.
Step 1: Do a Proper Research and Compare Loan Options
Evaluate loan schemes offered by different banks and NBFCs, considering factors such as interest rates, repayment terms, and processing fees to make an informed decision.
Step 2: Check Loan Eligibility
Confirm that you meet the lender’s requirements, such as academic qualifications and financial stability.
Step 3: Gather Required Documents
Prepare all necessary documents before applying to avoid delays.
Step 4: Submit the Loan Application
Apply online or visit the nearest bank branch to submit your education loan application.
Step 5: Loan Processing and Approval
The bank evaluates your application, verifies documents, and assesses creditworthiness before sanctioning the loan.
Step 6: Loan Sanction and Agreement Signing
Once approved, you receive a sanction letter outlining the loan amount, interest rate, and repayment schedule.
Step 7: Loan Disbursement
The loan amount is released directly to the university according to the specified payment schedule.
Eligibility Criteria for a Study Loan for Abroad
To qualify for a study loan for abroad, you must meet specific eligibility criteria. While the study loan procedure for abroad may vary by lender, the common requirements typically include the following:
- Nationality: The applicant should be an Indian.
- Academic Performance: A strong academic record is essential.
- Admission Confirmation: The student must have an offer letter from a recognized foreign institution.
- Course Type: The program must be job-oriented (professional, technical, or research-based).
- Co-Applicant: Most loan providers require a co-applicant (parent/guardian) with a good and fixed income.
Documents Required for Study Loan Procedure for Abroad
The study loan procedure for abroad requires applicants to submit various documents to banks or financial institutions. These documents serve as proof of eligibility and financial stability, ensuring that the loan can be approved smoothly. Submitting accurate and complete documents can significantly speed up the loan processing time.
Below is a list of essential documents required for securing a study loan for abroad.
- Admission Letter: Proof of enrollment in a foreign university.
- Academic Documents: Mark sheets, degree certificates, and test scores (IELTS, TOEFL, GRE, GMAT, etc.).
- Financial Documents: Income proof of the co-applicant, income tax returns, and bank statements.
- Collateral Documents (if applicable): Property documents, fixed deposit receipts, or other pledged assets.
- KYC Documents: Identity proof, address proof, and passport.
Also Read: Education Loan for B.Tech from Germany: Top Banks and NBFCs, Eligibility
Best Banks and Financial Institutions Offering Study Loans for Abroad
Choosing the right lender is a crucial part of the study loan procedure for abroad. Various public and private sector banks, along with Non-Banking Financial Companies (NBFCs), offer loans for students aspiring to study overseas. Each financial institution has different interest rates, collateral requirements, and repayment policies, making it essential for students to compare and choose wisely. Below are some of the top financial institutions providing study loans for abroad:
Public Sector Banks
- SBI Global Ed-Vantage Loan
- Interest Rate: 8.5% – 10.5%
- Loan Amount: Up to INR 1.5 crore
- Collateral: Required
- Bank of Baroda Scholar Loan
- Interest Rate: 9.0% – 11.0%
- Loan Amount: Up to INR 1.5 crore
- Collateral: Required
- PNB Udaan Loan
- Interest Rate: 8.5% – 10.75%
- Loan Amount: Up to INR 1.5 crore
- Collateral: Required
Private Banks and NBFCs
- HDFC Credila Education Loan
- Interest Rate: 11% – 14%
- Loan Amount: Varies based on applicant profile
- Collateral: Required for higher amounts
- ICICI Bank Education Loan
- Interest Rate: 10% – 14%
- Loan Amount: Up to INR 1 crore
- Collateral: Required for higher loans
- Avanse Education Loan
- Interest Rate: 10% – 16%
- Loan Amount: Up to INR 1.5 crore
- Collateral: Required for secured loans
Education Loan Repayment and Interest Rates to Study Abroad
The study loan procedure for abroad includes an important aspect of repayment, which varies from bank to bank. Understanding the repayment structure is crucial to managing your finances effectively. Here are some key factors to consider regarding education loan repayment and interest rates.
- Interest Rates: The study loan procedure for abroad comes with interest rates varying between 8% – 15%, depending on the lender and collateral requirements.
- Moratorium Period: Repayment typically begins 6-12 months after course completion, giving students time to secure employment.
- Loan Tenure: The study loan procedure for abroad usually provides education loan repayment time ranging from 10 to 15 years, allowing manageable EMI payments.
- Prepayment Options: Some banks allow early repayment without penalties, reducing the total interest burden on students.
Alternatives to Study Loans for Abroad
While the study loan procedure for abroad is a popular way to finance education, students should also explore other financial aid options. Scholarships, sponsorships, part-time work, and crowdfunding can reduce dependency on education loans. These alternatives can significantly help students manage their expenses while studying abroad.
- Scholarships & Grants: Many universities and organizations provide scholarships based on merit, financial need, or field of study, reducing the need for loans.
- Sponsorships & Fellowships: Some companies and institutions offer funding to students in exchange for work commitments or research contributions.
- Part-Time Work Opportunities: Many countries, such as the USA, UK, and Canada, allow international students to work part-time to support their education and living expenses.
- Crowdfunding & Financial Aid: Platforms like GoFundMe and scholarships from NGOs can assist students in covering their tuition fees, reducing their reliance on loans.
Applying for a study loan for abroad requires careful planning and comparison of options. Understanding study loan eligibility, repayment terms, and interest rates can help you make an informed decision. Always check for hidden charges, collateral requirements, and loan processing fees before finalizing your loan.
FAQs on Study Loan Procedure for Abroad
The study loan procedure for abroad involves researching loan options, checking eligibility, submitting an application, document verification, loan approval, and disbursement to the university.
To qualify, applicants must be Indian citizens, have strong academic records, secure admission to a recognized foreign institution, and have a co-applicant with a stable income.
Major banks like SBI, Bank of Baroda, PNB, HDFC Credila, and ICICI Bank offer study loans for abroad with varying interest rates and collateral requirements.
Collateral is required for secured loans but not for unsecured loans. Public banks usually offer lower interest rates on collateral-backed loans, whereas NBFCs and private banks provide non-collateral options.
Interest rates range from 8% to 15%, depending on the lender, loan type (secured or unsecured), and applicant profile. Lower rates are usually available for secured loans.
The process can take 2-6 weeks, depending on the lender, document verification speed, and loan type. Faster approval is common with NBFCs and private banks.
Repayment typically starts 6-12 months after course completion, known as the moratorium period. Some banks also offer flexible repayment plans.
Most lenders require a co-applicant, such as a parent or guardian, especially for unsecured loans. Some NBFCs may approve loans without a co-applicant under specific conditions.
Required documents include admission letters, academic records, financial proof, KYC documents, and collateral documents (if applicable).
Yes! Scholarships, part-time work, sponsorships, and crowdfunding can help finance education abroad without taking a full loan.
Need financial assistance regarding Education Loans abroad? Reach out to Fly Finance now!
