Studying abroad is a dream for many students. It offers opportunities to experience new cultures, gain international exposure, and receive a world-class education. However, the high costs of tuition fees, living expenses, and travel often make it a financial challenge for many students. This is where you can get an education loan to study abroad to study in a foreign country. In this blog, we’ll explore the different aspects of education loans for studying abroad, from the types of loans available to the best banks offering them, and the associated interest rates and terms.
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Education Loan to Study Abroad
You can easily get an education loan to study abroad. The loan amount covers a wide range of expenses that include tuition fees, accommodation costs, living expenses (such as food and utilities), travel expenses (for flights to and from the destination country), and even visa and application fees.
Some loans may also cover additional costs like health insurance, study materials, and exam fees. By covering these essential expenses, education loans allow students to focus on their studies and experience life abroad without the constant worry of financial constraints.
However, there are various factors to consider when applying for such loans. Below is an overview of the key aspects to keep in mind, including eligibility, loan amount, co-applicant requirements, documentation, and repayment details.
| Aspect | Details |
| Loan Purpose | – Covers tuition fees, living expenses, and other costs related to studying abroad |
| Eligibility | – Indian citizen – Secured admission to a recognized foreign university |
| Lenders | – Banks, NBFCs, and financial institutions offer loans – Compare interest rates, terms, and eligibility criteria to find the best option |
| Loan Amount | – Varies by lender, but can go up to INR 150 lakhs, depending on the program and university |
| Interest Rate | – Typically based on floating rates – Interest rates range from 7% to 15% (varies by lender) |
| Documentation | – Proof of income (co-applicant) – Academic records (marksheets, degree certificates) – Proof of admission (admission letter from the university) |
| Application Process | – Can be applied online or at the lender’s branch – Submit all required documents and information |
| Repayment | – Repayment typically begins after the course completion – Online payment options available |
| Co-Applicant | – Usually a parent or guardian (can also be a spouse or parent-in-law) |
| Collateral Requirement | – Some loans require collateral (e.g., property, fixed deposit) – Non-collateral loans are available for lower loan amounts or top institutions |
Also Read: Find out how much education loan you can get for pursuing higher education in India and abroad. Explore factors like family income and creditworthiness.
Types of Education Loans to Study Abroad
There are primarily two types of education loans available for students wishing to study abroad. One is a secured loan and the other is an unsecured loan, also known as a collateral-free education loan.
Secured loans are those where the borrower provides collateral (such as property, fixed deposits, or other valuable assets) to secure the loan. In case the borrower defaults, the lender can claim the collateral.
Unsecured loans do not require any collateral. These loans are granted solely based on the creditworthiness of the student and their co-applicant.
| Basis/ Loan Type | Secured Loans | Unsecured Loans |
| Definition | Requires collateral (e.g., property, fixed deposits). | No collateral is required; based on creditworthiness. |
| Loan Amount | Higher loan amounts, cover full education costs. | Lower loan amounts, typically covering tuition only. |
| Interest Rate | Lower interest rates due to collateral. | Higher interest rates as no collateral is involved. |
| Eligibility | Requires a co-applicant (usually a parent/guardian). | Stricter eligibility, focusing on credit history. |
Interest Rates on Education Loans to Study Abroad
Interest rates on education loans can vary depending on the country, the type of loan (secured or unsecured), and the bank or financial institution. SBI and HDFC Banks are two of the leading banks offering the lowest interest rates on education loans to study abroad. Their interest rates start from 8.15% p.a and 9.50% p.a onwards.
- Secured loans usually offer more favourable interest rates, often in the range of 8% to 12% p.a., depending on the collateral provided and the risk profile.
- Since unsecured loans carry higher risks for lenders, the interest rates tend to be higher, ranging from 10% to 15% p.a.
Also Read: Discover the advantages of simple interest on an education loan. Calculate interest easily and make informed decisions about repayment.
Tops Banks Offering Education Loans to Study Abroad
When applying for an education loan to study abroad, choosing the right financial institution is crucial. Here are some of the top banks and financial institutions offering loans to study abroad:
| Bank/Institution | Loan Type | Loan Amount | Interest Rate | Eligibility Criteria |
| State Bank of India (SBI) | Secured and Unsecured | Up to INR 1.5 crore | 8.50% p.a onwards | Co-applicant is required and must have secured admission |
| HDFC Bank | Secured and Unsecured | Up to INR 20 lakh | 9.50% p.a onwards | Must have admission to a recognized university |
| ICICI Bank | Secured and Unsecured | Up to INR 1 crore | 9.50% to 14.25% p.a | Good credit score, co-applicant required |
| Axis Bank | Secured and Unsecured | Up to INR 75 lakh | 13.70% to 15.20% p.a | Co-applicant and secured admission required |
| Bank of Baroda | Secured and Unsecured | Up to INR 80 lakh | 10.25% to 11.15% p.a | Co-applicant verified admission required |
| Prodigy Finance | Unsecured (for international students) | Up to USD 50,000 | 6% fixed + 5.06%* variable onwards | Only postgraduate students with eligible programs |
Please note: The interest rates on education loans to study abroad mentioned for the following banks have been taken from the official website of the lender. However, they may be subject to change. Please check the website for the latest updates.
Loan Repayment and Grace Period
Repayment terms for education loans to study abroad can vary based on the type of loan and the lender’s policies. Here are some important points to consider:
Grace Period: Most lenders provide a grace period after the completion of the course before the loan repayment begins. This period usually ranges from 6 months to 1 year, depending on the lender and the course duration.
Repayment Period: The repayment period for education loans can be quite long, with secured loans offering repayment terms of up to 15 years. Unsecured loans typically have shorter repayment periods, ranging from 5 to 10 years.
EMI Options: Borrowers can opt for Equated Monthly Installments (EMIs) to repay their loans, which may be fixed or floating, depending on the lender.
Documents Required for an Education Loan
To apply for an education loan, students will need to submit various documents to the bank or financial institution. Some of the key documents include:
- Admission Letter: A confirmed admission letter from the university or institution abroad.
- Identity Proof: Valid ID proofs such as Aadhar Card, Passport, or Driver’s License.
- Academic Records: Transcripts and certificates of previous education (e.g., 10th, 12th, degree).
- Co-Applicant Details: Identity and income proof of the co-applicant (usually a parent or guardian).
- Financial Documents: Bank statements, proof of income, or asset documents (for secured loans).
- Collateral Documents (for secured loans): Property papers, fixed deposit receipts, etc.
Also Read: The majority of applicants are unaware of the reasons behind their education loan rejection. Read this blog to find out about the same.
Tips for Getting an Education Loan
Securing an education loan is a vital step for many students wishing to study abroad. The loan application process can seem overwhelming, but with careful planning and research, you can increase your chances of approval and ensure you get the best terms. Here are some practical tips that will help you navigate the process and secure an education loan for your overseas education.
- Start Early: Begin the loan application process at least 6-8 months before your intended start date. This gives you ample time to gather documents and clear any hurdles in the loan process.
- Compare Interest Rates: Do thorough research to compare interest rates of different banks and NBFCs, loan amounts, and repayment terms from different banks and financial institutions.
- Improve Credit Score: A strong credit score can help you secure a loan with a lower interest rate, especially if applying for an unsecured loan.
- Consider Government Schemes: Some governments and institutions offer loan schemes with subsidized interest rates, so it’s worth exploring these options.
This was all about getting an education loan for higher studies abroad. Though securing an education loan is a great way to fund your studies abroad, it’s important to understand the different types of loans, interest rates, repayment options, and documentation required before you apply. By choosing the right loan and financial institution, you can ensure that your dream of studying abroad becomes a reality without financial stress.
To learn more about education loans, the best bank accounts for students, forex, banking experience for global students, or international money transfers, reach out to our experts at 1800572126 to help ease your experience with studying abroad.
FAQs
Yes, you can get education loans for studying abroad from banks or NBFCs, provided you meet the eligibility criteria.
Secured loans (requiring collateral) and unsecured loans (no collateral) are the two main types of education loans.
Interest rates for secured loans range from 8%-12%, while unsecured loans range from 10%-15%, depending on the lender and loan type.
Top banks include the State Bank of India (SBI), HDFC, ICICI, Axis Bank, and Bank of Baroda, offering both secured and unsecured loans.
Repayment typically starts 6 months to 1 year after course completion, with flexible EMI options. The term can range from 5 to 15 years.
Documents required include admission letters, academic records, identity proof, co-applicant details, and financial or collateral documents (for secured loans).
A good CIBIL score, usually above 650 to 700 is essential for securing unsecured loans and helps in getting lower interest rates on education loans.
Yes, Non-Banking Financial Companies (NBFCs) like Prodigy Finance offer education loans, especially for postgraduate programs abroad, without requiring collateral.
Loan amounts can vary, with banks offering up to INR 1.5 crore for secured loans and up to INR 20 lakh for unsecured loans. ICICI Bank, Axis Bank, HDFC Bank, etc offer unsecured loans of higher amounts up to INR 50 lakhs.
Start early, compare interest rates, maintain a good credit score, and ensure secured admission to a recognized institution to enhance loan approval chances.
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