Education Loans for MBBS Abroad: A Detailed Overview

It’s a no-brainer that studying MBBS abroad is not a cheap affair at all. Once the student obtains a medical seat in any popular medical college in the world. The next big requirement that he has to encounter is the high tuition fees. It is when education loans for MBBS abroad come into the picture. Abroad education loans have become a default choice for Indian students who want to go overseas for higher education. As the number of foreign colleges and universities offering MBBS courses is very few, students need to be aware of the options of education loans for MBBS overseas, to ensure that the hard-earned opportunity is not missed.

It is important to note that it is almost impossible to get unsecured loans for MBBS abroad as private lenders usually refrain from giving an MBBS loan considering its duration and a few other factors. Does this mean that students can’t get a study loan for MBBS abroad? No, students can get an overseas MBBS loan based on collateral. In this blog, we have shed some light on the details of education loans for studying MBBS abroad.

Features of Education Loan for MBBS Abroad

When pursuing an MBBS abroad, students often rely on education loans to cover tuition fees, living expenses, and other costs. Indian banks and financial institutions offer specialized loans for medical studies abroad, with some covering up to 100% of expenses. Popular destinations include Russia, Ukraine, and the Philippines, where fees are relatively affordable compared to Western countries.

Key factors to consider while planning for an education loan include loan amount, interest rates, repayment terms, and eligibility criteria. Moreover, students should check if the institution is recognized by global medical councils, as this can impact future career opportunities.

Secured Loans for MBBS Abroad:

Most of the students who go for foreign MBBS courses choose countries like China, Ukraine, the Philippines, etc., which are not on the list of preferred countries by private lenders in India. Also, the risk evaluation and the approximate duration to recover the loan make lenders resist launching any product for MBBS education loan without collateral. It leaves students to apply for secured education loans from public-sector banks.

Secured Education loans for MBBS Abroad Options:

Secured education loans are given based on collateral. Government banks in India are the best banks for MBBS courses, considering the lower interest rates, chances of approval, tax benefits, etc. Some of the major public-sector banks in India offering loans with collateral are SBI, Bank of Baroda (BOB), and Punjab National Bank (PNB). As these entities are government-backed, their trust factor also outweighs others.

Types Of Secured Education Loan For MBBS Abroad:

A secured loan requires collateral, yet the type of collateral affects the type of secured loan and the loan amount:

Loan Against Property (LAP):

• 
  Collateral: Residential house, apartment, or commercial property.
• 
  Loan Amount: 70-90% of the collateral value, up to INR 3 crores.
• 
  Benefits: Lower interest rates, flexible repayment tenure (10–15 years), and high approval chances.

Loan Against Fixed Deposits (FDs):

• 
  Collateral: Bank Fixed Deposits.
• 
  Loan Amount: Usually up to 90%–95% of the FD value.
• 
  Benefits: Quick approval, minimal documentation, and lowest interest rates.

Loan Against Insurance Policies:

• 
  Collateral: Eligible life insurance policies with surrender value.
• 
  Loan Amount: Generally up to 80%–90% of the policy’s surrender value.
• 
  Benefits: Simple process, moderate interest rates, fast disbursal.

Loan Against Government Bonds/Securities:

• 
  Collateral: Bonds, debentures, or other approved securities.
• 
  Loan Amount: Typically up to 80%–90% of market value.
• 
  Benefits: Competitive interest rates, relatively easy documentation.

Read more about: Education Loan for MBBS in Russia

Cost of Study for MBBS in Top Countries

The table given below talks about the average tuition fee and living expenses for the top countries that offer MBBS. 

Types of Education Loan for Medical Studies

You must understand the various factors that influence the education loan for MBBS abroad. Considering such factors will help you make an informed decision.

Depending on the Study Destination:

• 
  Domestic Education Loan: These loans are designed for students who are aiming to pursue their medical education in India only.

• 
  Study Abroad Education Loan: These loans target students who desire to pursue their medical education from abroad.

Depending on the Academic Level:

• 
  Loans for Undergraduate Studies: These loans are designed for students who wish to enroll in undergraduate courses. Students to become eligible for such loans must have passed their secondary education.

• 
  Loans for Postgraduate Studies: Those who are enrolled in postgraduate programs become eligible for these types of loans. 

Depending on the Security Offered:

• 
  Loans Secured by Deposits: In such loans, borrowers are required to pledge fixed or recurring deposits as collateral.

• 
  Loans Secured by Property: Borrowers pledge immovable assets such as houses, apartments, or land as security. 

• 
  Loans Secured by Financial Instruments: Borrowers use securities like bonds, debentures, or equity shares as collateral to secure loans.

• 
  Loans with Third-Party Guarantee: Under this type of loan, the borrower requires a guarantor, such as a relative or friend, to co-sign the loan agreement.

To learn more about the types of collateral accepted in an Education Loan, click here.

Why No Unsecured Loans for MBBS Abroad?

Pursuing an MBBS degree abroad can be a costly venture, as it includes lots of expenses. The cost of the course can be around INR 30-60 Lakhs, which includes only tuition fees, living costs, travel, and visa charges.

Other expenses, such as books and instruments, are added on while the MBBS study abroad starts. Thus, many students seek education loans to fund their medical studies. However, unsecured loans without collateral are rarely granted for MBBS abroad. Here's why:

Loan Default:

Students are required to clear FMGE/NExT to practice in India, which takes around additional one-year of the student's life. However, the pass rate of the exam is low, and abroad job opportunities require a Master’s.

Course Duration:

MBBS abroad takes 5–6 years, delaying repayment and increasing risk for lenders.

No Guaranteed Income:

Unlike tech or business degrees, medical graduates face licensing barriers and limited job options post-study.

Banking Policies:

Most lenders don’t approve unsecured loans for MBBS programs in countries with lower perceived academic or career value.

Need for Collateral:

Collateral-backed loans reduce risk, allowing higher loan amounts and better interest rates.

Top Banks that Offer Secured Education Loan for MBBS in Abroad

Here are the top lenders that can provide you with an education loan for MBBS abroad. The target country does matter in this case, but a generalized idea about how much loan you can take is given below:

Interest Rate of Education Loan For MBBS in Abroad

Public-sector banks, as stated above, offer education loans at lower interest rates in comparison to private lenders. The study abroad loan interest rate in India is determined by banks based on the Marginal Cost of Funds-Based Lending Rate (MCLR). It is the benchmark on which most Indian lenders calculate the foreign education loan interest rates. This MCLR is evaluated by taking into account several factors such as the marginal cost of funds, the tenure premium, the operating cost, etc.

Though the MCLR is the basis of all the abroad education loans for MBBS fixed by the Indian lenders, most public-sector banks’ interest rates are calculated as MCLR + Spread (a premium amount levied by lenders). Typically, the interest rate of government bank education loans ranges between 8% and 10%. For instance, SBI education loan for MBBS abroad starts around 8.8% p.a. The maximum loan amount that can be sanctioned by government banks could go up to INR 1.5 Crores.

Special Education Loan Schemes for MBBS

Below are some of the schemes offered by various lenders to make higher education more feasible.

• 
  SBI Global Ed-Vantage Scheme: This scheme is designed for students who wish to study MBBS abroad. Students can get a loan amount of up to INR 1.5 cr. at very low interest rates with a repayment period of up to 15 years.

• 
  Bank of Baroda Education Loan for Medical Studies: Under this scheme, a student can avail loan amount of up to INR 80 lakhs with a repayment period of 15 years. 

• 
  HDFC Credila Medical Education Loan: A student can get up to 100% coverage of their tuition fee and hostel charges under this scheme with a flexible repayment period.

• 
  Axis Bank Education Loan for MBBS: Students enrolled in a course like MBBS can secure a loan amount of up to INR 75 lakhs. Students can borrow unsecured loans up to INR 40 lakhs under this scheme.

Eligibility Criteria Of Secured Loans For MBBS Abroad

Some of the common eligibility criteria for secured loans in India for abroad education are: