Education Loan for Abroad Studies

All you need to know about education loans for studying abroad

Anam Shams is a seasoned professional in the study abroad field with deep knowledge of admissions and loans. With a passion for helping aspiring students fulfill their academic dreams, Anam...

Study Abroad Expert

Reviewed By: Aman

Aman Jain graduated from IIT Kanpur, and currently functions as the CMO at GyanDhan. He is deeply passionate about creating equality in higher education and has directly interacted with 2 Lakh...

What are Education Loans?

An education loan is a financial aid that helps students afford their higher education either in India or abroad. For abroad, different banks offer different loan types based on country and course. You can use the interest rates and the terms to choose the right education loan to study abroad.

However, suppose you have secured admission to a recognized university abroad that ranks among the top 500 QS World Ranking. This can help you get better interest rates and opportunities to cover your tuition and living expenses abroad.

Yet, when you start applying to different lenders it can be overwhelming because of overflowing documentation and formalities. You contact GyanDhan to guide you through this process. We help students find the best education loan for their study abroad needs, tailored to their unique profiles, ensuring a seamless and hassle-free loan approval process.

How to Get Student Loan for Study Abroad?

When you are considering an education loan for abroad studies, students often miss out on some details. Below are the steps that you can follow to build a roadmap to get an education loan:

List the expenses that you want to get covered during your studies.
Calculate the estimated loan amount you require.
Check the eligibility criteria of the lenders.
Prepare the documents.
Apply for the loan.
Upon approval, get the loan disbursed and start your abroad journey.

You can use the Vidya Lakshmi Education Portal to fill out your application. However, you can also use it to explore available scholarships

Expenses Covered in Loan for Study Abroad

The first step in getting a loan for study abroad is to calculate the expenses you want to cover. However, each lender has its own list of covered expenses. You can refer to the list below, but ensure to check with the lender. This will help you evaluate your options while applying for the education loan.

Tuition Fees:

This expense is covered by every lender however, the fund is directly released to the university account and not to your personal account. This covers a major part of your loan amount.

Living Expenses:

Most of the lenders provide the living expenses but, the covered expenses vary. Your living expenses cover your rent, electricity bill, and travel expenses.

Health Insurance:

Health insurance is mandatory for the abroad education but, only private banks cover the health expenses. Therefore, plan accordingly and try requesting your financial institution to cover your health insurance.

Visa Fees:

Not all lenders cover the visa fees, few lenders like NBFCs provide the visa fees. Therefore, you should arrange visa fees.

Air Ticket:

Any lender doesn’t provide the expense for the air ticket however, you need to request the lender to add the expense to the list. Most of the employees agree to air ticket costs.

While pursuing studies, many expenses are involved, such as books, laptops, course equipment, project work, study tours, and more. Most lenders include these expenses, but if they are not included, ask the lender to cover them.

Types of Education Loans for Abroad Studies

Education loan to study abroad are of two types, one that is taken with collateral that is a secured loan , and one taken without collateral that is an unsecured loan. You need to understand the difference between the two before choosing the one that is right for you.

Secured Education Loan:

When you get a secured loan from the lender you offer collateral like immovable property, FD, Insurance Policy, etc. against which the loan is offered.

What is Collateral?

Any property movable or immovable pledged against the collateral as a security against the loan is called collateral. Want to know about the type and documents considered as collateral? Read here.

How Much Can You Borrow Against Collateral?

The amount you can borrow against the collateral may vary based on the lender; however, around 70% to 80% of the collateral value is provided as the loan amount.

Who is the Guarantor?

When the loan amount is above INR 4 Lakhs, then the bank asks for a guarantor. Being a guarantor is a big responsibility because if an applicant defaults on the loan, he or she will be obliged to repay the education loan.

Features of Secured Loan:

Lower rate of interest.
The chances of approval are high.
Longer repayment period.
A higher loan amount can be availed.
No repayment during the study period.
Parental income is not required for approval.

Unsecured Education Loan:

When the borrower does not have any collateral to get their loan, they usually opt for an unsecured education loan.

Features of Unsecured Loan:

Higher interest rate, usually 1.5% - 4% higher than the secured loan.
Is a more risky proposition for the bank, hence is not so easy to obtain and requires a co-applicant.
Comparatively shorter repayment period.
Some repayment during the study period.
Parental income is required for approval.

Types of Lenders Offering Education Loans for Abroad Studies

When considering student loans for studying abroad, you have three main categories of lenders to choose from:

Banks
Non-Banking Financial Companies (NBFCs)
International lenders.

The lending choices within each category are as follows:

Public Banks:

Traditional financial institutions offer education loan to study abroad. The lenders topping the list are:

State Bank of India (SBI):

SBI is everyone's first choice among public banks for a loan to study abroad. They offer an abroad education loan under the Global Ed-Vantage scheme. The key features of the scheme are:

Loan Amount: Up to INR 1.5 crores with collateral and INR 50 Lakhs without collateral.
Interest Rate: 9.65% for women and 10.15% for men.
Loan Tenure: 15 years
Moratorium Period: Course duration and an additional 12 months.
Disbursement: Pre and post-disbursement options are available.

Punjab National Bank (PNB):

Some people consider PNB for education loans. They offer abroad education loans under the Udaan scheme. The key features of the education loan are:

Loan Amount: Up to INR 2 crores with collateral.
Interest Rate: 9.25% for both males and females for 50 listed universities. For unlisted universities, 10.50% for males and 10.00% for females.
Loan Tenure: 15 years
Moratorium Period: Course duration and an additional 12 months.
Disbursement: Pre and post-disbursement options are available.

Private Banks:

People often consider private banks when they are looking for an unsecured education loan. The popular leaders in the list are:

ICICI Bank:

ICICI Bank offers education loans to almost every university. However, students with offer letters from top universities can get approval for higher loan amounts. The key features of their education loan are:

Loan Amount: Up to INR 1.5 crores and a minimum of INR 20 Lakhs.
Interest Rate: 10.25% for secured loans and 11.25% for unsecured loans.
Loan Tenure: 10 years
Moratorium Period: Course duration and an additional 6 months.
Disbursement: Pre and post-disbursement options are available.

Note: ICICI Bank has two categories: Premium and General. The Premium category includes the top 100 universities, while the General category covers almost all universities. Loan amount and interest rate may vary depending on the category.

Axis Bank:

Axis Bank has a wide range of available universities with a variety of benefits. The key features of their education loan to study abroad are:

Loan Amount: Up to INR 1 crore without collateral.
Interest Rate: 11% to 11.5% based on the category.
Loan Tenure: 15 years
Moratorium Period: Course duration and an additional 6 months.
Disbursement: Pre and post-disbursement options are available.

Note: Axis Bank has two categories: Prime A and Prime B, which influence the interest rate and loan amount. You can borrow a minimum of INR 40 Lakhs under the Prime A category and INR 25 Lakhs under the Prime B category.

Non-Banking Financial Companies (NBFCs):

Non-Banking Financial Companies are financial institutions that offer various financial services similar to traditional banks but operate without a banking license.

HDFC Credilla:

Credilla is a subsidiary of HDFC Bank and offers competitive interest rates compared to other private banks. The key features of their education loan are:

Loan Amount: Up to INR 75 Lakhs without collateral.
Interest Rate: 11% per annum.
Loan Tenure: 10 years
Moratorium Period: Course duration and an additional 6 months.
Disbursement: Pre and post-disbursement options are available.

Note: HDFC Credilla has three categories: A, B, and C, which depend on academic scores. The most preferred exam they evaluate to categorize students is the GRE Exam, but it is not mandatory.

Avanse:

Avanse provides customized education loans for students, covering various expenses in the loan amount. The key features of their education loan are:

Loan Amount: Up to INR 50 Lakhs without collateral.
Interest Rate: 11.5%, based on the category.
Loan Tenure: 15 years
Moratorium Period: Course duration and an additional 6 months.
Disbursement: Pre and post-disbursement options are available.

Note: Avanse has three categories: A, B, and C, which affect your loan amount based on university and academic scores. You can borrow a minimum of INR 30 Lakhs in category C.

International Lenders:

Financial entities based outside your home country that specialize in offering international education loan to study abroad.

MPower:

MPower can be useful if you don’t have a co-applicant or collateral for the education loan. International lenders are often the last option because they tend to be expensive for students. The key features of their education loan are:

Loan Amount: Up to USD 100,000 without collateral.
Interest Rate: Charge 9.99% of interest rate per annum.
Loan Tenure: 10 years
Moratorium Period: Course duration and an additional 6 months.
Disbursement: Pre and post-disbursement options are available.

MPOWER Financing has a Path2Success program which provides a comprehensive solution for students planning to study in the USA or Canada. You can leverage some benefits such as visa services, including free preparation courses and mock interviews, financial services like US bank account prequalification and credit cards, and career services. Know more about the Path2Sucees Program.

Prodigy Finance:

Prodigy provides education loans for students who want to study abroad. Their network includes over 1,500 schools worldwide. The key features of their education loan are:

Loan Amount: Up to INR 50 Lakhs without collateral.
Interest Rate: 10.5% to 14%.
Loan Tenure: 10 years
Moratorium Period: Course duration and an additional 6 months.
Disbursement: Pre and post-disbursement options are available.

Education Loan Interest Rates for Abroad Studies

The education loan interest rate varies depending on the student's profile. Your course, university, and country play an important in your education loan amount. However, another factor that affects your interest rate is the co-applicant profile specifically in the unsecured loan options. You can use the table below to refer to the interest rates of the popular lenders.

Lender	Interest rate
SBI	10.15% (Men) and 09.65% (Women)
UBI	Repo Rate + 2%
PNB	10.50% for male and 10.00% for female
Axis	10.85%
ICICI	10.25%
IDFC	11%
Credila	12.75%
Avanse	12.75%
InCred	11.85%
Auxilo	11.5%
MPOWER	9.99%
Prodigy	10.5%

Eligibility For Education Loan for Abroad

Education loan abroad eligibility is straightforward but it can vary for different lenders. The general eligibility criteria to get a student education loan for study abroad are listed below -

Nationality: Must be an Indian citizen.
Admission: Secured admission through merit or entrance tests.
Course Type: Enrolled in career-oriented courses (UG/PG).
Academic Performance: At least 50% marks in the last qualifying exam.
Collateral: For secured loans, collateral might be required.
Co-applicant: For unsecured loans, a co-applicant with a strong financial background may be necessary.
University and Course Reputation: Factor in loan approval.

Relation between co-applicant income & loan amount.

Documents Required for Education Loan for Abroad Studies

Education loan required documents vary from lender to lender and also depend on the type of education loan applied for. Here’re the general documents required by almost every lender:

Document Type	Required Document
KYC Documents	PAN card Driving license Aadhar card
Address Proof	Aadhar card Valid water/electricity/LPG Bill Voter’s ID card Current house lease agreement Valid passport
Academic Record Documents (From Applicant)	10th result 12th result Proof of admission Undergraduate result semester-wise (If required) Entrance exam result - abroad institutes (GRE, GMAT, TOEFL, IELTS, etc.)
Financial Documents from the Co-applicant	Salary slips of the last 3 months Copy of Form 16 for last 2-3 years or copy of IT Returns for last 2-3 financial years, acknowledged by Income Tax Dept. Bank account statement for the last 6 months (salary account). Business address proof (If Applicable) TDS certificate (Form 16A, if applicable) Last 3 years ITR Certificate of qualification (for C.A./Doctor and other professionals) Bank account statement for the last 6 months
Technical Documents for Collateral (For Secured Loan)	Approved layout plan and permissions (if applicable) NOC and allotment letter Possession certificate (if applicable) Copy of prior sale deeds Conversion certificate where the property has changed from agricultural to non-agricultural use Urban clearance certificate
Legal Documents for Collateral (For Secured Loan)	Sale/gift/partition deed Khata certificate and extract Encumbrance Certificate (EC) Latest property tax receipt

Key Features of Education Loan for Abroad Studies

When you are getting an education loan, you should be aware of the key features that will help you choose the right lender based on your profile.

Loan Coverage: Check with your lender about the expenses they can cover in the education loan amount. Most lenders cover your living expenses, tuition fees, and insurance costs.

Interest Rate: The lender provides the interest rate based on the collateral or co-applicant profile. Thus, make your profile stronger by adding a stable co-applicant.

Moratorium Period: Every lender provides a grace period, which includes the course duration and an additional 6 months or 1 year. This period determines when your EMI payments will start.

Repayment Tenure: Most lenders provide a repayment tenure of up to 12 years. So, confirm with your lender about the prepayment options and any penalties related to early repayment.

Exchange Rate Protection: Many lenders offer exchange rate protection schemes to safeguard your loan amount from currency fluctuations, ensuring stability in repayment.

Special Loan Schemes: Government and universities offer schemes that provide subsidies and concessions on processing fees and interest rates. Be sure to check if you qualify for these benefits.

Follow the right steps and avoid loan rejections

Best Lenders to Get an Education Loan for Abroad Studies

A comprehensive comparison of some of the best lenders offering education loans is tabulated below in order to find the best education loan for abroad studies. Detailed information on each lender’s loan amounts, interest rates, moratorium periods, and other essential factors is provided, enabling you to make informed decisions.

Public Banks:

Basis of Difference	UBI	SBI
Loan Amount (Unsecured)	Up to INR 40 Lakh	Up to INR 50 Lakh
Interest Rate	Starting at 9.8%*	10.15% (Men)* 09.65% (Women)*
Moratorium Period	Course + 12 months	Course + 6 months
Unsecured Loan Eligibility	Only for master program	Top 100 universities
Financial Co-applicant Required*	Yes	Yes
Processing Fees	10,000 INR + GST	10,000 INR + GST
Processing Time	Up to 15-20 days	Up to 14 days
Margin Money	10-15%	10-15%
Repayment Tenure	15 years	15 years
Repayment Options*	Full Moratorium and PSI	Full Moratorium and PSI
Premiere Institute List	Have a list that can lead to fluctuation in interest rate	Have a list that includes the top 100 universities
Loan Approval Basis GRE / GMAT?	No	No
Tax Benefit*	Yes	Yes

SI - Simple Interest; PSI - Partial Simple Interest; EMI - Equated Monthly Installment
*Interest rate as of January 2025

Private Banks:

Basis of Difference	IDFC First Bank	ICICI Bank	Axis Bank
Maximum Loan Amount	Secured loans - INR 1 cr, Unsecured loans - INR 75 Lakh	Secured loans - INR 1 cr, Unsecured loans - INR 40 Lakh	Up to INR 40 - 75 Lakh
Interest Rate	11.50 - 12.25%	9.85 - 15.5%	11 - 11.5%
Moratorium Period	Course period + 12 months	Course period + 6 months	Course period + 12 months
Unsecured Loan Eligibility	Only for master program	Only for approved courses	Only for approved courses
Financial Co-applicant Required*	Yes	Yes	Yes
Co-applicant Minimum Income	INR 35,000 / per month	INR 60,000 / per month	INR 35,000 / month
Processing Fees	1 - 1.25%	0.5 - 2%	0.75% of the loan amount + GST
Processing Time	Up to 15-20 days	Up to 14 days	-
Margin Money	Nil	0 - 15%	0 - 5%
Repayment Tenure	12 years	8 - 12 years	15 years
Repayment Options*	Simple or Partial Interest	Simple Interest (SI)	Simple Interest (SI)
Pre-approved College Lists	Colleges and universities are divided into three categories i.e. Platinum, Titanium, and Gold	Colleges and universities are divided into four categories i.e A1, A2, A3 & A4	Colleges and universities are divided into four categories A, B, C, and D
Loan Approval Basis GRE / GMAT?	Yes	No	Yes
Tax Benefit*	Yes	Yes	Yes

*Interest rate as of January 2025

NBFCs:

Features	HDFC Credila	Avanse	Auxilo	InCred
Maximum loan amount	INR 20 - 75 Lakh	INR 20 - 75 Lakh	INR 20 - 75 Lakh	INR 20 - 80 Lakh
Interest rate*	11.25 - 13%	12.25 - 14%	12 - 13.25%	11.65 - 13.5%
Moratorium period	Course period + 1 year	Course period + 1 year	Course period + 1 year	Course period + 1 year
Unsecured loan eligibility	Only for master program	Only for master program	Only for master program	Only for master program
Financial co-applicant required*	Yes	Yes	Yes	Yes
Minimum co-applicant income (negotiable for secured education loans)	INR 30,000 - 60,000	INR 30,000 - 60,000	INR 20,000 - 40,000	INR 20,000 - 40,000
Processing fee	0.5 - 1.5% of the loan amount + GST	1 - 2% of the loan amount + GST	0.5 - 1.5% of the loan amount + GST	0.5 - 1% of the loan amount + GST
Processing time	Up to 7-10 days	Up to 14 days	Up to 5-7 days	Up to 10 days
Margin Money	Nil	Nil	Nil	Nil
Repayment tenure	12 - 15 years	12 - 15 years	12 - 15 years	12 - 15 years
Repayment Options During Moratorium*	Simple Interest (SI) or partial Simple Interest (PSI)	Simple Interest (SI) or partial Simple Interest (PSI)	Simple Interest (SI) or partial Simple Interest (PSI)	Simple Interest (SI) or partial Simple Interest (PSI)
Tax benefit*	Yes	No	No	No

*Interest rate as of January 2025

Advantages of Abroad Education Loan

If you are getting an education loan to study abroad, you can take advantage of the following features:

You can sponsor your abroad education.
Can customize the repayment plans of the education loan.
Take advantage of the Government Schemes to avail the benefits.
Many lenders provide a moratorium period thus, making the studies convenient.
You can avail a tax benefit under Section 80E on the interest rate.

How Do I Apply for an Student Loan for Abroad?

Applying for student loans India studies abroad can be quite simple if done carefully. To help you answer the question, 'How do I get an education loan for abroad studies?' here are some steps that will assist you.

Check eligibility with GyanDhan: GyanDhan evaluates your profile and selects the best lender for you, making it easier to navigate the loan application process.

Discussion with education loan counselor: GyanDhan’s education loan counselor will connect with you and help you understand all about foreign education loans and your chosen lender. The counselor will also provide you with a document checklist as well.

Document submission & verification: GyanDhan streamlines the document submission process by offering doorstep pickup or a customized checklist for online uploads. Once submitted, they manage all remaining formalities and collaborate with the lender to verify your documents efficiently.

Loan approval & disbursement: When all the documents are verified, you will get a loan approval letter and an agreement to sign. Once all this has been done you can take the loan disbursement as per your convenience.

Frequently Asked Questions

What determines the interest rate on an education loan?

The interest rate on an education loan is determined by various factors, including the applicant's creditworthiness, co-applicant's financial profile, loan amount, loan tenure, type of interest rate (fixed or floating), and the lender's internal policies. Students with a strong credit history and co-applicants with stable financial backgrounds are more likely to secure a lower interest rate.

Define margin money concerning education loans.

Margin money in education loan refers to the portion of the total educational expenses that the borrower needs to finance from their own funds. It is the percentage of the course cost that is not covered by the loan and needs to be borne by the student or their co-applicant. The remaining amount, after deducting the margin money, is financed through the education loan.

How long is the moratorium period for education loans?

The moratorium period for education loans is the time during which the borrower is not required to make any loan repayments. It typically starts from the course completion date and extends for a certain period afterward, allowing the student to focus on finding employment and settling into their new career. The duration of the moratorium period varies among lenders but is usually around 6 to 12 months.

What is the purpose of education loan insurance?

Education loan insurance provides financial protection to the borrower and their family in case of unforeseen events, such as the borrower's untimely demise or permanent disability. This insurance coverage ensures that the loan does not become a burden on the family, as the insurance company settles the outstanding loan amount, allowing the borrower's educational aspirations to be fulfilled even in their absence.

What are the different types of interest rates available for education loan in India for study abroad?

Education loans typically offer two types of interest rates - fixed and floating. In a fixed interest rate, the rate remains constant throughout the loan tenure, providing stability in repayment amounts. On the other hand, in a floating interest rate, the rate fluctuates based on market conditions, potentially leading to varying monthly installments.

What does autopay mean in the context of education loans?

Autopay, in the context of education loans, refers to a convenient payment method where the borrower authorizes the lender to deduct the monthly loan installment automatically from their bank account on a specified date. This automated payment ensures timely repayment and reduces the chances of missing deadlines, helping students manage their loan obligations efficiently.

What is the role of a guarantor in an education loan?

A guarantor plays a significant role in securing a bank loan for study abroad. If the borrower defaults on payment, the guarantor has a legal obligation to repay the loan amount. For loans exceeding INR 4 lakh, the bank may require a third-party guarantee. In these situations, the guarantor becomes liable to repay the entire loan amount to the bank if the borrower fails to do so.

What is the maximum loan limit for foreign study loan?

In secured student loans for studying abroad, one can get up to INR 1.5 cr. In overseas education loans without collateral, students can apply for study loans of up to INR 75 Lakh. This loan amount limit can increase or decrease depending on the applicants and co-applicants profile, country, course, etc.

How can one avail tax benefits on education loans?

In India, under Section 80E of the Income Tax Act, individuals can avail tax benefits on the interest paid on education loans. The entire interest amount paid during the financial year is eligible for deduction without any upper limit. However, the principal amount repayment does not qualify for tax benefits.

Explain the concept of an education loan top-up.

An "education loan top-up" allows borrowers who have an existing education loan to obtain additional funds over and above the original loan amount. This option is beneficial when students require extra financial assistance due to increased educational expenses or unforeseen circumstances. The top-up amount is added to the existing loan, and the borrower continues to repay the combined loan amount as per the agreed terms.

Which are best bank for abroad education loan?

For those seeking secured education loans to study abroad, banks like SBI and UBI are often recommended for their favorable interest rates and terms that require collateral. Conversely, for unsecured loans, which do not require collateral, AXIS, ICICI, and HDFC Credila are popular choices among students for their specialized education loan products. It's advisable to compare these options based on your financial needs and repayment capacity.