Education Loans for
Abroad
Studies
Education Loans for Abroad Studies
Discover and explore different types of education loan options for studying abroad with the lowest interest rates. This page will cover leading lenders, eligibility criteria, required documents, and the step-by-step application process.
What is an Education Loan?
Education loans, also referred to as student loans, provide financial assistance to students, enabling them to pursue their studies without financial stress. Various education loan options are available in the lending market, allowing students to choose the one that best fits their profile and needs.
Our smart eligibility checker saves you time by providing accurate results and recommending the best loan options tailored to your profile.
Education loan options have expanded significantly compared to the past, now accommodating students from diverse financial backgrounds. At Study Bank, we strive to bridge this gap by providing expert guidance and customized solutions to support your educational journey.
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Education loan categories
Education loans are generally classified into two main types: Secured and Unsecured. The table below provides a comparison of these two loan types:
| Secured education loans | Unsecured education loans |
|---|---|
|
Collateral security is required to apply for the loan, and the loan amount is determined based on the value of the pledged collateral. |
No need to pledge collateral security. Education loan is provided against your co-borrower’s income.
|
|
The rate of interest is lower than unsecured education loan options.
|
Carries a higher interest rate compared to secured education loan options.
|
|
Offer extended repayment periods.
|
The repayment period is relatively shorter compared to secured education loan options.
|
|
No need to prove your parental income.
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Your parental income must be up to the set standards.
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Unsecured education loans come in various categories to meet different financial needs, including:
- Education Loans Without Collateral or Co-Borrower: These loans are provided by international lenders and do not require collateral or a co-borrower. However, eligibility depends on whether your admitted university is listed by the lender.
- Education Loans with a Co-Borrower in the US: These loans are available from major banks in the US if you have a US citizen or permanent resident as your co-borrower. For convenience, they are often referred to as US Cosigner Loans.
Lenders of education loans
- 1. Banks – Traditional financial institutions offering both secured and unsecured education loans.
- 2. Non-Banking Financial Companies (NBFCs) – Private financial entities that provide flexible loan options, often with quicker processing.
- 3. International Lenders – Financial institutions outside India that offer loans without collateral, usually based on university and student profile.
Top features of education loans for abroad studies
| Features | US banks | Indian public banks | Indian private banks | Indian NBFCs | International lenders |
|---|---|---|---|---|---|
|
Maximum loan amount |
“15,000 – 220,000 USD (INR 12.5 Lakh – 1.8 Cr Approx.)” |
Up to INR 1.5 Cr |
Up to INR 60 Lakh – 1 Cr Approx. |
Up to INR 40 – 60 Lakh Approx. |
100,000 USD (INR 83 Lakh Approx.)
|
|
Loan type |
Unsecured |
Secured & Unsecured |
Secured & Unsecured |
Unsecured |
Unsecured |
|
Interest rates |
5.66% – 16.37% APR |
9.5% – 10% |
10.28% – 12.5% |
10.5% – 13.5% |
11% – 20% APR
|
|
Processing fee |
0 |
INR 10,000 |
1% of the loan amount |
1% of the loan amount |
Repayment tenure |
|
5% of the loan amount
|
Up to 15 years |
Up to 15 years |
Up to 15 years |
Up to 15 years |
Up to 10 – 20 years
|
|
Grace period |
9 months |
6 – 12 months |
6 – 12 months |
6 – 12 months |
6 months
|
|
Co-borrower requirement |
A US citizen or a permanent US resident is required as the financial co-borrower |
No financial co-borrower is mandatory for secured loans |
A financial co-borrower with sufficient income is required |
A financial co-borrower with sufficient income is required |
No co-borrower is required
|
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Eligibility requirements for education loans
However, the following requirements need to be fulfilled to apply for any education loan:
- You must be a citizen of India or an NRI
- You must have secured or be awaiting admission to a university abroad
- Your co-borrower’s CIBIL scores should be sufficient as demanded by the lender
- Documents you submit must be legally valid
Documents required for education loans for abroad studies
Documents from the student:
- Duly filled loan application form
- Recently taken passport-size photographs
- KYC documents of the student and co-borrower – Aadhar, Driving license, passport, etc.
- Address proof
- Proof of admission or application
- Academic documents – undergraduate, +2, 10th certificates
- Entrance test results – IELTS, GRE, GMAT, TOEFL, etc.
- Bank statement of the last 6 months.
Documents from the co-borrower:
- KYC documents of the student and co-borrower – Aadhar, Driving license, passport, etc.
- Address proof
- Recent passport-size photographs
- Proof of income
- Bank account statement for the last 6 months
- Salary slips of the last 3 months
- IT Returns and other documents, if self-employed co-borrower
- Collateral documents if the loan is secured
How to choose the best abroad education loan?
Taking an education loan is an important financial decision you make while being a student. Here are some checkpoints to ensure you get the best education loan:
- Interest Rates: Choosing an education loan with the lowest possible interest rate is ideal. Lower interest rates can help you save money in the long run, as even a slight variation can make a substantial difference in your total repayment amount.
- Interest Rate Variations Across Countries: Interest rates on loans in INR are generally lower compared to those in USD. If a loan in the US appears to have a lower interest rate than an Indian loan, keep in mind that the actual cost will be significantly higher once converted to INR.
- Repayment Period:It is important to select an education loan with a repayment tenure that suits your financial situation. If the repayment period is not favorable, consider negotiating with the lender or exploring alternative loan options.
- Tax Benefits: Education loans from Indian banks and HDFC Credila provide tax benefits under Section 80E of the Income Tax Act. Choosing a loan with tax benefits can help you reduce your overall financial burden and save more money.
- Additional Expenses: Education loans may include costs such as forex conversion fees, processing charges, and insurance premiums. It’s essential to evaluate these expenses and select a loan with the lowest possible charges to reduce overall costs.
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Frequently Asked Questions (FAQs)
What is margin money in education loans?
Margin money refers to the amount that the student has to contribute to the total loan amount. For example: if your loan has a 5% margin, you will get only 95% of the loan amount, and it’s your duty to add the remaining 5% to the loan.
Can I get a 100% loan to study abroad?
Yes. If approved, many lenders offer education loans with no margin money that cover 100% of your expenses. However, it is mandatory that you meet the eligibility requirements.
What is the maximum loan amount students can get from education loans?
From Indian lenders, students can get up to INR 1.5 Cr and from banks in the US, the maximum loan amount can be up to INR 1.8 Cr. If approved, the maximum loan amount depends on your co-borrower’s income (or collateral value), country and course of study, and similar other factors.
Who can be a co-borrower for an education loan?
In India, the co-borrower must be a close relative of the student, such as a parent, sibling, spouse, or parent-in-law. They must meet the lender’s minimum income requirements without other major financial obligations, along with additional eligibility criteria for approval.
Why there is insurance for education loans?
Education loan insurance helps when unexpected events, like the student’s untimely demise, occur. The insurance company will take care of the loan, thereby not troubling the student’s family with repayment.