Indian students are becoming more and more inclined to complete their studies overseas. While the US, UK, and Canada continue to be some of the top options, Australia and EU nations are not far behind in terms of educational prospects. Getting an education loan for abroad studies is one of the most preferred options to finance education during the time of the course. For students who aspire to study abroad, many banks and other lenders now provide overseas education loans. Different student loan programmes are available from these lenders, but picking the one that is best for you might be challenging. We at UniCreds bridge the gap & help you tackle this challenge of choosing the best education loan. Our experts guide you to pick the most suitable competitive education loan available today.
There are two types of student loans for abroad studies in India on the basis of Collateral. Both types are explained in detail below:
Secured Education Loan: A secured education loan, often known as a loan with collateral, requires the applicant to provide either material or immaterial security. A pledge of security to the lender may take the form of real estate, a fixed deposit, a life insurance policy, etc. Since the bank needs to confirm all the paperwork pertaining to the pledged security, this type of loan acceptance takes longer. However, it has lower interest rates on international student loans, lengthier payback schedules, and no repayment throughout the course of school. Additionally, there is a larger likelihood that this education loan will be authorised, and parental income is not a factor in a loan acceptance.
Unsecured Education Loan: In the case of an unsecured education loan for foreign studies, the applicant is not required to put up any security. This is a loan for abroad education loan without collateral. This form of student loan is suitable for students who do not have any security to give. However, it should be noted that an unsecured education loan is more difficult to get approval for and has a higher rate of interest (compared to secured loans). Unsecured student loans also have a shorter repayment period and certain repayments must be made while the borrower is still in school. Additionally, for non collateral education loan for abroad, a minimum co-applicant income is required.
All about Collateral
A valuable object is used as collateral to secure a loan. Lenders' risk is reduced by collateral. The lender has the right to sell the collateral if a borrower defaults on the loan in order to recover its losses. There are different types of instruments that are accepted as collaterals. Collateral can be any sort of liquid assets, such as bonds, shares, FDs, or any immovable property, such as a house, any business property, or just land. The fact that agricultural land is not recognised as collateral is a crucial consideration. Additionally accepted as collateral are shares, bonds, bank deposits, mutual fund shares, gold, debentures, bank deposits, life insurance policies, and government securities.
Now students can also obtain abroad education loans without collateral. For loans up to INR 7.5 lacs, parents or guardians are added as co-borrowers, and a third-party guarantee is acquired. Property or any other asset must be pledged as security for loans that are more than INR 7.5 lacs.
Check out these top government and private student loan providers in India:
For technical, professional, or career-oriented courses, students may apply for a study abroad loan in Axis Bank. Hostel costs, tuition costs, book costs, and other costs are covered by the loan amount, which starts at Rs 50,000 with competitive interest rates. With Axis Bank, the entire loan application process is simple.
Key Points
Student loans for college are authorised under the Baroda Scholar programme for students who have been admitted to professional and technical programmes like MBA, MCA, MS, etc. The loan cap is Rs. 80 lakhs for institutions that are specifically listed and Rs. 60 lakhs for institutions that are not.
Key Points
Numerous NBFCs, in addition to banks, provide education loan for abroad studies. NBFC frequently have fewer requirements for education loan for abroad eligibility.
Established in 2013, Avanse is a new-age education loan firm that strives to create seamless loans for those Indian students wishing to study abroad. The specifics of Avanse's student loans are as follows:
Maximum Amount |
Need-based Starting from Rs 1lakh |
Tenure of the Loan |
10 years including course tenure |
Margin Requirement |
No margin required |
Rate of Interest |
Avanse Base Rate + Spread Depends on your credit profile and the course is undertaken |
Processing Fee Charged |
1-2% of the loan amount decided on a case to case basis |
The goal of HDFC Credila, India's first specifically designed education loan, is to help students realise their dreams of pursuing higher education overseas. Credila's loan approval is available even before receiving official admission.
Maximum Amount |
Need-based Starting from Rs 1lakh |
Tenure of the Loan |
12 years |
Margin Requirement |
No margin required |
Rate of Interest |
Credila Benchmark Lending (12.55% current) Rate + Spread Depends on your credit profile, collateral offered, the course undertaken, etc |
Processing Fee Charged |
1-1.25% of the loan amount decided on a case to case basis |
Auxilo is a new player in the school loan market, but it has already established itself by providing education loan for abroad studies to numerous students. The primary characteristics of an Auxilo education loan are:
Maximum Amount |
Based upon the needs of students |
Tenure of the Loan |
10 years |
Margin Requirement |
No margin loans are available |
Rate of Interest |
Auxilo base interest rate (12.7% current) + a spread Depends on your credit profile, collateral offered, the course undertaken, etc |
Processing Fee Charged |
Up to 2% of the sanctioned loan amount |
All prospective students may apply for study abroad loan through the NBFC InCred. The following information relates to their loans for studying abroad:
Maximum Amount |
Rs 1 crore (Secured ) Rs 40 lakh (unsecured) |
Tenure of the Loan |
10 - 15 years |
Margin Requirement |
No margin loans are available |
Rate of Interest |
12% onwards Depends on your credit profile, collateral offered, the course undertaken, etc |
Processing Fee Charged |
1-1.5% of the sanctioned loan amount |
Numerous banks and commercial institutions in India provide education loans for abroad studies both domestically and overseas. However, each lender has a unique collection of products and services available. Banks differ significantly in terms of interest rates, processing fees, moratoria, prepayment policies, tax advantages, repayment lengths, and other factors. Therefore, it is important to examine options before choosing one that suits your demands.
When choosing a bank for a study abroad loan, the interest rate is still the most crucial factor to take into account because even a minor difference can result in huge financial savings. Learn the distinctions between fixed and floating interest rates, evaluate the interest rates provided by different banks and financial institutions, and select the most economical choice.
Section 80E of the Income Tax Act of India, 1961 permits tax deductions on the interest portion of student loans obtained from scheduled Indian banks and gazetted financial organisations. Tax deductions are available for a total of 8 consecutive years, starting with the year the loan is taken and continuing for 7 years after that, or until the interest portion of the loan is fully repaid, whichever comes first.
The amount of the education loan for abroad studies issued relies on a number of variables, including the co-credit applicant's history, academic background, and reputation of the college or university. Some banks only cover a portion of the cost of schooling, but other banks pay the full cost. Ask your lender for a student loan & what expenses are covered by the loan. These expenses include tuition, lab and equipment fees, library and test fees, personal expenses, and airfare in the case of international education.
There is a predetermined time during the loan term when the borrower is excused from repayment obligations. A major benefit of loans with a moratorium term is that you don't have to worry about making payments while you're studying abroad.
The less interest accrues on your principal amount as the loan is repaid, the more money you will save. Ask your lender if there will be a prepayment penalty. As a result, after you land a job, you can come up with a plan to pay back the loan as quickly as you can.
It's important to meet the deadlines while applying to universities abroad. The loan sanction letter is a crucial document that must be shown as proof of financial resources when applying for a visa and for a university. Asking several lenders about their loan processing times will help you organise your entire application procedure appropriately.
Always estimates the amount you will get at the time of distribution because any fluctuations in the exchange rate could have an impact on it.
The Indian Government has multiple education loan schemes that students can avail for their studies abroad. We are mentioning a few of them below.
Students who wish to apply for these education loan schemes must carefully review the terms and conditions of each scheme and choose the one that best fits their needs.
It is essential that students check if they are eligible to apply for an education loan for abroad studies. Although each bank or financial institution will have particular criteria or eligibility for education loans; we have some general terms and conditions that are common among them all. The following is a list of the typical terms and conditions that any bank will usually adhere to when providing an education loan.
Note: Please be aware that each bank may have its own qualifying requirements, which must be followed when applying to that specific bank
Documents needed for education loans for abroad studies differ depending on the lender and the type of loan being requested. The applicant must be fully informed of the documentation needed to apply for a study loan abroad before applying for education loan. The standard paperwork that almost all lenders demand is listed below:
Essentials
KYC Documentation
Address Proof
Academic Record Documents of the Applicant
For Salaried Co-Applicant
For Self-employed Co-Applicant
Collateral Related Documents (If applicable)
It is usually good to apply for an education loan for abroad studies a little early because the entire loan process—from loan application to approval and disbursement—takes time. Before understanding the whole application process; here are a few things that a student must do prior to officially applying.
Take the following actions to apply for a student loan through UniCreds:
Step 1: Check your loan eligibility online
Step 2: Seek professional loan advice to weigh your options
Step 3: Choose a lender and submit an online application
Step 4: Get the personalised education loan paperwork checklist
Step 5: Submit the necessary documentation for your student loans online
Step 6: Get the property and other legal evaluations completed
Step 7: After the lender approves your application for an education loan, obtain the loan sanction letter
If you have taken out an education loan, it's important to have a plan in place for its repayment. The first step is to secure a job and inform the bank of your employment status. Before the end of the moratorium period, send your account details to the bank so they can set up an auto debit system. This ensures timely payment of your EMIs, which is crucial to avoid penalties and late fees.
It's important to pay your education loan EMIs on time to maintain a good credit score. Some lenders allow you to pay the interest on the loan during the course, which reduces the financial burden when paying the actual loan amount. You can also opt for paying simple interest instead of compound interest, which saves money in the long run.
If you need help managing EMIs on a low-paying job, you can request the bank to increase the loan repayment tenure. This will reduce the EMI amount and give you more time to pay off the loan. Another option is to try and get your EMIs reduced to a suitable amount that fits your budget.
As a student borrower, you have both rights and responsibilities. Here are some of the general rights and responsibilities of a student borrower:
Rights:
Responsibilities:
Understanding your rights and responsibilities as a student borrower is essential to manage your loans effectively and avoiding any potential problems. If you have any questions or concerns about your student loans, contacting your lender or loan servicer is always a good idea for guidance.
In India, CIBIL is a credit information company that evaluates an individual's credit history and debt to provide credit reports and scores. A CIBIL score ranging from 1 to 999 determines a person's creditworthiness, and a poor score can hinder the chances of getting a loan. However, those with bad credit can still explore options such as offering collateral, applying for a loan with a co-signer, or considering alternative lending sources. It's crucial to analyze these options' terms and interest rates to ensure that they are sustainable and feasible for one's financial situation. If you have poor credit but need a loan in India, options are available.
Remember to analyse these options' terms and interest rates to find the best fit for your financial needs.
It is a known fact that most lenders only allow the parents of the loan applicant as co-applicants for study abroad loans, whether secured or unsecured. However, purchasing loan insurance can provide relief to co-applicants from the burden of repaying the entire education loan amount along with interest in case of unforeseen events.
This can be especially helpful for government bank education loan borrowers, as even retired parents can be designated as co-applicants. In the event of a tragedy that results in a terminal illness for the student, the insurance company will pay the entire education loan amount, relieving the co-applicants of this financial obligation.