How To Get An Education Loan Without Collateral?

Written by Muskan Behune

The name is Muskan, so probably was destined to spread smiles wherever I go. Writing is something which has grown on me with each passing day. Follow your passion in saying is a cliché but in doing is serious fun. So here I am to engage with my passion and maybe spread some smiles along the way.

November 3, 2020

Planning to fly abroad for higher studies but troubled about the sky-high tuition fees of universities? Well, student loans for studying abroad are the best option for you in this case. Keep reading to get the detailed information regarding the different student loan options available to you. Also get to know about education loan without collateral, which is a better way to fund your higher studies abroad.

To get a loan from a lender, you generally have to pledge security which can be anything ranging from house property, fixed deposits, shares, bonds, etc., to take the loan. This is required so that if in case you default on the loan, lenders can recover it by selling the pledged security. The security pledged against a loan is termed as collateral.

There are two types of student loans for studying abroad. These are called – Secured Loans and Unsecured Loans.

Unsecured Education Loan Without Collateral

It is a kind of student loan for which the borrower does not have to pledge any security (collateral). This loan is perfect for students who do not have any collateral to offer. However, it should be commemorated that an unsecured education loan has a higher rate of interest as compared to a secured loan and is more difficult to get approved. They also have a shorter repayment period and require certain repayments to be done during the study period too. Also, a minimum parental income is mandatory for this kind of education loan.

Secured Student Loan 

A secured education loan is one where the borrower has to offer tangible or intangible security. The security can be anything in the form of immovable property, FDs, LIC insurance, land, etc. A secured loan takes longer for confirmation as the bank has to verify all the documents related to the security being pledged. However, it has lower student loan Interest rates, a longer repayment period, and no repayment during the study period. An education loan without collateral also has higher chances of approval and parental income is not a deciding factor when it comes to approval.

What is collateral?

It can be costly if you decide to study abroad and hence you go for an education loan. The overall cost that will be aroused including the fees for studying abroad also depends a lot on the choice of country. For instance, an MS in the US will typically cost around the US $65,000- $70,000. Several public sector banks, private banking institutions, and financial corporations offer different kinds of education loans at various rates of interest. Nationalized Banks offer loans up to 7.5 lakhs without the need for arranging any collateral by the borrower.

However, for a credit limit crossing 7.5 lakhs, most of the companies require a deposit of any asset as collateral. The collateral is asked to handle the Non-Performing Assets in case the borrower defaults on the loan payments. Collaterals are risky, and many get uncomfortable at the thought of taking a loan against their assets as security.

Education Loan Without Collateral

Don’t you think it’d be great if no collateral is needed for loan amounts more than 7.5 Lakhs? The good news is that non-banking financial companies (NBFCs) and private lenders can administer collateral-free loans for a higher amount, but the only downside is that the collateral-free loans are sanctioned at a somewhat higher interest rate as compared to education loans taken with collateral. Banks generally need co-applicant details when you apply for a collateral-free loan. Not only this, but banks also ask for the income documents such as salary slips or income-tax returns (ITR) of the co-applicant before sanctioning the education loan.

Some banks that provide education loan for abroad studies without collateral:

Bank of Baroda

Bank of Baroda provides education loans for abroad studies without collateral through the Baroda Scholar scheme which is given for MBA, MCA, MS, and other notified courses that help with job creation. To get this education loan, the student must have secured admission to the notified university and course. The bank of baroda education loan limit for specified institutes is Rs. 80 lakhs and for non-specified institutes is Rs. 60 lakhs. However, they only provide unsecured loans from 7.5 Lakhs onwards.

Avanse education

Avanse education loan for studying abroad is composed keeping all the student requirements in mind. The Avanse education loan for studies abroad covers 1,626 universities, 1,262 colleges, and more than 6,000 courses across cities in 44 countries. They provide various kinds of loans such as pre-visa disbursement loans, pre-admission loans, bridge loans, fast-track loans, score-based benefits, and safeguard that the applicant faces no financial issues while studying abroad in order to uplift their career to the next level. Avanse provides both collateral and non-collateral loans based on the student’s profile with no defined limit on the loan amount. They provide loans maximum up to 50 Lakhs.

SBI Education Loan

Being the country’s leading nationalized lender, SBI provides Global Ed-vantage and education loans without collateral. For overseas education, SBI mainly offers education loans with collateral. Unsecured loans that are loans without collateral are available but only for the best and well-known colleges, and that too up to ₹ 7.5 lakhs only.


ICICI Bank provides Unsecured loans for studying abroad in leading global Universities. They have categorized Universities as A1/A2/A3/A4. They provide fixed interest rates between 10% to 11%. The university list is more global compared to its peers. ICICI bank has committed RMs from each region and they look to provide you home service.

Credila Education Loan

Along with the tuition fee of the University, Up to 100% of other expenses incorporating living and hostel expenses, traveling, examination fees, library fees, purchase of books, passage money for studies, purchase of laptops are considered mandatory for the completion of the course as decided by HDFC Credila. Travel fare is restricted to one economy class return ticket between India and the country of study. Co‐applicants need to provide documentary proof to authorize their relationship with the student to the satisfaction of HDFC Credila education loan. The maximum amount of loan they provide is up to 40 Lakhs

Summing up

All banks have varied criteria to look at and provide education loans for abroad studies without Collateral. An education loan without collateral principally depends on the student profile. Banks generally look at providing education loan for abroad studies without collateral to master students who are studying STEM-designated programs. It is very uncommon for people to provide unsecured loans at the undergraduate level. For any information regarding the education loan and its approval, you should contact UniCreds for the best and hassle-free experience.


What are the eligibility criteria for an abroad education loan without collateral?

To qualify for a loan for study abroad without collateral, candidates must fulfil several requirements, including a minimum grade point average of 60% required for employment prospects, the income statement of the financial co-applicant, and desired degree program for the candidate.

What documents are required for an unsecured education loan?

When you apply for a loan without collateral, banks typically require information on the co-applicants. In addition, before approving the school loan, banks also want income documentation from the co-applicant, such as salary slips or income-tax returns (ITR).

Which Banks give education loans without collateral for abroad?

Bank of Baroda, SBI, HDFC Credila, and ICICI are some of the banks that give loans to students without collateral for abroad education.

What is the loan procedure for an education loan without collateral?

The documents required to apply for a loan without collateral are your application form for the loan, income proof of the co-applicant, standardised test scores, academic transcripts, address and photo id proof, birth certificate, and bank statements.

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