Education Loan for Overseas Studies from India: Your Go-to Guide
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An education loan for overseas studies is an amount borrowed to support students studying abroad. It covers tuition, living expenses, and travel costs. Loans can be secured (with collateral) or unsecured. Interest rates vary, and repayment starts after studies with a grace period. A co-applicant or guarantor is usually required. Students must submit required documents along with the loan application.
Types of Education Loans for Indian Students Applying Abroad
A. Secured Education Loan for Overseas Studies:
Learn more about how to avail a secured education loan for your abroad studies.Â
B. Unsecured Education Loan for Overseas Studies:
C. No Collateral No Cosigner Loan for Overseas Studies:
D. Secured vs. Unsecured Education vs. No Collateral, No Cosigner Loans:
| Benefits | Secured education loan for overseas studies | Unsecured education loan for overseas studies | No Collateral no Cosigner Loan* |
| Collateral Requirement | Requires collateral, such as property or assets, reducing risk for the lender | No collateral required, making it more accessible for students without substantial assets | No need for collateral or a cosigner, making it accessible for students without significant assets. |
| Interest Rates | Typically lower interest rates due to collateral, reducing overall borrowing costs | Higher interest rates compared to secured loans due to the absence of collateral | Rates may vary, but these loans often offer competitive rates compared to traditional loans. |
| Approval Process | Easier approval due to the presence of collateral, suitable for those with limited credit history | Approval may be more stringent and dependent on credit history, income, and co-signers | Typically has a simplified approval process, making it easier for students to secure funding. |
| Repayment Terms | Flexible repayment terms and longer periods, easing post-graduation financial burden | May come with less flexible repayment options and shorter terms, potentially causing higher immediate repayment stress | Flexible repayment options are often available, accommodating the financial circumstances of students. |
| Credit Building | Can assist in building a positive credit history if payments are managed responsibly | Helps in building credit but might have a lesser impact due to higher interest rates and smaller loan amounts | Allows students to build a credit history without a cosigner, fostering financial independence. |
Study Abroad Education Loan: Eligibility, Documents Required and Application Process
A. Education Loan Eligibility in India
- Proof of finances and income details to prove your repayment capability
- The co-borrower(s) must have a bank account in any bank in India with cheque writing facilities.
- Admission letter from a recognised university or college abroad
B. Education Loan Documents Required
 Here’s a list of documents required to apply for a study abroad education loan:
- 1. Application form for the loan
- 2. Standardised test scores & academic transcripts
- 3. Acceptance letter from the international school/institute
- 4. KYC documents – Aadhaar Card & PAN card (yours and your parents/co-applicants)
- 5. Birth certificate
- 6. Residential Proof (including utility bills, rental agreement, electricity bills over the previous three months, etc.)
- 7. Income proof of family & bank statements for the last six months (including income tax returns and property proof)
Some additional documents are required if you are applying for an educational loan to study abroad without collateral:
- 8.University acceptance form with tuition fees
- 9. KYC of the co-applicant
- 10. Address proof along with electricity bill
- 11. Applicant’s savings account details
- 12. Form 16 and salary slip (applicable if co-applicant is a salaried person)
C. Application Process for Education Loan
1. Online application for student loans to study abroad:
- To submit an online application from the desired source, attach the required paperwork, and submit it.
- After thoroughly checking the submitted paperwork, the lender will contact applicants and proceed with the loan application.
- Niyo Global has partners who can help you get the best education loan to study abroad, at the best interest rates, instead of going to all banks separately. You just have to fill out one digital application, and they
Explore 12+ banks with abroad student loans and take a step towards your dreams!Â
2. Offline application for a student loan to study abroad:
- Applicants can acquire a loan by visiting the local branch and submitting the required paperwork.
- A representative will provide extensive insight on the reviewed paperwork submitted, after which the applicant will be asked to fill out the application in person if they agree with the terms.
- The applicant can also contact the lender, express interest, and discuss terms before applying.
It is best to have all required paperwork up-to-date and organised for a smooth loan application process.
D. Banks Offering Education Loans 2023
| Bank | Interest Rate (p.a.) | Processing Fees |
| HDFC Credila Education Loan | 10.25% – 12.75% | 0.5 – 1% of loan amount |
| ICICI Bank | 10.95% onwards | 0.5% – 1% of the loan amount + GST |
| State Bank of India (SBI) | 10.15% – 11.15% | INR 10,000 + GST (Non-refundable) |
| Bank of Baroda | 9.7% – 11.15% | 1.00% of loan amount (maximum Rs. 10,000) |
| Union Bank of India | 9.25% – 9.75% | An initial fee of INR 5,000 is required from students, and it will be reimbursed if the student secures the loan within three months from the sanction date. Otherwise, no processing fees apply. |
Benefits of Education Loan for Abroad Studies
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1. Reduces Strain on Family Expenses and Savings: A student loan eliminates the need to liquidate investments in fixed deposits, mutual funds, or bonds. Education loans by the government, such as the Pradhan Mantri Vidya Lakshmi Karyakram,may help students get other financial benefits, such as lower interest rates.
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2. Freedom to Pay Post-Education – EMIs, apart from using a repayment schedule while planning family finances, are an easily accessible method.
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3. Covers a wide range of expenses besides tuition fees: Yet another benefit of an education loan for overseas studies is that it provides financial backing not only for tuition fees but also covers living and travel expenses, other study and resource material costs, and additionally caters to costs related to academic pursuits.
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4. Repayment Terms Made Easy: Flexible collateral and co-borrower terms are easy and stress-free.
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5. Encourages Financial Independence: Encourages independent financial habits by allowing study abroad applicants to repay loans on their own, creates environments to start building their credit history, and enables cheaper loans in the future.Â
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6. Building Credit History: Another underestimated benefit of education loans is that, when managed responsibly, they contribute significantly to building a strong credit history. Timely payments and consistent handling of these loans demonstrate financial reliability, positively impacting one’s credit score. This responsible behaviour lays the groundwork for future financial opportunities, reflecting your ability to manage substantial long-term commitments.Â
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7. Facilitating Financial Discipline: Creates an extra layer of protection for the financial profile, helping prevent identity theft and fraud. A more robust credit score indicates low risk for you as a candidate, showing lenders that you might be eligible for free services or bigger loans.
Frequently Asked Questions
Students can apply for education loan to study abroad in India with private banks that can give loans without collateral. Such unsecured education loans are sanctioned only for students admitted to a particular list of universities.Â
Private banks and private lenders, including Non-Banking Finance Companies (NBFCs), generally cover the entire expense of studying abroad. Conversely, public banks may require students to self-finance around 10-15% of the total cost, with the education loan addressing the remaining expenses.
The minimum eligibility to avail of a study abroad loan is that you need to be 18 years of age and an Indian citizen. If you are not 18, your parents can apply for a loan for you to study abroad.Â
There are several ways to repay your education loan early. The most effective method requires sound financial planning. For a more accessible and earlier payout, opt for a short-term education loan, which you can repay faster. Choosing the right repayment plan can help you finish your loan more quickly. Setting up an automated payment system and making extra payments towards your loan also helps.Â
A collateral education loan is one where you pledge a financial asset in return for your education loan for overseas studies. It is also called a secured education loan, as the collateral will be confiscated if the loan amount is not paid.Â
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Overview
A study abroad education loan is financial aid that supports students studying in foreign countries. It covers tuition, living expenses, and travel costs. Loans can be secured (with collateral) or unsecured. Interest rates vary, and repayment starts after studies with a grace period. A co-applicant or guarantor is usually required. Students must submit required documents along with the loan application.
