Studying abroad is the dream of many Indian students. The concept of getting international exposure, learning from world-class institutions, and building a career across the globe is thrilling. But the cost of education abroad can be expensive. That’s where abroad study loans come into play—they can make your dream a reality.
If you are looking to study abroad and are baffled by how to go about the financial aspects, this guide will take you through all you need to know about obtaining an education loan.
Why Do You Need an Education Loan?
Education in foreign countries such as the USA, UK, Canada, Australia, or Germany can range from ₹20 lakhs to ₹1 crore or even more. All this includes tuition costs, living, travel, insurance, and other miscellaneous expenses.
Indian families are not able to pay this amount in full. An overseas education loan assists in paying all these expenses and keeps the student stress-free about money.
Types of Education Loans
There are mainly two types of lenders that offer education loans:
1. Banks (Public and Private)
Banks such as SBI, Axis Bank, ICICI, and Bank of Baroda provide education loans to foreign study aspirants. They tend to provide lower interest rates but can have higher eligibility standards.
2. Non-Banking Financial Companies (NBFCs)
NBFCs like HDFC Credila focus on offering education loans for higher education. These financiers provide easier terms and quicker processing.
Now, let us discuss these in greater detail.
Key Features of Education Loans
The following are some typical features most education loans have:
- Loan Amount: ₹1 Cr or more, depending on the course and location.
- Coverage: Tuition fee, living costs, travel, insurance, exam fees, and even laptop or books.
- Collateral: Amounts exceeding a particular level may need to be secured with collateral (such as property or fixed deposits).
- Interest Rates: 9% to 14% per annum.
- Repayment Period: Maximum of 15 years, generally after a moratorium period (course duration + 6 to 12 months).
- Tax Benefit: Interest on education loan can be deducted under Section 80E of the Income Tax Act.
Documents Required
The following documents are typically needed when applying for an education loan:
Admission letter from the university
- Fee structure
- Academic records (mark sheets, degree certificates)
- Passport and visa copy
- Co-applicant’s income proof
- Bank statements
- KYC documents of student and co-applicant
- Collateral documents (if applicable)
Eligibility Criteria
To be eligible for an education loan, you must:
- Be an Indian citizen
- Have secured admission to a recognized foreign university
- Have a co-applicant (usually a parent or guardian)
- Maintain a decent academic record
- Provide collateral if the loan amount is above a certain limit
Different lenders may have their own specific eligibility rules, so always check with your bank or NBFC.
Top Lenders for Education Loans in India
Several lenders offer competitive loans for students planning to go abroad. Let’s look at a few:
1. HDFC Credila
Credila education loan is specifically designed for students pursuing higher education overseas. Some benefits include:
- Personalized loans according to the needs of the student
- Pre-approval, even prior to securing admission
- 100% financing with living costs covered
- Flexible repayment options
Credila also offers loans for various countries and courses, such as STEM, management, and medical courses.
2. Axis Bank
Axis offers international education loans of up to ₹90 lakhs at competitive interest rates and a maximum repayment period of 15 years. Here are of the benefits of Axis Bank:
- Personalized loans
- 100% Financing
- Flexible Repayment terms
4. ICICI Bank
ICICI offers education loans with simple online processing and prompt disbursal. Loans are available up to ₹1.5 crore based on the course and destination. Some of its benefits are as follows:
- Personalized loans
- 100% Financing
- Flexible Repayment terms
Collateral vs Non-Collateral Loans
Collateral Loans
These loans necessitate the borrower to provide security—property, fixed deposits, or insurance policies—in the form of collateral. These loans usually have lower interest rates and are favored by public sector banks.
Non-Collateral Loans
These do not involve security but can have a higher interest rate. NBFCs and private banks extend non-collateral loans on the basis of the student’s academic record and the university’s reputation.
Credila education loan is frequently the choice for non-collateral loans due to its tailor-made assessment methodology.
Step-by-Step Procedure to Apply for an Education Loan
- Research: Compare various lenders, interest rates, processing charges, and repayment duration.
- Check Eligibility: Look up the website of the lender or call their representative.
- Apply Online or Branch Visit: Complete the application form and attach supporting documents.
- Loan Sanction: Upon verification, the lender issues a sanction letter.
- Disbursement: The amount of the loan is disbursed directly to your university or in your account in installments form.
- Start Repayment: Once you’ve finished your course and moratorium period, you start repaying monthly.
Tips to Increase Your Loan Approval Chances
- Sustain a good academic record
- Opt for recognized universities or high-employability courses
- Have a financially secure co-applicant included
- Present complete and clear documents
- Disclose your intentions post-graduation
Things to Keep in Mind Before Borrowing a Loan
Loan Margin: Some banks demand students to fund a small percentage of the total cost, known as the loan margin.
Processing Fees: Typically 1–2% of the loan amount.
Currency Exchange Rate: As you are studying abroad, consider the currency fluctuation while calculating the overall cost.
Repayment Options: Partial interest payment during the course is available with some loans to ease the EMI burden in the later stages.
Final Thoughts
Education loan for abroad studies is an excellent financial instrument that assists you to tap global opportunities without burdening your family’s savings. By proper planning and with a reputed lender such as Credila education loan, you can study your dream course without any worries.
Be careful to research extensively, know your financial commitments, and select a loan that is most suitable for your educational purpose and repayment capacity.
Disclaimer: All loan terms, rates, and policies are subject to change. Always check with the lender prior to proceeding.
