Education Loan for Abroad Studies – Interest, Eligibility, Documents

Educational Loans to Study Abroad

Due to the increase of academic fees, parents have to find ways to send their children into reputable foreign universities. This includes investment in mutual funds, insurance plans, etc. Thankfully, several large banks are starting to give educational loans to fill the gap.

As compared to a scholarship, educational loans should still be considered due to a few factors. No doubt awards do help students but to a certain extent.

Educational loans can cover all the educational expenses of your child, including tuition fees, supplies, books, accommodation, transportation, health insurance, and even living costs when they study abroad. This is rarely possible with a scholarship.

Especially for students who wish to study overseas, educational loans help both educational and financial needs. For example, if you want to study abroad at a foreign institution, it can cover necessary tuition fees, exam fees, library and laboratory fees, accommodation, books, equipment, instruments, uniform, travelling expenses, refundable deposits, and even money for emergencies.

Documents Needed for the Application of Educational Loans:

1. Examination certificate for the last qualifying exam in school or graduate studies in India.
2. Proof of admission
3. Schedule of course expenses
4. Copy of letter of scholarship confirmation (if any)
5. Copy of permit for Foreign Exchange (if any)
6. 2 Passport-sized photographs
7. Bank account statement for the last six months
8. At least two years of Income Tax assessment order
9. Brief Asset and Liability statement
10. Non-existing customers of the bank – proof of identity and residence

Requirements to Apply for Education Loan to Study Abroad:

• Indian resident
• Age between 16 and 35
• Owns collateral in case of emergencies
• For full-time programmes, a co-applicant is required. This can be a parent, spouse, sibling or paternal/maternal aunt/uncle.

Below are the interest and repayment schemes offered by banks with educational loans

Name of Bank	Loan Amount	Interest rate per annum
State Bank of India	20 lakhs	1. < 7.5 lakhs – 11.01%, 2. 7.5 lakhs – 10.75%, 3. 10 years repayment for loan amount up to 4 lakhs, 20 years repayment for loan amount 7.5 lakhs and above
Allahabad Bank	50 lakhs	1.< 4 lakhs – 11.45%, 2. < 7.5 lakhs – 11.45%, 3. 7.5 lakhs – 10.95%
Axis Bank	Above 20 lakhs depending on requirements	1.< 4 lakhs – 16.5%, 2. < 7.5 lakhs – 17.5%, 3. lakhs – 15.5%, 4. Repayment period up to 15 years
HDFC	10 lakhs max	1. Max 15.25%, 2. Min 9.5%, 3. Average 12.41%, 4. No collateral for loans <7.5 lakhs, Maximum repayment up to 15 years
Credila	No limit depending on requirements	1. 12.1% floating rate, 2. Tenure of loan = Duration of study + grace period + repayment period
Punjab National Bank (PNB)	20 lakhs	1. < 7.5 lakhs – 11.25%, 2. 7.5 lakhs – 11.85%, 3. Premier universities – 9.85%, 4. Repayment period up to 10 years for loans <7.5 lakhs and 15 years for > 7.5 lakhs
IDBI Bank	Depending on requirements	1. < 10 lakhs – 10.45% 2. 10 lakhs – 11.45% 3. Repayment period 10-15 years
Indian Overseas Bank (IOB)	< 40 lakhs	1. < 4 lakhs – 11.5%, 2. < 7.5 lakhs – 12%, 3. > 7.5 lakhs – 12.25%, 4. Repayment period 5-7 years excluding grace period of 6 months after getting a job or 12 months after completion of course, whichever is earlier
State Bank of Mysore	< 40 lakhs	1. < 4 lakhs – 12.2%, 2. < 7.5 lakhs – 12.2%, 3. > 7.5 lakhs – 11.2%, 4. > 10 lakhs – 11.7%, 5. Repayment of 15 years from date of course completion
Avanse Financial Services	No limit, depending on requirement	1. 11.5% floating rate depending on risks, 2. Repayment period of 12 to 120 months depending on loan amount
Syndicate Bank	20 lakhs	1. < 4 lakhs – 11%, 2. < 7.5 lakhs – 11.25% 3. 7.5 lakhs – 12.25% 4. Repayment 5-7 years
Canara Bank	20 lakhs depending on requirements	1. < 4 lakhs – 11.15% 2. < 7.5 lakhs – 11.65% 3. 7.5 lakhs – 11.15% 4. Repayment period of 10-15 years depending on loan amount

A Comprehensive Educational Loan Scheme is designed by the Government of India together with the Indian Banker’s Association (IBA) and the association of RBI.

This all-inclusive scheme covers both professional courses in schools and colleges in India and abroad.

This Scheme Features:

• Foreign countries – loans up to Rs. 15 lakhs
• Interest rates not exceeding first lending rates (PLR) for loans up to Rs. 4 lakhs and no collateral margin are required. Exceeding the limit, the interest rate will not be more than PLR, plus 1%.
• Repayment is between 5 to 7 period plus a grace period of 1 year after completion of studies.

Top Education Loans Providers in India for Studying Abroad

State Bank of India

• Maximum INR30 lakhs with a loan margin of 15% for studying abroad
• An interest rate of up to 2% on the current base rate
• Flexible loan repayment period of 1 to 15 years

HDFC Bank

• Largest private bank with overseas educational loans
• The maximum loan amount is up to INR 20 lakhs
• Provides loans for students before securing admissions

Axis Bank

• Loans with competitive interest rates
• 15% margin should the loan amount exceed INR 4 lakhs
• Maximum loan amount of INR 20 lakhs covering tuition, accommodation, and books

Punjab National Bank

• PNB Udaan for students studying abroad
• For students pursuing graduate, post-graduate, job-oriented professional and technical courses.
• The margin of 15% should loan amount exceed INR 4 lakhs.
• Interest rate is the base rate for students pursuing an education at the top 200 universities across the world.

Study Abroad Education Loan from NBFCs (Non-banking financial companies)

Educational loans are also provided by non-banking commercial companies or institutions (NBFSc) that offer complete tuition fees. However, collateral must be submitted as loan amounts usually exceed INR 7.5 lakhs.

NBFC Educational loan options are:

• Credit: An extension of HDFC bank providing loans for students who study abroad with competitive floating interest rate and loan repayment within ten years.
• Avanse: An extension of the DHFL group and most popular NBFC in India. This loan covers 100% of tuition fees and other expenses: floating interest rate and processing fee of up to 2% of the loan amount.
• International Student Loan Program (ISLP): Specifically, for students who wish to study in the US, covering tuition fees and other expenses. Students can borrow as little as $1,500 with repayment of up to 25 years.
• Global Student Loan Corporation (GSLC): For students who wish to study in the US and does not require a co-signer.

Some of the loan schemes offered by Indian banks for studying abroad

HDFC Bank Education Loan for Foreign Education:

For Indian students pursuing education abroad with a maximum loan amount of INR 20 lakhs at nominal interest rates with tax benefits to the borrower.

SBI Student Loan Scheme

Open to Indian students with secured admissions in Indian or foreign institutions. Maximum of INR 20 lakhs at a nominal interest rate with a repayment plan of 15 years. Collateral should be furnished should loan amount exceed INR 7.5 lakhs. Repayment begins one year upon course completion.

SBI Global ED-VANTAGE Scheme:

Open to Indian students pursuing full-time education abroad up to INR 1.5 crore with 15 years repayment plan. Collateral must be provided, and repayment begins six months upon course completion.

Oriental Bank of Commerce Education Loan for Study in India and Abroad:

For students studying in India or abroad. Students pursuing studies in the US will receive a loan amount depending on the fee structure of their applied institute. This scheme does not have a prepayment penalty and also offers insurance coverage to the borrower. Margin is 15% should loan amount exceeds INR 4 lakhs for students studying abroad.

Education Loan for Higher Studies in Abroad

There is an increase in Indian post-graduate students studying abroad. Besides the US, popular post-graduate destinations are Germany, Canada, UK and Australia.

There is also a significant increase in students choosing to study in France, Singapore, Dubai and New Zealand. While local Indian institutes are recognized internationally, they do not have the capacity for the number of graduates. Hence, the option for most postgraduates to study abroad.

The cost of studying abroad depends on the University, the chosen course, duration and cost of living in the said country. In understanding the complications of higher education fees, HDFC Credila offers customized loan solutions for specific countries.

For this reason, HDFC Credila is the most popular loan provider across all courses, over 1000+ institutions, and across 35+ countries.

Why is it important to know about study abroad education loans?

Student loans have enabled Indian students to study abroad and enrich the diversity and talent pool of universities. The dream of studying abroad for specialized courses has also, fortunately, become a reality for them.

However, not every student is aware of this assistance and might miss the chance of studying abroad. Therefore, Indian students should be well informed to realize their aspirations for foreign education.

Education Loan Study Abroad – Eligibility

Who can apply for study abroad loans? Is it available for all international institutions?

Eligibility for study abroad loans depends on the ability of courses and institutions. There are various banking options to choose from and surprisingly more hassle-free than private education loans.

Standard eligibility parameters for study abroad education loans are:

• The student must be of Indian Nationality including wards of PIOs and NRIs
• Permanent or conditional offer letter from a selected educational institution
• Passing of compulsory international entrance exams and permits such as VISA
• The student must exhibit financial stability to secure repayment of education loan

Courses eligible for foreign student loans

Banks are usually in favour of offering loans to students of technical and professional courses due to the possibility of post-academic employability. This is a form of security that they can repay the loan with a stable income.

Courses eligible for foreign education loans are as below:

1. Undergraduate degrees/diplomas and individual courses
2. Postgraduate degrees/honours and specialized courses
3. PhDs and Doctoral Programmes
4. Exchange programs (the degree to be offered by the foreign institution)

Other eligible courses offered depending on individual bank policies and plausibility of post-academic employability:

1. Computer Certificate course
2. Engineering diploma
3. Data entry operator course
4. Diploma in agricultural sciences
5. Veterinary/Animal Husbandry diploma
6. Any job-oriented diploma or certificate course
7. Applicants with Degree or Diploma in Pilot training, Aeronautics, shipping held by recognized regulatory bodies for employment in India or abroad

Education Loans Study Abroad – Collateral and Documents required

What are the approved collaterals for international student loans?

Collateral is an asset that is accepted to secure loan repayment. The bank requires conditional ownership of an asset that can cover the amount of the loan.

However, this is not compulsory for all banks and is usually above a specific loan amount. Registered banks and non-banking financial institutions are banned from keeping collaterals should the loan amount not exceed INR 7.5 lakhs.

Education Loan for study abroad – the collateral checklist

Loan Collateral Type Benefits/Conditions 

 Foreign Education Loan against Property fewer interest rates higher sum of loan Inspection and valuation charges requires NOC from society/regional development authority 

 Foreign Education Loan against Securities Loans with relatively liquid collateral reasonably interest rates easy to move in case of loan transfer or consolidation 

 Foreign Education Loan against Deposits Loan approved in Hounslow interest rates (4% max above deposit interest rate)Limitation on borrowed amountLow/no processing fees 

 Foreign Education Loan against Third-Party Guarantee No collateral law interest rates small loan amount (Max INR 7.5 lakhs) 

 Foreign Education Loan without Collaterals NBFC and Education Loan experts only high loan amounts up to INR 50 lakhsHigh interest rate approval time based on course commencementLoan transfer restrictions 

Education Loan for abroad studies without security

NBFCs provide education loans without collateral to help students with financial restrictions. Although with higher interest rates, they have additional benefits for students. These are some features for students who study abroad without security:

1. Co-applicants are required to co-sign the loan agreement
2. Co-applicants (1st degree): Parents or spouse
3. Co-applicants (2nd degree): Siblings and parents-in-law
4. Co-sign: Accept liability of repayment should the applicant fail to do so
5. Processing fees ranging from 1% to 4.5% or more from private loan agents
6. Mandatory CIBIL score and continuous income proof annually
7. Varying loan amount according to institution, course and bank policies
8. Provided by international banks with interest rates in % dollars
9. The high-interest rate in Indian Rupees more valuable than low-interest rates in dollars
10. Exchange rates may cause the repayment to be more expensive

FAQs for foreign education loan

Q: What is the maximum loan amount offered for studying abroad?

A: There is no limit; however, it differs from bank to bank. Most banks offer up to INR 20-30 lakhs with high-interest rates if exceeding INR 20 lakhs.

Q: For which type of courses do banks offer education loans for studying abroad?

A: Banks usually favour undergraduate and postgraduate courses, especially for professional courses.