Studying abroad is a dream for many Indian students, but financing international education can be a major challenge. Fortunately, various banks and financial institutions offer loans for abroad study in India, helping students pursue higher education in top global universities. This guide provides a detailed overview of student loans, eligibility criteria, loan application process, repayment options, and the best banks offering education loans for overseas studies.
Why Choose an Education Loan for Studying Abroad?
Pursuing education in countries like the USA, UK, Canada, Australia, and Germany requires a significant financial investment. Education loans provide students with the financial support needed to cover tuition fees, living expenses, travel, and other costs.
Key Benefits of Study Abroad Loans:
- High Loan Amount: Loans up to INR 1.5 crore depending on the institution and country.
- Flexible Repayment Options: Loan repayment starts after completing the course and securing a job.
- Tax Benefits: Under Section 80E of the Income Tax Act, interest paid on education loans is tax-deductible.
- Collateral-Free Loans: Many banks provide unsecured loans up to a certain limit.
Types of Education Loans for Studying Abroad
1. Secured Education Loans (With Collateral)
- Require collateral such as property, fixed deposits, or government bonds.
- Offer lower interest rates and higher loan amounts.
- Preferred by nationalized banks like SBI and Bank of Baroda.
2. Unsecured Education Loans (Without Collateral)
- Do not require collateral but come with higher interest rates.
- Suitable for students with strong academic records and admission in top universities.
- Offered by private banks and NBFCs like HDFC Credila and Avanse.
Eligibility Criteria for Education Loans
To apply for a study abroad loan, students must meet the following requirements:
- Indian nationality.
- Admission to a recognized international university or college.
- A co-applicant (parent/guardian) with a stable financial background.
- Academic excellence with a strong admission profile.
Documents Required for Loan Application
To apply for a loan, students need to submit:
- KYC Documents: Aadhaar card, PAN card, passport.
- Academic Records: 10th, 12th, and graduation mark sheets.
- University Admission Letter.
- Fee Structure from the Institution.
- Income Proof of Co-Applicant: Salary slips, ITR, bank statements.
- Collateral Documents (if applicable).
How to Apply for an Education Loan?
Follow these simple steps to apply for a loan for abroad study in India:
- Choose a Lender: Compare interest rates and loan terms from different banks and NBFCs.
- Check Eligibility: Ensure you meet the lender’s eligibility requirements.
- Gather Documents: Prepare necessary documents for submission.
- Submit Application: Apply online or visit the bank branch.
- Loan Processing: The bank verifies documents and processes the application.
- Approval & Disbursement: Upon approval, the loan amount is disbursed directly to the university.
Best Banks Offering Education Loans for Abroad Study
1. State Bank of India (SBI) Global Ed-Vantage Loan
- Loan Amount: Up to INR 1.5 crore
- Interest Rate: 9.50%-10.50%
- Repayment: Up to 15 years
2. HDFC Credila Education Loan
- Loan Amount: Customized as per requirement
- Interest Rate: 10.25%-12.50%
- Repayment: Flexible repayment plans
3. Bank of Baroda Education Loan
- Loan Amount: Up to INR 1.5 crore
- Interest Rate: 9.75%-10.75%
- Repayment: 10-15 years
4. Axis Bank Education Loan
- Loan Amount: Up to INR 75 lakh (without collateral)
- Interest Rate: 10.25%-12.75%
- Repayment: Up to 15 years
5. ICICI Bank Education Loan
- Loan Amount: Up to INR 1 crore
- Interest Rate: 10.50%-13.00%
- Repayment: 10-12 years
Loan Repayment and Interest Rates
Repayment starts after a moratorium period, which includes the course duration plus 6-12 months post-course completion. The repayment tenure varies between 7 to 15 years, depending on the loan terms.
Ways to Reduce Interest Burden:
- Start repaying interest during the study period.
- Opt for a longer repayment tenure to reduce EMI.
- Avail of government interest subsidies for economically weaker sections.
Government Schemes for Study Abroad Loans
The Indian government supports students through interest subsidy schemes:
- Padho Pardesh Scheme: Interest subsidy for economically weaker sections.
- Dr. Ambedkar Central Sector Scheme: Interest subsidy for OBC and EWS students.
- National Overseas Scholarship: Grants and loans for SC/ST students.
Our Recommendation
Education loans make studying abroad accessible for Indian students by covering tuition, living expenses, and travel costs. Choosing the right loan provider, understanding repayment options, and exploring government subsidies can help ease the financial burden. If you are planning to study abroad, research your options carefully and apply for the best loan that meets your needs.
Frequently Asked Questions
The maximum loan amount depends on the lender. Banks like SBI and Bank of Baroda offer up to INR 1.5 crore, while private lenders may offer customized loan amounts.
It depends on the loan type. Secured loans require collateral, whereas unsecured loans (offered by NBFCs and private banks) do not require collateral but may have higher interest rates.
Loan repayment starts after the moratorium period, which includes the course duration plus 6-12 months after course completion.
Most banks require a co-applicant, usually a parent or guardian, for financial security. However, some NBFCs offer loans without a co-applicant under special conditions.
Yes, under Section 80E of the Income Tax Act, the interest paid on education loans is tax-deductible.
Ranjan is a dedicated finance writer for smartfinclub.com, where he specializes in comparing top financial products in India, including loans, credit cards, savings accounts & more. With a focus on providing clear insights into features, rates, and benefits, Ranjan aims to empower readers to make informed financial decisions customized to their needs.