Education Loan for Studying Abroad in 2024

Studying overseas might change your life, but it’s not always easy to finance your studies. However, this objective can be unattainable for students from low-income families. Consider an education loan for overseas study. It is now possible for those who wish to pursue higher education overseas but are having trouble finding the money to do so to arrange for their education.

We will go over every aspect of the best education loan in India for international study abroad in this article. We will go over several additional topics regarding student loans, such as the function of guarantors and Indian banks that offer education loans, in addition to the application process, eligibility, and documentation needs.

Benefits of Education loans

At times, the family’s resources and income might not be enough to pay for the student’s education. In these circumstances, a student loan (NBFC) must be requested from banks or other financial institutions. A student loan can be used to cover all or a portion of your educational costs. It is guaranteed that a student who takes out an education loan to study abroad will be able to finish their degree programme without running into any financial difficulties.

Many people view loans as terrible debt. This phrase suggests that you are taking out a loan for an item whose value will eventually decrease. Since an education loan is an investment in the borrower, it differs from other types of loans. You will ultimately profit much more from this than from the loan.

Eligibility Criteria for Education Loan

Verifying your eligibility to apply for an education loan should be your top priority. The standard terms and conditions that any bank will typically adhere to when obtaining an education loan are listed below. Please be aware that each bank may have certain requirements for eligibility, which must be followed when applying to that bank. 

• The applicant needs to be a citizen of India.
• The applicant’s parents must take out the loan if the applicant is younger than eighteen (18).
• The applicant needs to have a solid academic background.
• The applicant needs to have been admitted to a respectable college, university, or other establishment abroad.
• The course that the applicant chooses must be technical or professional, as banks prefer courses that are job-oriented.
• The guidelines that loan providers establish to ensure that only safe and secure loans are made available are known as underwriting norms. They are crucial since they determine not only whether to grant a study loan for an individual to pursue their studies abroad, but also the amount and interest rate that the company is willing to lend.

The applicant must be fully informed of the documentation needed to apply for a study loan overseas before applying for an education loan. To apply for an education loan for study abroad, the following documentation is needed: 

1. Finished the application Form
2. Photographs: The applicant and the co-applicant should have passport-size photos.
3. Photo ID: Both the co-applicant’s and the applicant’s photo ID. It could be a passport, Aadhar card, Voter ID card, driving licence or PAN card.
4. Proof of residence: Proof of residency for both the co-applicant and the applicant
5. Academic records: The applicant’s grade report and certificates and Mark sheet (Score Report) for the appropriate exam, such as the GRE, GMAT, TOEFL, IELTS, etc. (When applying for a loan, factors other than the GRE score that are significant to take into account are your overall academic standing and professional experience.)
6. A letter of admission from the college or institution serves as admission verification.
7. Bank statements: The co-applicants bank statements for the last six months.
8. Income verification: The co-applicant’s income documentation (the availability of a foreign school loan is contingent upon several factors, such as your co-applicant’s assets, location, and financial standing).
9. The following paperwork is needed in the event of collateral (immovable property), which can include a house, an apartment, or non-agricultural land:
   • Deed of property title
   • Approved building plan
   • NOC from a builder or society for a mortgage

Technical Documentation

In addition to the aforementioned documents, candidates must possess additional technical documentation to be eligible for a student loan.

• The title deed (with all pages attached)
• A copy of the authorised layout plan and the case-specific permissions
• Documentation of revenue (Khata/Patta)
• Non-Encumbrance Attestation
• Certificate of Possession (If the flat is repossessed from a builder)
• most recent receipt for property taxes
• Original Sale Deeds in Copy
• Conversion certification
• Certificate of urban clearing (case-specific)

Legal documentation

Applicants must have a list of legal documents in addition to the standard and technical documentation in order to be considered for an education loan.

• Minimum 13 years old; sale, gift, or partition deed in the customer’s favour
• Khata Certificate and extract under the present owner’s name
• Encumbrance certificate: at least 13 years old, showing every transaction related to sales
• Most recent receipt for property taxes

*Note: Collateral Rules

Collateral: What Is It?

Collateral is any asset, real or personal, that can be pledged to a bank as security for a loan. To lower the risk associated with repaying the credit, the majority of Indian banks need collateral as security. Discover everything there is to know about collateral.

What kind of financial instruments may you use as collateral?

Collateral can be any kind of liquid asset, such as bonds, FDs, shares, or any immovable property, such as a home, a business property, or plain land. Remembering that agricultural land is not acceptable as collateral is one key thing to do. Collateral can also include government securities, gold, debentures, bank deposits, mutual fund units, shares, bonds, and life insurance policies.

How can I apply for an education loan without collateral to study abroad?

For people who wish to pursue a top-notch education but find it difficult to secure the necessary cash, education loans have been a huge comfort. Students can now get a loan without collateral for up to INR 4 lacs. A third-party guarantee is sought and parents or guardians are made joint borrowers for loans up to INR 7.5 lacs. Property or any other asset must be used as security for loans larger than INR 7.5 lacs.

How much money can you borrow with Collateral?

The bank representative will inspect your property and write a report indicating whether or not it can be mortgaged if you choose to take out a loan using it as security.

A representative of the bank will also assess your property. This report will determine whether to approve the loan amount.

Interest Rates for Education Loans Offered by Various Banks

The following lists the interest rates offered by several well-known Indian banks for loans for study abroad:

BANK	INTEREST RATE (Variable)
HDFC Credila Education Loan	13.80% (approx)
ICICI	9.40% to 14.00%
SBI	11.15%
Axis Bank	13.70% to 15.20%
Punjab National Bank	9.40% to 12.10%
Bank of Baroda (Baroda Scholar)	9.70% to 12.20%
Indian Bank	8.80% to 11.40%
Union Bank of India	10.90% p.a. to 12.55% p.a

How to Apply for an Education Loan?

It is usually good to apply for a loan a bit early because the entire loan procedure takes time, from loan application to approval and disbursement. To apply for a student loan, follow these steps:

• Verify whether or not the banks will accept the course you plan to take.
• Determine the total amount of loans you need and the amount you can secure on your own.
• Examine the student loans offered by several banks for overseas study, then select the one that best suits your requirements.
• Complete the loan application and visit your bank after deciding on the bank and loan amount.
• The bank will provide you with loan documents that contain all of the loan’s components as soon as your loan is approved.
• The bank will release the funds in instalments or as requested by the university following your signature on the loan agreement.

Top Education Loans Providers in India for Studying Abroad

Banks	Description
HDFC Bank	One of the biggest private banks providing loans for study overseas is HDFC Bank. The bank offers loans up to a maximum of INR 20 lakhs. Even before the student has been accepted to the university, the bank offers study loans abroad to help them avoid the last-minute rush.
ICICI Bank	For overseas courses, the bank provides loans up to Rs 1 crore, with interest rates starting at 9.50% annually. As exceptional collateral, new real estate, FDs, and cross-collateralization with pre-existing mortgage loans are accepted. For undergraduate programmes, the maximum education loan amount at ICICI is Rs 20 lakhs, while for graduate programmes, it is Rs 40 lakhs.
State Bank of India	With a 15% loan margin, State Bank of India (SBI) provides education loans up to INR 30 lakhs for overseas studies. Up to 2% of the loan amount’s interest rate is applied to SBI’s current base rate. Moreover, the loan repayment period varies from one year to fifteen years.
Axis Bank	Study loans abroad are available from Axis Bank at affordable interest rates. If the loan amount is more than INR 4 lakhs, the borrower must establish a margin of 15%. The bank pays various expenses such as books, lodging, and tuition, up to a maximum of INR 20 lakhs.
Punjab National Bank	The education loan programme that Punjab National Bank offers to students who intend to study overseas is called PNB Udaan. For students pursuing graduate, post-graduate, career-oriented professional, and technical courses, the bank provides loans for overseas education. For loans over INR 4 lakhs, the applicant must provide a 15% loan margin. In addition, the bank offers the base rate as the interest rate on loans taken out to attend the world’s top 200 universities.

Education Loan to Study Abroad Offered by NBFCs

In addition to nationalised banks, non-banking financial firms and institutions (NBFCs) offer student loans. Students can get full tuition payments from non-banking institutions. Banks require collateral from borrowers since loans over INR 7.5 lacs are typically made. NBFCs are becoming a viable option for students seeking education loans for study abroad programmes. Among the NBFCs’ choices are:

• Credila: A division of the well-known HDFC bank, Credila offers loans to Indian students who want to pursue higher education overseas. The loans have a competitive variable interest rate and a ten-year repayment period.

• Avanse: Belonging to the DHFL group, it is regarded as one of India’s most well-known non-banking financial companies. Avanse student loans pay for various costs in addition to tuition up to 100%. In addition, the processing charge may represent one to two per cent of the loan amount, and interest rates are subject to change. 

• The International Student Loan plan (ISLP) is a plan specifically created for foreign students who wish to pursue their studies in the United States. Students can borrow as little as $1500 through this plan, and the payback time can be extended up to 25 years. Tuition and other costs are covered by the loan that is awarded under this programme.

• Global Student Loan Corporation (GSLC): The GSLC provides loans to foreign students so they can continue their education in the United States without needing a cosigner.

Education Loan Schemes Offered by NBFCs

A few of the Education loan programmes that Indian banks provide students studying abroad:

• SBI Student Loan Scheme: Indian students who have been admitted to any college in India or overseas may apply for the SBI Student Loan Scheme. At a low interest rate, up to INR 20 lacs can be borrowed, with a 15-year repayment term. Also, borrowers must provide collateral as security if the loan amount exceeds INR 7.5 Lacs. Repayment begins one year after the course is finished. 

• SBI Global ED-VANTAGE Scheme: Indian students who want to study abroad full-time may apply for this loan. Students are required to repay loans up to INR 1.5 crore within 15 years. The loan must be secured by collateral, and the borrowers must begin repaying the loan six months after the course ends.

• HDFC Bank Education Loan: Indian students who want to study overseas can apply for the HDFC Bank Education Loan for Foreign Education programme. This scheme has a maximum sum of INR 20 lacs available at a minimal interest rate. Additionally, it provides the borrower with tax benefits and has the option to be approved before admission.

• Oriental Bank of Commerce Education Loan for Study in India and Abroad: Students who want to continue their higher education in India or overseas can apply for this loan programme. The amount of the loan will depend on the institute’s fee schedule if the student wants to continue his studies in the United States. The best thing about this plan is that it offers insurance coverage in addition to not requiring borrowers to pay a prepayment penalty. When taking out a loan to study overseas, there is a margin of 15% applied to amounts over INR 4 lacs.

Also checkout: Education Loan Interest Rates 2024: Check Updated List of Banks

Points to Consider Before Applying for the Education Loan

Some things to keep in mind while applying for an education loan to study abroad:

• The moratorium period is the amount of time that the borrower is exempt from having to repay the bank. This time frame varies from bank to bank and may extend for a while after the course is finished.
• Loan Margin: Typically, banks don’t give the full amount—that is, all of the funds required to pay for the education—instead of just a portion of it. 90% of the total sum is issued by public sector banks; the remaining 10% must be arranged by the candidate directly.  
• Effect of Exchange Rate: It is important to always estimate the amount you will get at the time of payment because fluctuations in exchange rates can have an impact on that amount.

FAQs

Can I get a 100% loan to study abroad?

Yes, you are eligible for a 100% education loan to finance your study abroad.

Can I get a 2 lakh education loan?

For student loans up to Rs 4 lakhs, there is no margin. The margin for studies conducted in India is 5%, and for studies conducted abroad, it is 15%, for loans exceeding Rs 4 Lakh. 

Who is eligible for an abroad study loan?

Has to be an Indian national. You need to have a parent or guardian present. It is necessary to have an acceptance letter from an accredited international university. The borrower must have a stable financial status in order for the loan to be disbursed.