Education Loan Facility
Comprehensive Guide to Education Loans for Studying Abroad
What is an Education Loan?
An education loan is a specialized financial product designed to support students in funding their higher education, whether in India or overseas. It acts as a bridge, enabling aspirants to afford tuition fees, living expenses, and other study-related costs without immediate financial strain.
When it comes to studying abroad, banks and financial institutions offer a variety of loan options. These differ based on factors such as the destination country, chosen course, and the applicant’s profile. Interest rates, loan tenure, collateral requirements, and other terms vary, so understanding these nuances is crucial to selecting the ideal education loan.
Admission to Top Universities: A Gateway to Better Loan Terms
Securing admission at a reputed university ranked within the top 500 of the QS World University Rankings often opens doors to more favorable loan conditions. Lenders tend to offer lower interest rates and extended coverage of expenses, including tuition and living costs, for students attending such institutions.
Overcoming the Complexities of Education Loan Applications
Applying for education loans can be overwhelming due to extensive documentation, eligibility criteria, and varied formalities. This is where expert guidance becomes invaluable. At “Shree Consultancy”, we specialize in simplifying the loan application process for students aspiring to study abroad. We tailor loan solutions to individual profiles, ensuring a smooth, hassle-free approval experience.
How to Obtain a Student Loan for Studying Abroad?
Many students miss essential steps when applying for education loans. To streamline your journey, follow these well-defined steps:
List Your Expenses: Identify all costs you want the loan to cover during your study period.
Calculate Loan Amount: Estimate the total funds required based on tuition, living costs, insurance, etc.
Check Eligibility: Review lender-specific eligibility criteria to shortlist suitable options.
Prepare Documentation: Gather all necessary documents, both academic and financial.
Submit Application: Apply through preferred lenders or use online portals like the Vidya Lakshmi Education Portal.
Loan Approval & Disbursement: After approval, receive the funds and begin your overseas education journey.
Besides loans, the Vidya Lakshmi Portal also helps explore scholarships to supplement your finances.
Expenses Typically Covered by Education Loans for Studying Abroad
Different lenders cover varying expense categories. Confirm coverage with your lender, but commonly included expenses are:
Tuition Fees: Usually paid directly to the university, covering the major portion of the loan.
Living Expenses: Includes rent, utilities, transportation, and daily costs, though the extent varies by lender.
Health Insurance: Mandatory for overseas studies; private banks often cover this, so verify coverage beforehand.
Visa Fees: Not always covered; some Non-Banking Financial Companies (NBFCs) include this expense.
Airfare: Generally not included but may be added upon request.
Academic Supplies: Books, laptops, equipment, projects, and study tours are usually covered.
Types of Education Loans for Studying Abroad
Education loans fall into two primary categories:
1. Secured Education Loans (With Collateral)
These loans require collateral such as property, fixed deposits, or insurance policies. Collateral acts as security against the loan.
What is Collateral?
An asset pledged as security to mitigate the lender's risk. This can be movable (vehicles, jewelry) or immovable property (real estate).Loan Amount Against Collateral:
Typically, lenders offer 70-80% of the collateral’s market value as loan funds.Guarantor Requirement:
Loans above INR 4 Lakhs usually require a guarantor—someone legally responsible if the borrower defaults.
Features of Secured Loans:
Lower interest rates due to reduced risk.
Higher approval chances.
Longer repayment tenures (up to 15 years).
No EMI payments during the study period (moratorium).
Parental income may not be mandatory.
2. Unsecured Education Loans (Without Collateral)
These loans are ideal for students without collateral but often come with stricter conditions.
Features of Unsecured Loans:
Higher interest rates (1.5% to 4% more than secured loans).
Require a co-applicant with a stable financial background.
Shorter repayment tenure.
Partial repayment during the study period may be necessary.
Parental income is typically a key factor.
Who Offers Education Loans for Abroad Studies?
Three main types of lenders provide education loans for international studies:
1. Banks
Public Sector Banks:
State Bank of India (SBI):
Loan Amount: Up to INR 1.5 crore (secured), INR 50 Lakh (unsecured)
Interest Rate: 9.65% for women, 10.15% for men
Loan Tenure: 15 years
Moratorium: Course duration + 12 months
Special scheme: Global Ed-Vantage
Punjab National Bank (PNB):
Loan Amount: Up to INR 2 crore (secured)
Interest Rate: 9.25% for select universities; higher for others
Loan Tenure: 15 years
Moratorium: Course duration + 12 months
Scheme: Udaan
Private Banks:
ICICI Bank:
Loan Amount: Up to INR 1.5 crore (secured), minimum INR 20 Lakhs
Interest Rate: 10.25% (secured), 11.25% (unsecured)
Loan Tenure: 10 years
Moratorium: Course + 6 months
Axis Bank:
Loan Amount: Up to INR 1 crore (unsecured)
Interest Rate: 11%–11.5%
Loan Tenure: 15 years
Moratorium: Course + 6 months
2. Non-Banking Financial Companies (NBFCs)
HDFC Credila:
Loan Amount: Up to INR 75 Lakhs (unsecured)
Interest Rate: 11%
Loan Tenure: 10 years
Moratorium: Course + 6 months
Avanse:
Loan Amount: Up to INR 50 Lakhs (unsecured)
Interest Rate: 11.5%
Loan Tenure: 15 years
Moratorium: Course + 6 months
3. International Lenders
MPower Financing:
Loan Amount: Up to USD 100,000 (unsecured)
Interest Rate: 9.99%
Loan Tenure: 10 years
Moratorium: Course + 6 months
Prodigy Finance:
Loan Amount: Up to INR 50 Lakhs (unsecured)
Interest Rate: 10.5% to 14%
Loan Tenure: 10 years
Moratorium: Course + 6 months
Education Loan Interest Rates for Abroad Studies
Interest rates vary based on the lender, borrower profile, co-applicant financials, university, course, and destination country. Below is a snapshot of current rates (as of January 2025):
Eligibility Criteria for Education Loans Abroad
Although criteria differ by lender, general eligibility conditions include:
Nationality: Indian citizen.
Admission: Secured admission in a recognized university via merit or entrance tests.
Course: Enrollment in career-oriented undergraduate or postgraduate programs.
Academic Performance: Minimum 50% marks in the last qualifying exam.
Collateral: Required for secured loans.
Co-applicant: Mandatory for unsecured loans; must have a stable financial background.
University & Course Reputation: Considered for loan approval and interest rate determination.
Income Relation: Co-applicant’s income must correlate with the loan amount.
Documents Required for Education Loan
Documentation depends on the lender and loan type but generally includes:
Key Features of Education Loans for Abroad Studies
Loan Coverage: Tuition, living expenses, insurance, visa fees (varies by lender).
Interest Rate: Influenced by collateral or co-applicant profile.
Moratorium Period: Typically course duration plus 6-12 months.
Repayment Tenure: Up to 15 years depending on lender and collateral.
Tax Benefits: Interest on education loans is eligible for deduction under Section 80E of the Income Tax Act.
Prepayment Options: Most lenders allow partial/full prepayment without penalty.
Processing Time: Usually 2-4 weeks, expedited with complete documentation.
Why Choose “Shree Consultancy” for Education Loan Assistance?
Navigating the maze of education loans can be confusing and stressful. “Shree Consultancy” offers expert consultancy services tailored for international education funding:
Personalized loan recommendations based on your profile and university.
Transparent comparison of interest rates and loan terms.
Assistance with documentation and application submission.
Dedicated loan approval support.
Guidance on scholarships and grants to reduce loan dependence.
Final Thoughts
Studying abroad is a transformative experience but requires careful financial planning. Choosing the right education loan can ease monetary burdens and help you focus on your academic goals. Always compare options, scrutinize terms, and consult experts to secure the best loan.
If you’re ready to pursue your dream overseas education, connect with “Shree Consultancy” for a seamless loan journey!
FAQs: Education Loans for Study Abroad
Q1: What is an education loan for studying abroad?
An education loan is financial assistance to cover your tuition fees, living expenses, and other costs for higher education abroad, often requiring collateral or a co-applicant.
Q2: How do I know how much loan amount I need?
List all expenses such as tuition, living costs, insurance, visa fees, and study materials. Sum these to estimate the loan amount.
Q3: What types of education loans are available?
Two types:
Secured loans backed by collateral (property, FD, etc.)
Unsecured loans without collateral but may require a strong co-applicant.
Q4: Which lenders provide education loans for abroad studies?
Main lenders include public banks (SBI, PNB), private banks (ICICI, Axis), NBFCs (HDFC Credila, Avanse), and international lenders (MPower, Prodigy Finance).
Q5: What documents are needed for the loan application?
Typically: KYC documents, admission proof, academic records, financial documents of co-applicant, and collateral documents (if secured loan).
Q6: How long is the repayment tenure?
Usually up to 10-15 years, with a moratorium period covering course duration plus 6-12 months.
Q7: Can I prepay the loan without penalty?
Most lenders allow partial or full prepayment without penalties, but confirm with your lender.
Q8: What interest rates can I expect?
Rates vary 9% to 14%, depending on loan type, collateral, lender, and student profile.
Q9: Are there tax benefits on education loans?
Yes, interest paid on education loans is eligible for deduction under Section 80E.
Q10: How can “Shree Consultancy” help me with the loan process?
“Shree Consultancy” offers personalized loan matching, application assistance, documentation guidance, and ongoing support to streamline your loan approval.
