Overview of Education Loan

If you are planning to fund your higher studies abroad with the help of an education loan in India for study abroad, then you must have definitely thought about the expenses that would be covered by a typical foreign education loan scheme. Many students who wish to study abroad rarely have the right idea about the nature of expenses to be covered by education loans. Here we aim to expand on the same topic.

Investing in knowledge pays the best interest! And if the knowledge is acquired at a top tier and premium university then it is sure to take your career to the next level. However, the unfortunate reality is that the cost of studying at a reputed college is usually quite high. And studying in a good college abroad is an even more expensive proposition.

Foreign education loans help students realize their dream of studying in one of the best universities in the world, irrespective of their financial situation.

Many banks and other financial institutions now offer foreign education loans for students who wish to study abroad. These lenders have different education loan plans, but choosing the one that is right for you is not an easy task. And that's where GyanDhan helps. We match you with the lender that is the best overseas education loan in India that perfectly suits your profile and needs and then helps you secure loan approval in the most seamless and hassle-free manner.

How to Choose the Best Foreign Education Loan?

Taking an education loan is the right option to reduce the cost of education abroad. Depending on the amount and your profile, financial institutions can also finance 100% of the cost of the course. However, for the best foreign education loan option, one needs to carefully analyze the following key aspects of the various options available. When you apply with us, we do this analysis for you. If you do the loan comparison yourself, consider these factors:

Interest RateAn increase of even 1% in the interest rate of education loans has a substantial financial impact. Example - Loan Amount: Rs. 30,00,000, Loan Repayment: 5 years after graduation, Course duration: 2 years; Whereas at 10%, you will pay Rs. 9.7 lakh in interest, at 11%, you will pay Rs. 10.9 lakhs - that is, a difference of 1.2 lakhs in just 1%
Repayment Holiday / Moratorium PeriodThis is a specified period during the loan tenure in which the borrower is exempted from making payments. Loans with a moratorium period have a huge advantage, as you do not have to worry about making payments while studying abroad.
Tax ExemptionEducation loan taken for studies abroad from Indian banks is special in the sense that the entire amount paid as interest is exempted from income tax. This has a big impact: Example - Loan amount: Rs. 30,00,000, Marginal Tax Bracket: 30%, Repayment: 5 years after graduation, Course duration: 2 years, Rate of interest: 10% ... If your loan is tax-deductible, you can save Rs. 2.9 lakhs.
Margin MoneyThe amount that you have to pay out of your own pocket while the rest is paid by the bank. If a bank offers 0% margin, it means they will cover all your education expenses.
Hidden charges

There are many hidden charges that your lender may charge you and when these accumulate, you will have to spend a considerable amount, such as:

  • Forex Margin: Some lenders charge a foreign currency conversion fee at a particular rate when the foreign education loan is approved in Indian Rupees (INR) and disbursed in any other currency. It can go as high as 1.5%, which is Rs. 45,000 for a loan of Rs. 30 million.
  • Processing Fee: This varies from zero to as high as 2%. of the loan amount. For a loan of Rs. 30 Lac, it can be as high as Rs. 60,000
  • Cost of Credit Life Insurance: Some lenders make it mandatory for the applicant to go for credit life insurance so that their loan amount is protected against any unfortunate event. If the premium amount is high, it eventually increases the cost of the education loan as well.
  • Compulsory Cross-sell: Some lenders try to cross-sell other policies before approving an education loan, even if it is not required on the applicant's part.
  • The Interest Rate in Different Currencies: Often students face the dilemma of choosing education loans in USD with a low-interest rate or an equivalent amount in INR with a high-interest rate. As per the previous trend of rising prices of US Dollar to INR conversion rates, going for a loan in INR is a smart option even though it may come with a higher interest rate.

As you can see, by choosing the right foreign education loan, the cost reduction can be as high as 5-6%.

Which is the Better Option?

Which is the Most Affordable - Cheapest - Education Loan in India to Study Abroad?

Public sector banks offer the lowest interest rates on loans for overseas education as compared to private banks and NBFCs. Bank of Baroda is the cheapest education loan option in India if your institution is listed in BOB's premium list of colleges. Otherwise, the State Bank of India offers the cheapest education loan. However, the extent of cheap education loans in India depends on several factors including the applicant's profile, co-applicants financial profile, target country, target course, etc.

Which is Better: Loan with or without Collateral?

There are two types of education loans, one which is taken with collateral i.e. a secured loan and the other is taken without collateral i.e. an unsecured loan. You need to understand the difference between these two clearly before choosing the one that is right for you.

Secured Education Loan:

  1. The borrower needs to offer any collateral like immovable property, FD, insurance policy etc. against which the loan is offered.
  2. Low-interest rates.
  3. The chances of approval are high.
  4. Long repayment period.
  5. No repayment during the study period.
  6. Parental income is not required for approval.

Unsecured Education Loan:

  1. The borrower is not required to offer any collateral to avail of this loan.
  2. High-interest rate, usually 1.5% - 4% higher than secured loans.
  3. It is a more risky proposition for the bank, so it is not that easy to get an unsecured loan from the bank.
  4. Comparatively short repayment period.
  5. Few repayments during the study period.
  6. Parental income is required for approval.

What is the Eligibility Criteria to apply for the Education Loan?

Well before we proceed further, the first and foremost thing is to check whether you are eligible to apply for an education loan or not. Given below are the general terms and conditions generally followed by any bank in the process of granting an education loan. Please note that individual banks may have their own eligibility guidelines that have to be followed while applying for that particular bank.

  • The applicant student must be a citizen of India.
  • The Applicant must be 18 years of age otherwise his/her parents will have to take a loan.
  • The applicant should have a good educational background.
  • The applicant must have secured admission to a recognized foreign university/institute/college.
  • The desired course the applicant is going to study must be technical or professional, as banks give preference to job-oriented courses.

What are the Expenses Covered by an Education Loan in India for Study Abroad?

Funding for their higher education is one of the major concerns of most of the students in India who wish to study abroad. Education loan ensures that all the financial requirements of the education process abroad are met within the stipulated time frame. When it comes to funding higher education abroad, the major topic of discussion for most students is the expenses to be covered by education loans in India for study abroad. The information here is applicable to studying abroad both secured education loans as well as unsecured education loans to study abroad.

There is a very common misconception that an education loan does not cover all the expenses that students are likely to incur while studying abroad. However, this is not true. Any education loan, whether it is a secured education loan or an unsecured education loan from Government banks, Private banks, or NBFCs; entails the following list of important education loan expenses for the higher education process.

Tution Fee

Tuition fees quoted by universities abroad is one of the two major elements of both types of education loan in India for study abroad. Education loan in India for studying abroad aims to help students pay their tuition fees. All foreign education loans in India cover tuition fees. Therefore, while deciding on the total education loan amount, tuition fees should be your first priority.

Living Expenses

Several factors may be involved in this period. A student's living expenses mainly include the cost of their accommodation, food and expenses related to other days to day activities such as transportation from your home to the university, a deposit of security deposit for accommodation, etc. When calculating your total expenses for the course abroad, it is important to include your living expenses.

Health Insurance

Many universities abroad require international students to purchase health insurance. The expenses for an education loan in India for study abroad cover this particular expense as it is one of the requirements to study abroad for a lot of students. Hence, health insurance can also be considered in your education loan statement while applying for one.

Travel Ticket

Flight ticket to the destination of your choice is another major expense covered by the education loan in the education loan process abroad. This component can also be included in the education loan amount while quoting it to your bank.

Study Aid

If your university abroad offers letter mentions that you pay for field trips and other miscellaneous activities during the duration of your course, this can also be added to the education loan statement. Apart from this, students can also mention the cost of items like books, laptops and other study material in their total expenditure while applying for both types of education loans in India.

Points to be Observed while taking a Education Loan

What are the things to remember while taking an Education Loan for Abroad Studies?

Moratorium Period: 

This is the time during which the borrower is not required to make any repayment to the bank. This duration varies from bank to bank and may last for some time after the completion of the course.

Loan Margin:

Generally, banks do not provide the entire amount i.e. 100 per cent of the money required for education. Most of the public sector banks release 90% of the total amount, the remaining 10% has to be arranged by the candidate himself.

Effect of Exchange Rate:

Always calculate the amount that you will receive at the time of disbursement, as any change in the exchange rate may affect the amount you will receive.

What are the important points to note before declaring expenses to the bank for education loan in India for study abroad?

Although the expenses for an education loan cover all the equipment that is likely to be incurred while pursuing higher education abroad, it is possible that some of you may have to pay them all while submitting the final list of expenses to your respective banks. Forget to include it. , Therefore, it is very important that you look into the exact number of expenses before applying for an education loan in India to study abroad.

For example, if you have forgotten to include the cost of your flight ticket in the estimated list of expenses to be covered by your education loan abroad, it is quite possible that you will be required to reimburse the same after taking out your loan. Will not be able to apply. Education loan disbursement. If you approach your bank with the concern of returning your flight ticket after taking your first disbursement, they may deny you this. Therefore, it is extremely important to have a clear understanding of the exact expenses and make a list of the same before applying for an education loan in India to study abroad.

Read the Loan Agreement Carefully

This is one of the most important aspects to keep in mind while taking a loan. We always suggest that you read the terms and conditions of the loan carefully and then go ahead with it. This is a factor that we emphasize, as you should always be clear with all the terms mentioned in the loan agreement. If you have any doubts about anything, always consult experts other than the bank representative.

What are the Documents Required For Secured Education Loans?

Before applying for an education loan, the applicant must be completely aware of the documents required to apply for a study loan abroad. The following documents are required to apply for an education loan for abroad studies:

  • Filled application form
  • Photographs: Passport size photographs of the applicant and the co-applicant.
  • Photo ID: Photo ID of the applicant and the co-applicant. It can be a PAN card, driving license, Voter ID card, Aadhar Card, or Passport.
  • Residence proof: Resident proof of the applicant and the co-applicant
  • Academic documents:
    • Mark sheet and certificates of the applicant
    • Mark sheet (Score Report) of GRE, GMAT, TOEFL, IELTS, etc. whichever is applicable
  • Admission proof: Admission letter shared by the university or college.
  • Bank statements: Last six months bank statements of the co-applicant
  • Income proof: Income proof of the co-applicant
  • In the case of collateral (immovable property), it can be flat, home, or non-agriculture land the following documents are required:
    • Property title deed
    • Building approved plan
    • NOC for a mortgage from a builder or society
Document TypeApplicantCo-Applicant
Date of BirthBirth Certificate, Passport, Voter card with DOB, College Passing Certificate, PAN Card, Driving license, Aadhaar Card 
Residence Proof 
(if owned)
Electricity Bill, Municipal Tax Receipt, Share Certificate or Title Deed (with Flat No) 
Residence Proof 
(for a rented property)
Registered Rent agreement (with utility bill), Landline phone bill, Post Paid Mobile Bill, Bank statement., Passport, Driving License, Voter ID, and Aadhaar card 
AadhaarAadhaar card 
PAN CardCopy of PAN / Form 60 if PAN is not available 
SignatureSignature verification from the bank, Passport, Driving License, and PAN Card (all IDs should match with your current signature) 
Relationship ProofPassport, Pan, Aadhaar card, Marriage certificate, Birth certificate, Legal heir certificate, Ration card, or any other acceptable documents 
Academic Documents10th,12th, UG or PG mark sheets, degree or provisional degree certificate, and applicable entrance test scoresRegistration certificates for Professionals (CA, Doctor)
Income proof - SalariedDocuments to establish 3 years of work experience where ever applicable and availableLatest  3 salary slips, Bank Statement of last 3 months, Form 16,
2 years ITR with the statement of income, Income certificate from Tehsil/collector's office
Office AddressNAForm 16/ Salary slip/ Letter from HR/ Snapshot of site/Identity card
Admission ProofInvite/admission letter from University/college and Fee structureNA

Technical Documentation

Apart from the above-mentioned documents, aspirants also need to have some other technical documents to avail of a student loan.

  • Title deed (all the pages to be attached)
  • Copy of approved layout plan and permissions case specific
  • Revenue document (Khata / Patta)
  • Non Encumbrance certificate
  • Possession Certificate (In case the flat is taken from a builder)
  • Latest Property tax receipt
  • Copy of Prior sale deeds
  • Conversion certificate
  • Urban clearance certificate (Case-specific)

Legal Documentation

In addition to the standard and technical documents, aspirants also need to have a list of legal documents for getting an education loan.

  • Sale /gift/partition deed in favour of customer – Minimum 13 years
  • Khata Certificate and extract in the name of the current owner
  • Encumbrance certificate – Minimum 13 years reflecting all sale transactions
  • Latest Property tax receipt

NOTE: These requirements can vary as per the banks’ regulations.

What is the procedure for getting an education loan for Studying Abroad?

From loan application to approval and disbursement, the entire loan process takes time, so it is always advisable to apply for a loan early. Follow these steps to apply for student loans: 

  • Check whether the course you are going to study is recognized by banks or not. 
  • Find out how much loan amount you need and how much you are going to arrange yourself. 
  • Compare student loans offered by different banks for studies abroad and go for a loan that meets your needs. 
  • After finalizing the bank and loan amount, fill up the loan application form and contact your bank. 
  • As soon as your loan is approved, the bank will issue a loan document that will contain the various elements of the loan. 
  • After getting the loan documents signed, the bank will disburse the amount in instalments or as asked by the university.

You can Apply Now for 3-Steps hassel-free Education Loan Abroad

The steps to apply for a loan to finance studies abroad are:

1. Online Pre-approval

Once you complete our 2-minute education loan application, we automatically match your profile with criteria from our partner lenders and determine the best education loan option.

2. Lender-Approval

We get in touch with you to finalize the lender and give you a customized document listing. We then follow up with the lender for faster loan processing, handling hassles and negotiating interest rates as in the case of private lenders.

3. Loan Disbursement

Once your loan is approved, we help the university coordinate the disbursement as per the fee schedule. We also enable pre-visa disbursement if required.

We have Partnership with Reputed Financial Institutions across India

Some of the Partners are listed here::

  • IDFC Bank
  • With India being a fast developing country, the demand for good quality higher education is also increasing to build a better future. IDFC First Bank brings to you a fully digitized and customized education loan for the unique needs of each student.

    Be it education loans for MBA or any other professional or vocational courses, part-time or full-time, our domestic student loans cover a wide range of programs. Apart from educational expenses (tuition, hostel, exam fees etc.), our student loans provide financial coverage for additional expenses such as laptops, insurance, travel and more.

  • Avanse DHFL
  • Part of the DHFL Group, it is considered to be one of the most popular non-banking financial institutions in India. Avanse student loans cover up to 100% of tuition fees and other expenses. Also, the interest rates are floating and the processing fee can go up to 1 to 2 per cent of the loan amount.

  • HDFC Bank
  • HDFC Bank is one of the largest private banks offering education loans to study abroad. The maximum loan amount offered by the bank is up to INR 20 Lakh. To avoid the last-minute rush, the bank offers study abroad loans even before the student gets admission to the university.

  • HDFC Credila
  • Credila is part of the renowned HDFC Bank and offers loans to Indian students wishing to study abroad. The loans are given at a competitive floating interest rate and can be repaid within 10 years.

  • Axis Bank
  • Axis Bank offers study loans abroad at competitive interest rates. If the loan amount exceeds INR 4 Lakh, a margin of 15% should be arranged by the borrower. The bank offers a maximum of INR 20 Lakhs and covers various costs like tuition, accommodation and books.

  • ICICI Bank
  • Established in 1994, ICICI Bank is a leading private sector bank in India. ICICI offers a range of banking and financial services and credit products, which are formatted to suit the needs of various customers.

    The Bank understands the career aspirations of the students and has designed its ICICI Education Loans for Overseas in such a way that each student can be successfully supported in his/her future journey. With collateral-free loans up to Rs 40 lakh, tax savings u/s 80(e) on interest paid, flexible tenor and repayment options, and competitive ICICI Bank education loan interest rates, these loans help students achieve their dreams. help make it come true. To get a world-class education in premier institutions abroad.

  • Kotak Bank
  • A good education is what paves the way to success, and we believe that everyone has a right to an education that helps them grow and prosper. Hence our education loans are designed to provide finance to meritorious students who wish to pursue higher education both in India and abroad. With quick approval rates, minimal documentation and high loan amount based on income and repayment capacity, you will never be far from making your dreams come true.

  • State Bank of India - SBI
  • SBI offers a maximum of INR 30 lakhs as an education loan to study abroad with a loan margin of 15%. The interest rate applicable on the loan amount is up to 2% on the existing base rate of SBI. Also, the loan repayment period can range from 1 year to 15 years.

  • Bank of Baroda - BoB
  • Established in 1908, the Bank of Baroda provides various international and domestic banking services to retail and corporate customers. Education Loan from the Bank of Baroda (BOB) has been fulfilling the dreams of thousands of students aspiring to study both in India and abroad for many years.

    Baroda Scholar is their flagship education loan scheme which provides financial assistance to students wishing to pursue regular courses or executive development programs in foreign universities. Bank of Baroda also provides a subsidy of 0.5% in interest rates to girl students.

Frequently Asked Questions - FAQs

How do we help students with study abroad education loans?
We do work with all the major lenders in the market. Using a data-driven approach, we help students make the right choice while choosing a lender that offers the lowest interest rate with maximum chances of approval. Students can either get the documents from our concerned authority or upload them on the website. Students can track the entire education loan process online and a dedicated counsellor is available at all times to resolve queries or escalate any delay in the process.

How do we make it easier for students to get education loans?
We have streamlined the entire process of education loans for study abroad. Students need not run from pillar to pillar with their documents as we do manage everything from start to finish. We have tied up with many lenders in the market and can complete the loan process in less turnaround time.

Does our company help with both secured and unsecured education loans?
Yes, we help with both secured and unsecured education loans.
How do we help students in choosing the right bank for education loans?
There are two ways,

  1. Students can check eligibility and get instant loan recommendations on our loan eligibility tool. Thereafter, a Knowledge Executive will liaise with the student to help with documentation and further processing, or
  2. Students can request a call back on our website and an Education Loan Counsellor (ELC) gets in touch with the student within a few hours to understand the requirements. Will ask some detailed questions to further assess our ELC profile and match the profile with the best lender. Often, students are not aware of the deals available for them, so we help them choose the loan with maximum benefit.

Does the company charge anything for their services?
No, our services for students are free.

If a student needs an urgent education loan. Can we help him out?
Yes, we can help him to get an education loan if he applies for a loan with collateral and in 7 working days in case of an unsecured loan.

In which major cities does the company offer free document pickup service?
We provide free document pick-up services in Delhi, Gurugram, Faridabad, Noida, and Sonipat.

Can the company negotiate the interest rate on behalf of the students?
Yes, in the case of private lenders, we can negotiate the interest rate on behalf of the students. In our experience, if students approach private lenders
themselves, the interest rate they get is slightly higher. Public lenders have fixed ROI, irrespective of the channel you wish to apply.

What is the maximum loan amount I can apply for?
In secured education loans, students can apply for student loans up to INR 1.5 crores. In foreign education loans without collateral, students can apply for study loans up to INR 45 lakhs. This loan limit may increase or decrease depending on the applicant and co-applicants profile, country, course, etc.

My loan application got rejected by a bank. Can the company help me?
Yes. we can get you a loan from any other lender. In case of defective rejection, we can also get the loan application reviewed by the same lender.

A student is already in the process of applying for the loan but the application is stuck. Can the company help?
Yes. You can contact us at any stage of your loan application and we will help resolve any issues you may come across.

What type of lenders offers education loans to Indian students?
There are mainly 4 types of education lenders that provide study loans for Indian students:

  1. Public Sector Banks
  2. Private Sector Banks
  3. Non-Banking Financial Companies (NBFCs)
  4. International Lender

What types of education loans are available to Indian students to study abroad?
Broadly speaking, education loan options to study abroad in India can be divided into two categories:

  • Secured Education Loans – These are education loans in which the applicant has to pledge any property to the lender as security for the loan to be sanctioned.
    Collateral can be of two types:
    • Tangible assets like flats, shops, land (non-agricultural), etc.
    • Immovable assets like fixed deposits, insurance policies, government bonds, etc.
  • Unsecured Education Loans – These are education loans in which the applicant does not need to pledge any security to the lender to get the study loan to finance the study abroad. However, a co-applicant has to be included and his income becomes an important determinant of loan approval. In addition, private lenders only in India and some international players give an amount exceeding Rs 7.5 lakh to Indian students without any collateral.

What is Collateral?
Any asset whether movable or immovable, which can be offered to a bank as security for a loan, is collateral. Most Indian banks ask for collateral as security to mitigate the risk involved in paying off the loan. Learn all about Collateral here.

What types of instruments are accepted as collateral?
Any type of liquid assets such as bonds, FDs, shares or any immovable property such as a house, any commercial property, or just land can be classified as collateral. An important point to keep in mind is that agricultural land is not accepted as collateral. Even shares, bonds, bank deposits, mutual fund units, gold, debentures, bank deposits, life insurance policies, and government securities are accepted as collateral.

How can I get an education loan in India to study abroad without collateral?
Education loan has come as a big relief for those who want to get a quality education but face a big challenge while arranging funds. Now students can avail of loans up to Rs 4 lakh without collateral. For loans, up to INR 7.5 Lakh, the parent or guardians are made joint borrowers and a third party guarantee is obtained. Loans above INR 7.5 Lakh require property or any other asset as collateral.

How much can you borrow on collateral?
If you want to take the loan with your immovable property as collateral, in that case, the representative of the bank will verify your property and prepare a report on whether it can be pledged or not.
Also, the representative of the bank will evaluate your property. The loan amount will be sanctioned on the basis of this report.

What is the responsibility of the guarantor in an education loan?
Being a guarantor for a loan is a huge responsibility as there will be a legal obligation to pay the guarantor if the borrower defaults on his payment. If the loan amount exceeds Rs 4 lakh, the bank may seek a guarantee from a third party. If the borrower is not able to pay the loan amount irrespective of the circumstances, in that case, the guarantor holds the responsibility of repaying the entire amount to the banks.