Educational loans to Study Abroad
Since there is a hike in education fees everywhere, there are so many ways to overcome these difficulties. Parents are investing their money in mutual funds, unit linked insurance plans etc. to get their children get admitted into reputed foreign institutions or universities and meet their educational needs. Overcoming these issues some banks are providing educational loans filling the gap between shortfall and required amount.
It is not good to dismiss the idea of ignoring the educational loan because you got scholarship. There is no doubt that scholarship will help the student very much. But meeting all the foreign educational expenses is definitely not possible only with scholarship. It basically covers tuition fees, book and any supplies fees, room and board fees, transportation fees, health insurance fees, and also your living expenses.
Also Read: SBI Education Loan
Educational loans play a dominant role in helping students who go abroad to meet their educational as well as financial needs. Educational loans for foreign institutions usually cover tuition fees, charges for examination, library, laboratory and hostel, cost of purchasing books, equipment, instruments and uniform, Travel expenses for study abroad, caution money, refundable deposit, etc. & study tours, exchange programs and project work.
Here are the details of the educational loans to Indian students:
Documents to be submitted while applying for an educational loan:
- Mark sheet for last qualifying examination of school and graduate studies in India
- Admission proof to the course
- Schedule of expenses for the course
- Copy of letter confirming scholarship (if any)
- Copy of Foreign Exchange permit ( if available)
- Two passport size photographs
- Statement of borrowers bank account for last six months
- Income Tax assessment order not older than two years
- Brief statement of Borrowers Assets and Liabilities
- If not a customer of the lending bank provide proof of identity and residence
Requirements for Education Loan To Study Abroad:
- The applicant must be a resident Indian
- Age group must be in between 16 and 35
- Capable of offering collateral for certain cases
- A co-applicant is required for all full-time programmes. The co-applicant can be a parent, spouse, sibling, father-in-law, mother-in-law, brother-in-law, or a paternal/maternal uncle/aunt
Here are the interest and repayment details of some banks who offer educational loans:
|Name of Bank||Loan Amount||Rate of Interest per Annum|
|State Bank of India||20 lakhs||Upto 7.5 lakhs- 11.01%
Above 7.5 lakhs- 10.75%
The candidates who take educational loan upto 4 lakhs or between 4 lakhs and 7.5 lakhs will get 10 years to repay the amount. The repayment period for the loan amount above 7.5 lakhs is 20 years.
|Allahabad Bank||50 lakhs||Upto 4 lakhs- 11.45%
Upto 7.5 lakhs- 11.45%
Above 7.5 lakhs- 10.95%
|Axis Bank||20 lakhs and beyond depending on requirement||Upto 4 lakhs- 16.50%
Upto 7.5 lakhs- 17.50%
Above 7.5 lakhs- 15.50%
Repayment tenure is upto 15 years post moratorium period.
|HDFC||Upto 10 lakhs||Max-15.25%
No collateral is required for loans up to Rs. 7.5 lacs.
The maximum repayment tenure is up to 15 years post moratorium period.
|Credila||No limit. Depends on requirement||12.10%+ floating rate(depends on the risks points of the applicant)
Tenure of the loan is the Duration of Study + Grace Period after the Study + Repayment Period
|Punjab National Bank (PNB)||20 lakhs||Upto 7.5 lakhs- 11.25%
Above 7.5 lakhs- 11.85%
for education at premier foreign universities- 9.85%
Repayment period: up to 10 years for loans of Rs. 7.50 lacs or below and up to 15 years for loan above Rs. 7.50 lacs
|IDBI Bank||Depends on requirement||Upto 10 lakhs-10.45%
Above 10 lakhs-11.45%
The repayment period is from 10 to 15 years.
|Indian Overseas Bank (IOB)||Upto 40 lakhs||Upto 4 lakhs- 11.50%
Upto 7.5 lakhs- 12.00%
Above 7.5 lakhs- 12.25%
The repayment period is for a maximum period of 5 – 7 years excluding holiday period of six months after getting the job or 12 months after completion of the course, whichever is earlier.
|State Bank of Mysore||Upto 40 lakhs||Upto 4 lakhs- 12.20%
Upto 7.5 lakhs- 12.20%
Above 7.5 lakhs- 11.20%
Above 10 lakhs- 11.70%
Tenure for repayment of loan is 15 years from the date of completion of course.
|Avanse Financial Services||No limit. Depends on requirement||11.5%+ floating rate(depends on the risks points of the applicant)
The repayment period can be 12 to 120 months depending on the loan amount.
|Syndicate Bank||20 lakhs||Upto 4 lakhs- 11.00%
Upto 7.5 lakhs- 11.25%
Above 7.5 lakhs- 12.25%
The repayment period is five to seven years.
|Canara Bank||20 lakhs. Depends on requirement||Upto 4 lakhs- 11.15%
Upto 7.5 lakhs- 11.65%
Above 7.5 lakhs- 11.15%
The repayment period is up to 10 or 15 years depending on the loan amount.
The association of RBI and Indian Bankers’ Association (IBA), the Government of India has framed a Comprehensive Educational Loan Scheme. This covers all type of courses, including professional courses in schools and colleges in India and abroad. Features of this scheme are:
- The scheme issues loans upto Rs.15 lakhs for studying in foreign countries.
- No collateral margin is required and the interest rates should not exceed the primary lending rates (PLR) for loans up to Rs. 4 lakhs. Above that limit the interest rate will not exceed PLR plus 1 percent.
- Repayment of loan should be done over a period of 5 to 7 years with provision of grace period of one year after completion of studies.
Top Education Loans Providers in India for Studying Abroad
State Bank of India
SBI offers a maximum amount of INR 30 lakhs as education loan for studying abroad with a loan margin of 15%. The Interest rate charged on the loan amount is up to 2% on the current base rate of SBI. Further, the loan repayment tenure can be 1 year to 15 years.
HDFC Bank is one of the largest private banks offering education loans for abroad. The maximum loan amount offered by the bank it up to INR 20 lakhs. In order to avoid last minute rush, the bank offers study loan for abroad even before the student has secured admission at the university.
Axis bank offers study loan for abroad at competitive interest rates. A margin of 15% has to be arranged by the borrower if the loan amount exceeds INR 4 lakhs. The bank offers a maximum of INR 20 lakhs and covers different costs like tuition, accommodation, and books.
Punjab National Bank
PNB Udaan is the education loan scheme offered by the Punjab National Bank to students going to study abroad. The bank offers foreign education loan for students going to pursue graduate, post-graduate, job-oriented professional and technical courses. The borrower needs to show loan margin of 15% for the loan amount of above INR 4 lakhs. Also, the bank offers the base rate as the interest rate on loans taken for pursuing an education at the top 200 universities across the world.
Study Abroad Education Loan from NBFCs (Non-banking financial companies)
Apart from the nationalised banks, student loans can also be availed from non-banking financial companies/institutions (NBFCs). Non-banking institutions offer complete tuition fees to the students. Borrowers need to provide collateral as security to the banks as the loan amount is generally more than INR 7.5 Lacs. Students looking for education loan for abroad studies can now have the option to secure a loan from NBFCs. Some of the NBFCs options are:
- Credila: Credila is part of the renowned HDFC bank and provides loans to Indian students wishing to study abroad. The loans are given at a competitive floating rate of interest and can be repaid within a period of 10 years.
- Avanse: Part of the DHFL group, it is considered as one of the most popular non-banking financial institutions in India. Student loans from Avanse cover tuition fees up to 100% and other expenses. Apart from this, the interest rates are floating and the processing fee can go up to 1 to 2 percent of the loan amount.
- International Student Loan Program (ISLP): This program is specially designed for international students who want to study in the US. Through this program, students can borrow an amount as little as $1500 and can extend the repayment period up to 25 years. The loan disbursed under this program covers tuition fees and other expenses.
- Global Student Loan Corporation (GSLC): The GSLC offers loans to international students to pursue their higher studies in the US without the requirement of any co-signer.
Some of the loan schemes offered by Indian banks for Studying Abroad
- HDFC Bank Education Loan for Foreign Education: This loan scheme can be availed by Indian students who wish to pursue studies abroad. The maximum amount available in this scheme is INR 20 lacs at a nominal rate of interest. Also, it offers tax benefits to the borrower and it can be sanctioned before admission as well.
- SBI Student Loan Scheme: This scheme can be availed by Indian students who have secured admission in any institute in India or abroad. A maximum of INR 20 lacs can be availed at a nominal interest rate and it has to be repaid within 15 years. Also, if the loan amount is more than INR 7.5 Lacs, then borrowers need to furnish collateral as security. The repayment starts after one year of completion of the course.
- SBI Global ED-VANTAGE Scheme: This loan can be availed by Indian students who wish to pursue a full-time course abroad. Students can avail a loan of up to INR 1.5 crore and have to repay it within a period of 15 years. The borrowers need to provide collateral to secure this loan and will have to start repayment after 6 months of completion of the course.
- Oriental Bank of Commerce Education Loan for Study in India and Abroad: This loan scheme is offered to students who wish to pursue their higher studies in India or abroad. If the student wishes to pursue his studies in the US, then the amount of the loan will depend on the fee structure of the institute they have applied to. The highlight of this scheme is that it does not charge a prepayment penalty from the borrowers and also give insurance cover as well. The margin for the loan amount exceeding INR 4 Lacs is 15% on the loans taken for studying abroad.
Education Loan for Higher Studies in Abroad
Post-graduate students from India are increasingly choosing to study abroad. India’s most popular destination to study abroad (apart from USA) is countries such as Germany, Canada, U.K. & Australia. France, Singapore, Dubai, NZ are also seeing significant increases from India.
While many institutes in India are internationally competitive by most measures, but the numbers of students who can be served by these schools is quite limited. Hence increasing number of bright Indian are choosing to study overseas for higher education.
The cost to study in these countries varies, depending on the University, course, duration and the cost of living of the country. HDFC Credila understands the complexities of financing higher education and hence has customised loan solutions for each county to help brilliant minds pursue their higher education in the University of their choice.
It is this customised solution finding that has made HDFC Credila the preferred loan provider of thousands of students studying hundreds of different courses, in over 1000+ different Institutes, across these 35+ countries.
Why is it important to know about study abroad education loans?
Universities have gladly accepted diversity in their talent pool with Indian students and study-abroad-student-loans have aided in doing so. The aim of higher education abroad, for specialized learning, is now becoming a more credible reality for students of India. But not many students are completely aware of education funding options for study abroad. Students are often found to have missed the opportunities of their lifetime for want of regular financial limitations. Information about the education loans to study abroad, is required for Indians to realize their educational aspirations, undeterred and independently.
Education Loan Study Abroad – Eligibility
Who can avail student loan for study abroad? Is foreign education loan available for all international institutions?
Education loans for abroad studies are based on the eligibility of courses and institutions. Students wishing to pursue higher education abroad can choose from the numerous banking options to fund their education. Eligibility for foreign education loan is not as tedious as it is for domestic education loan. Applicants who already have a decent knowledge of foreign education application process and are preparing for such steps are eventually eligible for a student loan to study abroad.
Common eligibility parameters for study abroad education loan are:
- A student should be an Indian national. Wards of PIOs and NRIs are included in this criteria
- Applicants should have an acceptance letter from educational institution (either permanent or conditional)
- Students should have passed the requisite international entrance exams and should have permits (VISA and work) in place
- Should be able to exhibit financial viability for repayment of education loan for study abroad
Courses eligible for international student loans
Banks always prefer to provide education loan for study abroad, to students attending technical or professional courses which offer some credible weightage to post academic employability. This is because banks prefer the applicants to have a source of income after education to repay the loan. Almost all international universities/colleges/institutions provide job oriented courses only. Still, for the reference of applicants, all courses eligible for foreign education loan are mentioned below:
- Undergraduate degrees/diplomas and special courses
- Postgraduate degrees/diplomas and special courses
- PhDs and Doctoral Programmes
- Exchange programs (the degree to be offered by the foreign institution)
Some other courses which are eligible for education loans depending upon the banks’ individual policies and plausibility of job-oriented outcome:
- Computer Certificate Course
- Engineering Diploma
- Data Entry Operator Course
- Diploma in Agricultural Sciences
- Veterinary/Animal Husbandry Diploma
- Any job-oriented diploma or certificate course
- Applicants with Degree or Diplomas for aeronautics, pilot training, shipping held by recognized regulatory bodies for the purpose of employment in India or abroad
Education Loan Study Abroad – Collateral and Documents Required
What collateral can I use for getting international student loans?
Collateral are assets presented as a guarantee against the repayment of the loan. Applicants need to submit the conditional ownership of an asset that covers the education loan amount, to the bank; as collateral for loan amount sanctioned. This is not at all compulsory for all banks and neither for all education loan amounts.
The Government of India bars all registered banks and non-banking financial institutions from keeping any collateral for loans below ₹7,50,000 (7.5 lakhs). However, collateral is required for education loans of the higher amount. These are the kind of collateral that applicants can use to get education loan for studies abroad.
Education Loan for study abroad – collateral checklist
|Loan Collateral Type||Benefits/Conditions|
|Foreign Education Loan against Property||
|Foreign Education Loan against Securities||
|Foreign Education Loan against Deposits||
|Foreign Education Loan against Third Party Guarantee||
|Foreign Education Loan without Collaterals||
Education Loan for abroad studies without security
In order to aid and provide aspiring students with a chance to pursue higher education abroad without any financial restrictions, NBFCs (Non-Banking Financial Institutions) have started to provide education loans without collateral. These loans, as mentioned above have comparatively high interest rate but additional features that compensate for this concern. Some key features of education loan for study abroad without security requirement are:
Applicants are required to have co-applicants co-sign the loan agreement
a. Co-applicants (first degree): parents and spouse
b. Co-applicants (second degree): siblings and parents-in-law
c. Co-sign: accept the liability of repayment if the applicants fail to do so
1. Processing fees of education loan for studies abroad without collateral can range between 1.00% to 4.5% and more for private loan agents
2. CIBIL score and annual continuous income proofs are mandatory
3. The education loan amount may vary based on the institution, course and bank norms
4. Such loans are also provided by international banks, but they charge interest rate in percentage dollars.
a. A higher interest rate paid in Indian rupees is generally cost-effective compared to the low-interest rate paid in dollars
b. Exchange rates may render loans without security more expensive than with security foreign education loans
FAQs for foreign education loan
Q. What is the maximum loan amount you can get for studying abroad?
A. As such, there is no limit set by the banks for offering education loans to the students abroad. It depends from bank to bank. Majority of the banks offer loans maximum up to INR 20-30 lakhs. Also, if the loan amount is more than INR 20 lakhs then interest rate also increases.
Q. For which type of courses, banks offer education loan for studying abroad?
A. Generally, banks and NBFCs prefer to give loans for undergraduate and postgraduate courses. Also, majority of the banks prefer to give education loans for abroad for pursuing job oriented and professional courses.