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How to Get Education Loan to Study Abroad? Research Team | Posted On Thursday, September 19,2019, 09:19 PM

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How to Get Education Loan to Study Abroad?



Studying abroad is a dream that comes with a heavy price tag. It is a life-changing decision that requires a huge financial back-up to be fulfilled.

An Education Loans helps to bridge the gap between the total amount required and the shortfall. It is a way you can fund your education and pursue and achieve your educational goals. Education loan comes with a special benefit that allows you to repay the loan after securing a job.

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How to Get Education Loan to Study Abroad?

You can approach any public or private sector bank or an NBFC for availing an education loan. An education loan is the best way to fund your educational expenses without incurring massive debt or disturbing your family’s finances. Since the processing of loan takes a good amount of time, it is always advised you apply for the loan a little early. For availing an education loan you must:

  • Find out the amount required and the amount you can provide
  • Compare loans from different banks and choose the one that suits your requirements
  • Fill the loan application and approach your bank
  • Once the loan is approved, you have to go through the loan documents
  • After signing the loan documents the amount will be disbursed.

See Also: Tax Benefits on Education Loan

Eligibility Criteria to Apply for an Education Loan:

Before applying, you must check your eligibility for education loan. Make sure you confirm your eligibility before applying for the loan as it saves your time and effort. Listed below are the eligibility criteria prescribed by the banks:

  • The applicant must be a citizen of India
  • The applicant must be above 18 years of age
  • A good academic background is preferred.
  • He/she should have secured admission in a recognised foreign university/ institution
  • Banks give preference to job oriented courses, so the course that the applicant wants to pursue must be a technical or professional one.

Documents Required to Apply for Education Loan for Studying Abroad?

Availing education loan is easier than other loans as it requires minimal documentation. Before applying for a student loan, you must be completely aware of the documents required to obtain the loan. 

  • Completed loan application form
  • Passport-sized photo of the applicant and the co-applicant
  • Copy of academic documents: mark sheets and certificate and score report of GRE, TOEFL, IELTS
  • Admission letter shared by the university/institution
  • ID proof and address proof
  • Proof of income (IT returns of the co-applicant)
  • Previous 6 months bank statement ( applicant / parent / guarantor)
  • Assets or property papers can be submitted as collateral for the loan
  • Passport /visa-copy, airfare costs as established documents for studies abroad.

 Please note that banks in their capacity may request for additional documentation and proof.

See Also: How to Get a Student Loan?

Education Loan Interest Rates in India:

The rate of interest on education loans is lower than that of personal loans. Since education loans are devised to offer credit to students, the banks use the Marginal Cost of Funds based Lending Rate (MCLR), plus an additional spread to set the interest rate. The rate of interest varies across banks and NBFCs and also depends upon the amount of loan sanctioned. Majority of the public sector banks sanction 90% of the total amount required for pursuing the course.

Generally, banks offer a lower interest rate of 6.60% and above for loans below 4 lakhs. For loans ranging from 4 lakhs to 7.5 lakhs, the rate of interest offered is 8.50% up to 14.7%. For loans above 7.5 lakhs the rate of interest offered by the banks and NBFCs ranges from 10.20% to 16%. A co-borrower (parents/guardian/spouse) must-sign the loan documents if the loan amount is more than 7.5 lakhs.

Collaterals to Get Education Loan:

You can apply for a collateral-free education loan as well as a loan with collateral. Collateral is an asset presented as a security against the repayment of a loan. Before applying for a collateral-free education loan, you must know that the student is the main borrower and the parent or guardian can be the co-borrower of the loan.

Providing collateral is not compulsory for all banks and neither for all education loans. But to fulfil your dreams of perusing education abroad you require a large amount that will help you to take care of your educational expenditures. For higher loan amounts banks generally, ask for collateral security.  Let’s take a look into some of the collaterals that can be used to get education loan for studies abroad:

  • Tangible assets: documents of house, apartment, bungalow, shop, agricultural land, vehicle
  • Intangible assets: fixed deposit, life insurance, stocks etc.

If you want to avail an education loan using your tangible assets than the bank will first verify the documents and prepare a report on whether is it mortgaged or not. A bank representative will evaluate the market price of the property and the loan amount will be sanctioned based on it.

See Also: Personal Loan For Students

SBI Student Loan Scheme:

One of the most reputed banks offering education loan is the SBI. It offers loan to Indian students aspiring to continue their studies abroad. SBI finances courses that are job-oriented and often prefers students going for professional courses like MBA; MCA, MS etc. Courses offered by the Chartered Institute of Management Accountants (CIMA), London and the Certified Public Accountant (CPA), USA are also funded by SBI. The loan amount provided is up to 30 lakhs with a special concession for woman applicants. Education loan offered by the state bank of India covers all education expenses. The rate of interest on SBI student loan scheme is up to 2% on the current base rate of SBI.

Applying for the loan is easy and the applicant must submit the course details and estimate along with the KYC documents of self and co-applicant to avail the State bank of India education loan.

How to Get Education Loan to Study Abroad from NBFC's?

You can also apply for the education loan in NBFCs that offer complete tuition fees for students. The student’s loan can be applied for NBFCs and individual who wants to pursue higher education in abroad can avail student’s loan provided he/she has already qualified the higher secondary examination. To get a student’s loan, the borrower must submit the loan application form along with necessary documents. Some NBFCs like Avanse, ISLP, and GSLC provide loan scheme especially for courses abroad.  Avanse offer loans that cover 100% of the tuition fees at floating interest rates and 1.2% processing fee. ISLP and GSLC provide loans specially designed for students studying in U.S. the loans disbursed under these program covers the tuition fee and other expenses.

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