Apply for an Educational Loan for Study Abroad: A Complete Guide for Indian Students

Dreaming of studying abroad but worried about the rising costs? You’re not alone. The tuition fees, living expenses, travel, and other miscellaneous costs can seem overwhelming. But here’s the good news—an Educational Loan for Study Abroad can make your global education dream a reality without putting excessive pressure on your family’s finances.

In this comprehensive blog, we’ll walk you through everything you need to know about applying for an education loan to study overseas—from the types of loans available and eligibility criteria to the documentation process and repayment.

Why Take an Educational Loan for Overseas Studies?

Studying abroad offers immense academic and career benefits, but affordability remains a major challenge. Here’s how an educational loan can help:

1. Access to World-Class Education

By taking a study loan, you can enroll in top universities in countries like the UK, USA, Canada, New Zealand or Australia, gaining access to superior faculty, research facilities, and industry exposure that may not be available in India.

2. Strong Return on Investment (ROI)

Graduates from reputed international institutions often land high-paying jobs globally. Over time, the potential ROI of your education far outweighs the upfront costs.

3. Preserves Your Family’s Savings

With a loan, you don’t have to dip into your family’s hard-earned savings. You can fund your education and repay the loan after securing employment.

4. Build Your Credit Score Early

Timely repayment of an education loan helps students start building a positive credit history early in life.

Types of Education Loans for Studying Abroad

There are various education loan options available to Indian students, each with distinct features:

1. Secured Education Loans (With Collateral)

These loans are backed by assets such as property, fixed deposits, or insurance policies. They usually come with lower interest rates and higher loan amounts.

2. Unsecured Education Loans (Without Collateral)

These loans do not require you to pledge any assets but generally carry a higher interest rate. Lenders also have stricter eligibility criteria, focusing on academic merit and the financial stability of the co-applicant.

3. Loans from NBFCs and International Lenders

Non-Banking Financial Companies (NBFCs) and international lenders like Prodigy Finance, offer flexible education loan options, often with faster processing, especially useful when traditional banks have rigid norms.

Typical Loan Amount for Overseas Education

The amount of educational loan for study abroad you can avail depends on factors such as:

Tuition fees and living costs in the destination country
The reputation of the university or course
Your academic background
Co-applicant’s financial standing

Most Indian banks and NBFCs offer loans ranging from INR 10 lakh to INR 1.5 crore, based on the above factors.

Related Source: https://sbi.co.in/web/personal-banking/loans/education-loans/student-loan-scheme

Basic Eligibility Criteria for an International Study Loan

To apply for an overseas education loan, students generally must:

Be an Indian citizen aged between 16–35 years
Have secured admission to a recognized foreign university
Possess a strong academic record (minimum 60% marks in previous qualifications)
Have a co-applicant (usually a parent/guardian) with a steady income and good credit score

Each bank or NBFC may have additional criteria depending on the destination country or course.

Essential Documents Required for Education Loan Application

To apply for an education loan for abroad studies, keep the following documents ready:

For the Student (Applicant):

Completed loan application form
Admission letter or offer from a foreign institution
Academic records (10th, 12th, graduation mark sheets)
Valid passport and recent passport-sized photographs
Exam scores: IELTS/GRE/GMAT (if applicable)

For the Co-Applicant (Guarantor):

ID proof: PAN, Aadhaar, Passport
Income proof: IT returns, salary slips, bank statements
Business proofs (for self-employed co-applicants)

For Collateral-Based Loans (if applicable):

Property documents
Valuation certificate
Encumbrance certificate

How to Choose the Right Lender?

Choosing the right lender is critical. Here’s what to compare:

Interest Rates:

Compare fixed and floating interest rates. Generally, secured loans offer better rates.

Processing Time:

Faster processing is essential if you have tight visa or admission timelines.

Repayment Flexibility:

Look for longer tenures (up to 15 years), grace or moratorium periods, and zero prepayment penalties.

Processing Fees & Hidden Charges:

Always check for processing charges and any hidden costs.

Customer Support:

Responsive and supportive lenders make your journey smoother, especially when dealing with international transactions.

Repayment Process for Overseas Education Loans

Repayment usually begins after the moratorium period—this includes the course duration plus an additional 6–12 months after graduation.

Common Repayment Options:

EMI (Equated Monthly Installments): Auto-debited from your account
Partial Interest Payments: Some lenders ask for interest-only payments during the study period
Prepayment Options: Allows you to repay the loan early without penalties (subject to terms)

Defaulting on education loan EMIs can negatively affect your credit score, co-applicant’s finances, and even future visa applications.

Tax Benefits on Educational Loans (Under Section 80E)

Yes, Indian students and their co-applicants can claim tax deductions on the interest paid for educational loans under Section 80E of the Income Tax Act.

Key Highlights:

No upper limit on the interest amount
Valid for loans from approved banks/NBFCs
Tax benefit applicable for 8 years or until full repayment (whichever is earlier)

Note: The principal amount is not eligible for tax deduction.

Common Mistakes to Avoid When Applying for an Education Loan

Not Comparing Loan Offers:

Don’t rush. Always compare multiple banks, NBFCs, and international lenders before finalizing.

Delayed Applications:

Start your loan process as soon as you get admission. Loan delays can affect your visa process.

Ignoring Fine Print:

Understand moratorium periods, interest types, and repayment terms before signing.

Inaccurate Information:

False details or errors in application forms can lead to rejection or legal consequences.

No Repayment Planning:

Always have a solid backup plan. Estimate future income and set a realistic repayment strategy.

Need Help Securing an Education Loan for Studying Abroad? AVF Consultants Is Here for You!

Planning to study overseas but unsure how to manage your finances? AVF Consultants can help you secure the right educational loan for study abroad—quickly and confidently.

As one of India’s most trusted overseas education consultants, AVF Consultants offers expert guidance throughout the loan application process. We simplify the complexities and ensure you understand every step, from eligibility to documentation. We make it easier for students to access competitive education loan options for higher studies in top destinations like the USA, UK, Canada, Ireland, Germany, Australia, and New Zealand.

Let AVF Consultants help you make your study-abroad journey a reality. Connect with our experts today to find the best loan option tailored to your needs and study destination.

FAQs on Educational Loans for Studying Abroad

1. Can I get an education loan without collateral?
Yes, many private lenders and NBFCs offer unsecured loans up to INR 40–50 lakh based on academic performance and co-applicant’s income.

2. What does an education loan cover?
Tuition fees, living expenses, travel, books, insurance, exam fees, and even laptop costs in some cases.

3. Do I need a co-applicant?
Yes, most banks require a co-applicant (parent or guardian) with a stable income and credit profile.

4. What if I don’t get a job immediately after graduation?
You have a grace period of 6–12 months after course completion to begin repayment. Discuss deferment options with your lender.

5. Which banks offer education loans for study abroad?
Popular choices include SBI, Bank of Baroda, ICICI Bank, Axis Bank, Yes Bank, HDFC Credila, Avanse, and Prodigy Finance.