Did you know?
- According to Business Standard, around 1.3 million Indian students studied abroad in 2023, making India one of the top countries sending students overseas.
- India Today projects a spend of about $70 billion on overseas education by Indian students till 2025.
- Financial institutions and Indian banks disbursed education loans worth about ₹30,000 crore in 2023.
Why is the number of students opting for education loans increasing at this rate?
There are many reasons, and education inflation is one of them. According to Inside Higher Ed, the inflation rate in the USA in 2023 was 4%. Today, a typical UG engineering degree in the USA costs up to $56,169+ per year. That would make a four-year program cost about INR 1.8 crores. And then there are additional expenses on top of that.
With the high cost of education, when savings aren’t enough, education loans can be a helpful solution. Read the full blog below to learn more about type of student loans and their types, and how to select one.
What is an education loan to study abroad?
An education or study loan is a financial tool for affording education in India or abroad. It can cover tuition, additional program fees, living expenses, visa fees, flight tickets, and personal expenses. The terms, however, vary depending on the lender.
Many lenders provide education loans to students abroad. Some of the top ones include HDFC Credila, Avanse, Auxilo, SBI, Union Bank, ICICI, etc.
Before you read further in the blog and learn more about the types of education loans for studying abroad, you must know some important terms.
Here’s a list of terms that you would come across while researching ed-loans:
| Terms | Definitions |
| Principal Amount | The total money borrowed from a lender, on which the interest rate is calculated |
| Interest Rate or ROI (Rate of Interest) | The percentage of the loan amount charged by the lender |
| Repayment Duration | The period over which the borrower must repay the loan |
| Moratorium Period | A grace period during which the borrower is not required to make loan repayments, often lasting until after graduation |
| Collateral | An asset pledged by the borrower to secure the loan, which the lender can seize if the loan is not repaid |
| Unsecured Loan | A loan that does not require collateral is typically offered based on the borrower’s creditworthiness and academic profile |
| Secured Loan | A loan that requires collateral reduces the lender’s risk, often resulting in lower interest rates |
| Processing Fees | The lender charges fees for processing the loan application, usually a percentage of the loan amount |
| EMI (Equated Monthly Installment) | The fixed monthly payment made by the borrower to repay the loan, including both principal and interest |
| Credit Score | A numerical representation of the borrower’s creditworthiness based on their credit history and financial behavior |
| Co-signer | A person who agrees to repay the loan if the borrower cannot |
| Prepayment | The option to repay the loan before the end of the repayment period, which can sometimes incur additional charges |
Also Read: Education Loan for Abroad Studies (Comprehensive Guide)
Types of education loans based on collateral
Based on collateral, education loans can be divided into two categories:
- Secured loans (with collateral): These loans require you to pledge an asset to secure your education loan. If the borrower fails to repay the loan, the lender can exercise their right to seize the pledged asset/collateral.
- Unsecured loans (without collateral): These loans don’t require you to pledge an asset or collateral to secure your education loan. These loans generally tend to have a higher interest rate.
Let’s get to know both types of loans in detail:
| Features | Secured Education Loans | Unsecured Education Loans |
| Collateral Requirement | Requires collateral such as property, fixed deposits, etc. | No collateral required |
| Loan Amount | Higher loan amounts (up to ₹1.5 crores) | Lower loan amounts (generally up to ₹40 lakhs or higher) |
| Interest Rates | Lower interest rates (9% – 11%) | Higher interest rates (11% – 15%) |
| Eligibility | Easier eligibility due to collateral | Stricter eligibility criteria, based on academic profile and credit score |
| Processing Time | Longer processing time due to collateral verification | Faster processing time |
| Processing Fees | Lower processing fees (up to 1% of loan amount) | Higher processing fees (1% – 2% of the loan amount) |
| Repayment Duration | Longer repayment periods (up to 15 years) | Shorter repayment periods (up to 10 years) |
| Moratorium Period | Flexible moratorium period (course duration + 6-12 months) | Fixed moratorium period (course duration + 6 months) |
| Approval Chances | Higher chances of approval | Lower chances of approval without a strong academic and financial background |
| Interest Subsidy | Eligible for government interest subsidies | Usually not eligible for interest subsidies |
Here are some more details on non-collateral and collateral loans offered by top lenders:
| Lenders | Non-collateral Loan Amount | Collateral Loan Amount | Interest Rate for Non-collateral Loans | Interest Rate for Collateral Loans |
| UBI | INR 40,00,000 | INR 1,50,00,000 | 9.75% | 9.25% |
| ICICI Bank | INR 1,00,00,000 | INR 2,00,00,000 | 11.25-12.75% | 10.25% |
| IDFC Bank | INR 75,00,000 | INR 1,50,00,000 | 11-14% | 9.25-10.5% |
| Axis Bank | INR 1,00,00,000 | INR 2,00,00,000 | 10.5-12.5% | 9.75-10.5% |
| Yes Bank | INR 50,00,000 | INR 1,50,00,000 | 11-12.5% | 11-11.5% |
| HDFC Credila | INR 75,00,000 | INR 1,50,00,000 | 11.75-12.5% | 10.15-10.75% |
| Avanse | INR 1,00,00,000 | INR 80,00,000 | 10.5-13% | 10.5-11.5% |
| Auxilo | INR 1,00,00,000 | INR 1,00,00,000 | 11.3-13% | Marginally less |
| InCred | INR 80,00,000 | INR 80,00,000 | 11.85-13% | Marginally less |
| TATA Capital | INR 75,00,000 | INR 1,50,00,000 | 11.75-13% | 10.75% |
| Prodigy Finance | $200,000 | NA | 11.5-15% | NA |
| MPower | $100,000 | NA | 12.99-15.99% | NA |
| Leap | $100,000 | NA | 11-12.5% | NA |
| Avanse Global | $120,000 | NA | 10.5-14% | NA |
Types of education loans based on lenders
Three main types of lenders provide education loans to Indian students studying abroad. You can explore some of the top lenders in each category below:
Education loans to study abroad by public sector banks
Here’s a list of top public sector banks and the characteristics of their study abroad education loans:
| Bank | Loan Amount | Interest Rate | Repayment Duration | Moratorium Period | Processing Fees |
| State Bank of India (SBI) | Minimum: INR 7.5 lakhs Maximum: Up to INR 1.5 crores | Starting with 11.15% | Up to 15 years | Course duration + 6 months | Up to INR 10,000 per application |
| Punjab National Bank (PNB) | Need-based financing | For female students – 10.25% – 12.25%For other students – 10.25%-12.75% | Up to 15 years | Course period + 1 year | 1% – a minimum of INR 10,000/- (refundable after 1st disbursement) |
| Union Bank of India | Minimum: INR 7.5 lakhs Maximum: Up to INR 1.5 crores | For a loan of up to INR 40 L – EBLR*+0.50% For a loan of over INR 40 L – EBLR+0.25%/ EBLR | 15 years (after moratorium period) | Course period + 1 year | For a loan of up to INR 40 L – INR 10,000 + GST For a loan of over INR 40 L – INR 20,000 + GST |
| Indian Bank | Up to INR 25 lakhs | 12.50% | Up to 15 years | Course period | 0.5% of the loan amount |
| Bank of Baroda | For premier institutes – Up to INR 1.5 crores For other institutes – Up to INR 60 lakhs | 9.70% – 13.70% | 10-15 years | Course duration + 1 year | For a loan up to INR 7.50 lakhs – NILFor a loan over INR 7.50 lakhs – 1% of the loan amount (maximum INR 10,000 + GST) |
*EBLR stands for External Benchmark Lending Rate. It’s the interest rate that banks use as a reference point to set their loan rates. So, for a loan of up to INR 40 lakhs, the interest rate would be EBLR plus 0.50%. For loans over INR 40 lakhs, the rate is either EBLR plus 0.25% or just the EBLR rate.
Education loans to study abroad by private sector banks
Here’s a list of top private sector banks and the characteristics of their study abroad education loans:
| Bank | Loan Amount | Interest Rate | Repayment Duration | Moratorium Period | Processing Fees |
| HDFC Bank | Up to INR 45 lakhs | 12.5% | 14 years (including moratorium period) | Course duration + 1 year | 1.5% of loan amount + tax |
| ICICI Bank | Up to INR 3 Cr | Minimum – 9.5% Mean – 11.31% | For UG courses – Up to 12 years. For PG courses – Up to 14 years | Course duration + 1 year | Up to 2% of the loan amount |
| Axis Bank | Up to INR 1 Cr | 13.7%-15.2% | Up to 15 years | Flexible | 2% of loan amount + GST |
| Kotak Mahindra Bank | Up to INR 20 Lakhs | Maximum upto 16% | Up to 10 years | Course duration + 6 months | Varies |
| Federal Bank | Up to INR 20 Lakhs | 12.55% onwards | Up to 15 years | Course duration + 1 year | Varies |
Education loans to study abroad by NBFCs (Non-Banking Financial Companies)
Here’s a list of top NBFCs and the features for their study abroad education loans:
| NBFC | Loan Amount | Interest Rate | Repayment Duration | Moratorium Period | Processing Fees |
| HDFC Credila | INR 1 lakh to no upper limit (almost 100% of the education cost covered) | Varies | Up to 12 years | Course duration + 6 months | Up to 1.25% + GST (non-refundable) |
| Avanse Financial Services | INR 1 lakh to no upper limit (almost 100% of the education cost covered) | 14.25% onwards | 1 to 15 years | Course duration + 6 months or 3 months after job | 1% – 2% of loan amount |
| InCred | Up to INR 80+ lakhs | Varies | Up to 15 years | Course duration + 6 months | Up to 2% of the loan amount |
| Auxilo Finserve | Up to INR 1 Cr | 11.3-13% (for collateral-free loans) | Up to 10 years | Course duration + 6 months | 1% – 2% of loan amount |
| Prodigy Finance | No specific limit | 11.5% to 15% | 7 to 12 years | Course duration + 6 months | Up to 5% of the loan amount |
| Aditya Birla Finance | Up to INR 50 lakhs | 10.55% onwards | Up to 7 years | NA | 0.5% to 2.5% of loan amount |
How to decide which education loan is the best for studying abroad?
Deciding on the best student loan to fund your education abroad requires comparing multiple lenders and loan characteristics.
Here are 3 things you must do to get the best education loan offer for your needs:
Determine the loan amount
You may need a loan of INR 10 lakhs or INR 1.5 crores. Whatever your loan amount requirement, you must ensure your lender can meet that.
For instance, HDFC Credila offers education loans of as low as INR 1 lakh, whereas the Union Bank of India doesn’t offer a study abroad loan below INR 7.5 lakhs. Similarly, the maximum amount for an Indian Bank education loan is INR 25 lakhs, whereas ICICI Bank offers student loans of up to INR 3 crores.
Compare interest rates
Your student loan’s ROI will determine the total cost you must spend on repaying your loan. Your interest rate will depend on your application. However, different lenders may offer varying interest rates for the same application or conditions.
So, it’s important to compare different lenders and then decide. Some lenders (usually public sector banks) also offer interest rate waivers for specific students.
Look at the repayment terms
Some lenders (e.g., Axis Bank) give you up to 15 years to repay your loan, whereas some (e.g., Aditya Birla Finance) require you to repay within 7 years.
Apart from this, you should also look for additional benefits from getting an education loan. For example, the Bank of Baroda offers a free debit card to borrowers and doesn’t charge any processing fee for loans below INR 7.5 lakhs. Some lenders, like Axis Bank, also offer GRE-based funding if one’s scores meet its criteria.
Easier and faster ways to get the best education loan to study abroad
In the previous section, we discussed the important things you must do to secure the best student loan. Now, however important and foolproof the suggestions may be, comparing the terms of every lender in India can make the entire ed-loan journey stressful for you.
So, how can you ensure the best education loan without doing the heavy lifting yourself? You must find a way to:
- Easily compare the offers or conditions of top lenders in one go
- Get expert assistance to run you through the entire student loan process
- Quickly receive offers from lenders that perfectly fit your specific requirements
Through FundRight, you can get all that and much more. With just one application, which would take less than 10 minutes, you can get competitive loan offers from 15+ lenders.
Here’s how FundRight works:
- Provide detailed information about your educational plans and financial needs.
- Within two days, get multiple competitive loan offers from top lenders tailored to your profile.
- Evaluate the loan offers based on interest rates, repayment terms, and other conditions.
- Get guidance from FundRight’s financial advisors to help you select the best loan and negotiate terms.
- Securely upload all necessary documents through the FundRight platform and wait for loan approval, which can take as little as 10 days.
If you apply today, you can get your loan approved for the Spring ’25 admissions within 10 days.
Other Banks & NBFCs Offering Education Loan to Study Abroad:
- Union Bank of India Education Loan
- Yes Bank Education Loan
- IDFC Bank Education Loan
- Bank of India Education Loan
- State Bank of India Education Loan
FAQs
The maximum loan amount for non-collateral or unsecured education loans varies for different lenders. For instance, the Union Bank of India offers unsecured loans of up to INR 40 lakhs, whereas Axis Bank offers collateral-free ed-loans of up to INR 1 crores.
You can use the following as collateral for your education loan: residential property, agricultural land, commercial property, fixed deposits, mutual funds, government bonds, life insurance policies, etc.
The interest rate for secured education loans is usually lower than that for unsecured student loans. It generally ranges from 9% to 11%. However, this may vary depending on your lender and your profile.
