Education Loan for Abroad Studies
Studying abroad is a dream for many students. It offers world-class education, international exposure, and better career opportunities. However, the financial burden of tuition fees, living expenses, and other costs can be overwhelming.
This is where an education loan for abroad studies comes to the rescue, allowing students to pursue their dreams without financial stress. In this guide, we will explore how personal loans work, their types, eligibility criteria, and why Mortgage Rio is your go-to partner for securing the right personal loan for abroad studies.
Why Take an Education Loan for Abroad Studies?
Rising Cost of International Education
The cost of student education loans has been rising significantly due to increased tuition fees, living expenses, and exchange rate fluctuations. Generally, the cost of education in the USA, UK, Canada, and Australia can reach lakhs of Indian Rupees. But, it varies significantly depending on the institution, program, and living expenses.
Benefits of Opting for an Education Loan Instead of Personal Funds
Taking an education loan for abroad studies has multiple advantages over using personal savings:
• Preserve Family Savings: Instead of draining personal funds, an ed loan allows families to retain their savings for emergencies or other investments.
• Lowered Credit Score: Where a personal loan needs a credit score of 750+, an education loan’s credit score starts at 685. With a lowered credit score, you can make timely repayments. Also, it improves your credit history, which can benefit you in future financial initiatives.
• Enhances Financial Independence: Students learn financial discipline by repaying their loans after securing a job.
Tax Benefits Under Section 80E of the Income Tax Act (India-specific)
Students in India can avail of tax deductions on interest paid on education loans under Section 80E of the Income Tax Act. This benefit is available for up to 8 years, reducing the overall repayment burden.
Types of Education Loans for Studying Abroad
Secured Education Loans (With Collateral)
These loans require collateral such as property, fixed deposits (FDs), or other assets. The key benefits include:
• Higher student loan interest amount (up to ₹1.5 crore)
• Lower student loan interest rates (typically 8-10%)
• Longer repayment tenure (up to 15 years)
Note: The above tenure and interest rates may vary as per market condition
Unsecured Education Loans (Without Collateral)
If a student does not have assets to commit, they can opt for unsecured personal loans. Features include:
• Get an education loan without collateral.
• Higher study loan interest rate (10-14%)
• Loan amounts up to ₹50 lakh.
• Faster approval process
Note: The above factors of a personal loan can vary as per the lender’s terms and market conditions.
Eligibility Criteria for Education Loans
To qualify for a personal loan for abroad studies, students must meet the following criteria:
• Nationality & Age: Must be an Indian citizen and typically between 18-35 years.
• Admission to a Recognized Foreign University: A confirmed offer from an accredited institution is mandatory.
• Financial Co-applicant Requirements: Unsecured loans require a financially stable co-applicant (parent, guardian, or spouse).
• Academic Performance & Future Employability: Good academic records and job opportunities increase the chances of loan approval.
Interest Rates & Loan Repayment Terms
Interest Rate Comparison – Banks vs. NBFCs vs. Government Schemes
Lender TypeStudent loan percentage ratesLoan Tenure
Public Banks (SBI, Bank of Baroda)8-10%10-15 years
Private Banks (HDFC, ICICI)9-12%10-12 years
NBFCs (Avanse, Credila)10-14%10-12 years
Government Schemes (Vidya Lakshmi)6-8%15 years
Loan Repayment Terms & Moratorium Period
Most student loans have a moratorium period, meaning students start repaying only after completing their studies. Additionally, they must have an additional grace period (typically 6-12 months). EMI of an education loan depends on loan tenure and tuition loan interest rate.
Required Documents for Loan Application
To apply for education loan, you need the following:
• KYC Documents: Carry an Aadhaar card, PAN card, or passport for loan application.
• Proof of Admission: An offer letter from a foreign university is the most important thing. Carry it without fail.
• Income Proof of the Co-applicant: If your co-applicant is working, gather salary slips, ITR, and bank statements as income proof.
• Collateral Documents (if applicable): These documents are not a priority, still bring property papers, FD receipts, etc.
How to Apply for an Education Loan?
Step-by-Step Guide
• Research & Compare Lenders – Research student loan interest percentage, repayment terms, and loan amounts.
• Check Eligibility & Prepare Documents – Gather all necessary paperwork for an education loan for MBA.
• Submit Loan Application – Apply online or visit the bank/NBFC.
• Approval Process & Loan Sanctioning – Lenders verify eligibility and approve the loan.
• Disbursement of Loan Amount – Funds are directly transferred to the university.
Tips for Quick Loan Approval
• You must maintain a strong credit score.
• Choose a co-applicant with stable financials.
• For education loans apply online to avoid last-minute delays.
Best Banks & Financial Institutions Offering Education Loans
Many banks in different countries offer education loan for abroad studies includes:
1. India
• SBI
• HDFC
• ICICI
• Bank of Baroda
2. USA & UK:
• Wells Fargo
• HSBC
• Barclays
3. Government-backed Loans
• In India, Vidya Lakshmi Portal provides loans funded by the government
• In the USA, Federal Student Aid (FAFSA) helps students to get loans.
Alternatives to Education Loans
• Scholarships & Grants – Apply for student loans from universities and organizations.
• Part-Time Work Opportunities – Many countries allow students to work part-time.
• Crowdfunding & Sponsorships – Platforms like GoFundMe help raise funds.
FAQs
Q1. Can I get a 100% education loan for studying abroad studies?
Yes, some banks like ICICI Bank, HDFC Bank, and SBI provide full funding, but collateral may be required.
Q2. What happens if I can’t repay my education loan?
The lender has the right to file legal action under Section 138 of the Act.
Q3. Do all banks require a co-applicant?
No, not all banks demand co-applicants for loans. It is based on the lender’s policies and regulations.
Q4. How long does it take for loan approval?
It varies as per banks, but typically 2-3 days or a few weeks.
Conclusion
Pursuing higher education abroad is a life-changing experience, but finances shouldn’t be a barrier. An education loan for abroad studies provides the financial support you need to achieve your dreams.
With Mortgage Rio, getting personal loan for studies abroad is faster, easier, and stress-free. Get an instant student loan today and take the first step toward a brighter future!