Table of Contents
- Why Do You Need Abroad Education Loans?
- What are the Abroad Education Loan Types?
- Which are the Top Abroad Education Loan Lenders?
- What are the Abroad Education Loan Interest Rates?
- How to Calculate Your Abroad Education Loan Interest Rate?
- How to Save on Your Abroad Education Loan Interest Rate?
- Frequently Asked Questions
Education loans have transformed the dreams and experiences of millions. Unlike other loans, education loan repayment starts after 6 – 12 months of course completion. The cherry on the cake is various interest subsidies from the government and lenders to reduce your financial burden.
How are the interest rates calculated for your education loan abroad? When must you start the interest repayment? We will answer your intriguing questions in this blog. Ultimately, we also discuss smart tips to reduce your abroad education loan interest while applying and in the long run.
Why Do You Need Abroad Education Loans?
Abroad education loans are your financial saviour for studying without stress. You can study abroad and earn a global degree with the right lender and a proper financial plan.
- Cost coverage: An abroad education loan will cover your tuition fee, living expenses, travel costs, and all related expenses.
- Tax benefits: Education loans are eligible for tax benefits under Section 80 E of the Income Tax Act. You need not pay tax on the interest you pay for education loans.
- Repayment tenure: You get ample time to repay your education loan, which stretches from 10 to 15 years.
- Credit history: Timely repayment of your education loan builds a good credit history that helps you in future transactions.
What are the Abroad Education Loan Types?
Abroad education loans are of two types – with collateral and without collateral. With collateral security, you can get up to 70% – 100% of the collateral value as the education loan amount. Without collateral security, you need a cosigner with a standard income specified by the lender.
Secured education loan: Education loans with a collateral guarantee are called secured education loans. A plot, a fixed deposit, a bond, etc., can be the collateral for an education loan abroad. Compared to no-collateral loans, secured education loans have a lower interest rate. Banks primarily offer secured education loans.
Unsecured education loans: Unsecured education loans solve the problem of not having collateral to pledge your education loan. Unsecured education loans for abroad studies are offered on the guarantee of an earning cosigner. The cosigner’s CIBIL scores (750 – 900) and income must be high. Banks, NBFCs, and international lenders offer unsecured education loans.
Which are the Top Abroad Education Loan Lenders?
Abroad education loan interest rates change according to market conditions and lender decisions. Lenders decide the interest rates based on your creditworthiness, financial history, and academic profile. Public and private banks, NBFCs, international lenders, and US banks are the top lenders for abroad education loans.
Public banks: Public banks like SBI, BoB, UBI, and Union Bank offer education loans to study abroad with and without collateral. The institution of study must be listed by the bank for education loans of more than INR 7.5 Lakhs.
Public banks offer the lowest interest rates and subsidies among education loan lenders. Abroad education loans offered by public banks are eligible for tax benefits under Section 80 E of the Income Tax Act.
Private banks: Private banks like ICICI, IDFC FIRST, and Axis offer education loans with and without collateral for institutions listed by the bank. Like public banks, private bank education loans to study abroad are also eligible for income tax benefits.
NBFCs: You can apply for no-collateral education loans from NBFCs like Credila, Auxilo, InCred, and Avanse. You must have a cosigner with a high income and CIBIL score (750 – 900).
International lenders: Abroad education loans from international lenders allow you to study without collateral or a cosigner. The lender must list your institution of study and course. Unlike Indian lenders, the education loan interest rates are calculated in APR (Annual Percentage Rates).
US banks: If your goal is to study in the USA, getting an education loan from a US bank is a wise option. The interest rates start at 3.47% APR. You must have a cosigner in the US, a US citizen or permanent resident.
What are the Abroad Education Loan Interest Rates?
As mentioned, education loan interest rates change abroad if the market fluctuates. Under stable market conditions, the interest rate remains predictable and steady. When finalizing the education loan interest rates, your (or your cosigner’s) financial profile is a trump card.
There are fixed and floating interest rates for abroad education loans. As a student, you can choose from these options for your education loan interest rates abroad.
Fixed interest rates, as the name suggests, do not change throughout the course of your repayment. You can easily predict your repayment and make a financial plan with fixed-interest options.
Floating interest rates can change according to market conditions. If you choose floating abroad education loan interest rates, they will fluctuate over time based on a volatile underlying benchmark rate or index.
| Type of Lender | Sample Lenders | Maximum Loan Amount | Interest Rates | Repayment Period |
| Public Banks | SBI, BoB, UBI | Up to INR 80 Lakhs – INR 1.5 Cr | 9.65% for girls, 10.15% for boys | 10 – 12 years |
| Private Banks | Axis, ICICI, IDFC FIRST | Up to INR 50 Lakhs | 10% – 13.5% | 10 – 20 years |
| NBFCs | Credila, Auxilo, Avanse, InCred | Up to 2INR 20 Lakhs | 12% – 13.5% | 10 – 15 years |
| International Lenders | MPOWER Financing, Prodigy Finance | Up to 100,000 USD | 12% – 14% | 10 – 20 years |
How to Lower Your Abroad Education Loan Interest Rate?
Don’t worry about the interest rate on education loans abroad. Follow these tips below to lower your abroad education loan interest rate as much as possible.
- Choose the right lender who offers the lower interest rates.
- Improve your (or your cosigner’s) credit score before applying for an abroad education loan.
- If collateral is available, opt for a secured loan. You can consider having a third party provide collateral for your education loan.
- Negotiate with your lender for lower interest rates. Nomad Credit’s counselor will do that for you.
How to Save on Your Abroad Education Loan Interest Rate?
Your education loan interest rate accrues to your principal amount in the moratorium period: course years plus 6 – 12 months. Follow these tips to reduce the abroad education loan interest rate:
- Pre-payment: If possible, pay a significant sum of your education loan before completing your course. This will reduce the interest rate you accrue.
- Pay interest while studying: Many students reduce their abroad education loan interest rate by paying partial or simple interest while studying by doing part-time work. You can lower your education loan interest by paying the interest timely while studying.
- Increase your EMI: Your EMI amount is inversely proportional to the interest you pay for your abroad education loan. The higher the EMI, the lower the interest rate.
- Apply for interest subsidies: Don’t miss a chance to get education loan interest subsidies abroad. The Indian government offers many subsidy schemes to students studying abroad, such as interest rebates. Girl students get a 0.5% interest concession from public banks. International lenders offer interest subsidies to students who make EMI payments while studying abroad.
Use Nomad Credit’s free EMI calculator for your education loan repayment roadmap abroad.
Looking for low-interest education loan options? Connect with Nomad Credit and explore personalized education loan options abroad with us. Get complete guidance from beginning to end and study abroad with a low-interest education loan. Join us today!
Frequently Asked Questions
How much is the interest rate for an abroad education loan?
The interest rate for your abroad education loan depends on your lender, your financial profile, and your academic details. It can be from 9% – 13.5% of your loan amount in India and 12% to 14% APR for international lenders.
Can you get a 0% interest education loan to study abroad?
Practically, it is impossible to get a 0% abroad education loan interest rate from financial lenders like banks and NBFCs. You can explore interest-free loan scholarships (up to INR 10 Lakhs) from private trusts like KC Mahindra Trust and Tata Trust.
What is the simple and partial interest for education loans abroad?
Simple interest repayment involves paying the interest rate completely while studying. Partial interest rate repayment involves repaying a part of the interest rate.
Should you pay interest on an education loan while studying abroad?
Paying back your education loan interest rate while studying abroad depends on your lender and personal choices. Often, students get the moratorium period up to 12 months after completing their studies. In the moratorium period, you can avoid interest payments if the lender agrees.
Is a longer repayment period good for saving on education loan interest rates abroad?
Start paying your education loan interest abroad as soon as possible to save in the long run. Gradually reducing the debt will result in interest concessions in the long run.
