An investment in knowledge pays the best interest. – Benjamin Franklin. Studying abroad benefits students, including personal growth, enhanced career prospects, and expanded learning opportunities.
However, studying abroad also comes with numerous expenses, which you can cover by taking out an education loan. In today’s world, several options are available for obtaining a loan from banks, lenders, NBFCs, and other financial institutions. If you are confused about where to get the best study abroad education loan? Here’s a quick guide for you.
Table of Contents:
- Understanding: Banks vs Private Lenders
- Key Differences Between Banks and Private Lenders
- Popular Banks Offering Study Abroad Loans in India
- Bank or Private Lender: Which Is Right for Your Study Abroad Dream?
- Frequently Asked Questions
Understanding: Banks vs Private Lenders
Before applying for a study abroad education loan, it is very important to understand the basics about banks and private lenders. Banks are often traditional and are either operated by or backed by the government, while private lenders are operated privately or by Non-Banking Financial Companies (NBFCs). Here’s a table for your better understanding of your foreign education loan:
| Particulars | Banks | Private Lenders |
| Operated By | Government / Banking Institutions | NBFCs or Fintech Firms |
| Interest Rates | Generally lower due to RBI | Higher due to risk |
| Security | Often need collateral as security | Offer unsecured loans based on a co-applicant |
| Approval Process | Longer processing (2-4 weeks) | Faster processing (3-7 days) |
| Best For | Students with a strong academic record and collateral | Students needing quick disbursement and a high loan amount |
Key Differences Between Banks and Private Lenders
While taking out a study abroad education loan, there can be several differences between a bank and a private lender. Here’s how you can differentiate between banks and private lenders for your best education loan for abroad:
| Differences | Banks | Private Lenders |
| Interest Rates | Changes in the repo rate by the RBI affect the interest rates charged for education loans | The interest rates remain the same, RBI repo rate does not affect it |
| Eligibility | Gives preferences to top universities and a strong financial background | Accept top as well as mid-tier universities, and assess students’ future earnings |
| Co-Applicant | Usually requires a co-applicant with a strong financial history | Often based on a student’s future income potential and university reputation |
| Loan Coverage | Usually covers tuition & basic living expenses | Often covers up to 100% of the cost of attendance and other expenses |
| Documents | Requires several documents, especially for secured (collateral) loans | Fewer documents for unsecured loans and quicker approvals |
| Customer Service | May lack personalized support to students | Often known for being friendly and student-focused |
| Processing Fees | Generally lower compared to private lenders | Usually charges up to 2% of the loan amount |
Popular Banks Offering Study Abroad Loans in India
Several Indian banks offer education loans for students to pursue studies abroad. The process of selecting a bank relies heavily on important aspects, including the amount borrowed, interest rates, and required securities. If you are wondering which bank is best for an education loan abroad, check the table below:
Indian Public Banks:
| Bank | Loan Amount | Interest Rates |
| State Bank of India (SBI) | Up to INR 3 Crores | 9.40% – 9.90% |
| Bank of Baroda (BOB) | Up to INR 1.5 Crores | Starting from 9.45% |
| Union Bank of India | Up to INR 1.5 Crores | Starting from 9.00% |
| Bank of India (BOI) | Up to INR 1.5 Crores | Floating: RBLR + 1.70% presently 10.35% – 10.55%Fixed: 12.20% – 12.40% |
Indian Private Banks:
| Bank | Loan Amount | Interest Rates |
| Axis Bank | Unsecured Loan up to INR 1 Crores | 13.70% – 15.20% |
| HDFC Bank | Entire Cost of Education | Starting from 8.64% |
| ICICI Bank | Up to INR 3 Crores | 9.50% – 14.25% |
Bank or Private Lender: Which Is Right for Your Study Abroad Dream?
Studying abroad is a dream for many Indian students; however, deciding on a loan can be complicated. Each financial institution, whether a bank or a private lender, offers exclusive advantages over its competitors.
Bank loans offer lower interest rates and flexible payment terms, and they also include government backing for your funds. Private lenders provide high loan amounts at quicker processing speeds and do not require any security. A bank or private lender should be selected based on the desired loan amount and specific financial needs, as they offer diverse advantages.
Frequently Asked Questions
Do Indian banks offer education loans for studying abroad?
Yes, several Indian banks offer education loans for overseas studies. Review all the loan criteria first, and ensure you gather all the necessary documentation to file your loan application correctly.
Which bank is best for an education loan for abroad?
Several banks are considered the best for education loans for studying abroad. The best bank depends on several factors, such as interest rates, repayment terms, loan amount, processing time, etc.
Can I obtain a 100% loan for my studies abroad?
Yes, you can easily obtain a 100% loan for studying abroad. However, you must provide all the proofs the bank asks and fulfill the eligibility requirements.
How can I avoid loan rejection for studying abroad?
Ensure you are not missing any important information or documents, and thoroughly fulfill the eligibility criteria. Consider having a co-signer or collateral to avoid rejection when studying abroad.
Can I get a student loan as an international student?
Yes, as an international student, you can obtain student loans to meet your needs. However, conditions may vary depending on the lender and their requirements.
