A student loan (or education loan) is money lent to students to assist them in meeting some or all of the education-related expenses, including fees, books, boarding, and other requisite living expenditures. Students can obtain loans from banks and other financial institutions while studying in India or abroad.
The loan is given at a fixed amount and is payable with interest after study completion. A student loan in India covers several variables, as listed below:
- Number of applicants, which will include Indian or foreign students
- A subject that the applicant is pursuing
- Payment ability and financial condition of the candidate
Table of Contents:
- What is an Education Loan?
- Advantages of Education Loans for Abroad Studies
- How do you Apply for an Education Loan to Study Abroad in India?
- Types of Education Loans in India for Studying Abroad
- Documents Required by the Applicant and Cosigner
- Important Aspects of the Education Loan Process
- Why Choose a Study Abroad Loan Consultant?
- Frequently Asked Questions
What is an Education Loan?
Education loans are specially designed for students who want to pursue higher studies. Financial institutions, government bodies, and even some universities offer these loans. Whether planning to study in India or abroad, you can apply for an education loan to fund your dreams.
In India, many banks provide education loans at competitive interest rates. However, interest rates can vary from bank to bank, so it’s a good idea to compare your options before deciding.
Advantages of Education Loans for Abroad Studies
However, there are times when income and resources may not be adequate to support a student’s education. Banks or financial institutions, as well as non-banking financial companies (NBFCs) or international lenders, can be approached for a student loan.
Educational loans can finance the entire or partial schooling of the student. Guaranteed for students with study-abroad loans is the completion of their degree program without any financial concern. Listed below are the advantages of a student loan for studies abroad:
- Support Without Financial Burden – An education loan helps manage tuition fees and living expenses without putting your family under a financial burden.
- Accommodates Many Expenses—The funding for educational loans is wide enough to cover accommodation, travel, books, health insurance, and meal expenses.
- Easy Terms of Payment – Most loaning banks allow students 6-12 months after coursework for payment before EMIs start coming into effect.
- Tax Reduction Interest Benefit – A noticeable edge is the ability to reduce tax liabilities with the interest margin from funds received for education.
- Built impressive credit report: This benefit will help you in the future when you knock on the door of a bank to borrow other loans.
How do you Apply for an Education Loan to Study Abroad in India?
While securing an education loan can be challenging, these steps should help simplify the process. Hiring a study abroad loan consultant can also ensure a smooth experience.
Step 1: Find & Compare Suitable Loans
- Look for other banks and NBFCs (Non-Banking Financial Companies) to check their interests, repayment conditions, processing fees, and moratorium periods.
- Choose either a secured loan (requires collateral) or a nonsecured loan (does not require collateral).
Step 2: Check Eligibility Criteria
- Indian citizenship and admission to a recognized international university.
- Minimum academic performance (as per the lender’s requirement).
- Co-applicant (parent/guardian) with a steady income for unsecured loans.
Step 3: Gather Required Documents
Typical documents include:
- Admission letter from the university.
- Academic records (10th, 12th, and graduation certificates).
- KYC documents (Aadhar, PAN, passport, visa).
- Income proof of co-applicant (salary slips, ITR, bank statements).
- Collateral documents (if applicable).
Step 4: Seek Assistance from a Study Abroad Loan Consultant
A study abroad loan consultant helps in:
- Comparing loan options and selecting the best one.
- Assisting with documentation to avoid errors.
- Negotiating better terms with banks/NBFCs.
- Speeding up loan approval with the right approach.
- Providing financial planning guidance for smooth repayment.
Step 5: Apply for the Loan
- Submit the loan application form online or at the bank branch.
- Upload or submit all necessary documents.
Step 6: Loan Processing & Approval
- The lender evaluates your creditworthiness, academic record, and university ranking.
- A loan sanction letter is issued upon approval.
Step 7: Disbursement of Loan
- Funds are transferred directly to the university or student’s account as per the agreed schedule.
- Use the loan to cover tuition fees, living expenses, travel, and other educational costs.
Step 8: Repayment Begins After the Moratorium Period
- The moratorium period (study duration + 6-12 months) allows students to start repaying after securing a job.
- Repayment can be monthly EMIs or other flexible options provided by the lender.
Types of Education Loans in India for Studying Abroad
| Type of Education Loan | Description |
Secured Education Loan |
|
Unsecured Education Loan |
|
Education Loan from Government Banks | Public sector banks offer it with lower interest rates but may require collateral for higher amounts. |
Education Loan from Private Banks | Provided by private banks with more flexible terms but slightly higher interest rates. |
Education Loans from NBFCs (Non-Banking Financial Companies) |
|
Documents Required by the Applicant and Cosigner
| Document Type | For Student-Applicants | For Co-Applicants |
| Proof of Identity | PAN Card / Aadhar Card | PAN Card / Passport / Driver’s License / Voter ID Card |
| Proof of Residence / Address | Recent Telephone Bill / Electricity Bill | Recent Telephone Bill / Electricity Bill / Aadhaar Card |
| Passport | Required | Not required |
| Academic Records | 10th & 12th Result | Not required |
| Graduation Result | Semester-wise (if applicable) | Not required |
| Entrance Exam Result | GMAT / GRE / TOEFL / IELTS (if applicable) | Not required |
| University Admission Letter | Offer Letter / Admission Letter (Conditional letter may be considered) | Not required |
| Statement of Study Cost | Required | Not required |
| Passport-size Photographs | 2 | 2 |
| Loan History | Last 1-year Account Statement if any previous loan exists | Last 1-year Account Statement if any previous loan exists |
Important Aspects of the Education Loan Process
- Eligibility Criteria
- Loan Amount
- Interest Rates
- Repayment Terms
- Collateral or Cosigner Requirements
- Documentation
- Processing Fees & Charges
- Disbursement Process
- Credit History
- Additional Funding Opportunities
Why Choose a Study Abroad Loan Consultant?
- Assists in reducing time and expenditure owing to professional assistance.
- Enhances the possibility of loan acceptance through accurate documentation.
- Helps in attaining optimal interest rates and effective repayment schedules.
- Offers comprehensive support from the point of application to payment processing.
Frequently Asked Questions
Who can apply for an education loan?
An education loan is meant to assist students in paying for university, including living expenses, books, tuition fees, and other related costs. One could use it for research anywhere or in India specifically.
Who can borrow for studies?
- Enrolled in a well-known college or institution for advanced instruction (undergraduate, graduate, or professional level).
- Depending on the lender’s policies, both foreign and Indian students can submit.
What qualifies as reimbursed costs under an education loan?
Usually included in tuition credits are:
- Tuition costs.
- Living costs and housing.
- Sources of learning materials and documents.
- Costs of travel (for studying overseas).
- Other related costs include equipment, exam costs, and laboratory fees.
May I obtain an education loan with no co-applicant?
Most banks require a co-applicant—usually a parent, guardian, or partner—to repay the loan. Still, some lenders might give small loans without a co-applicant.
How much time does an education loan approval process need?
Typically, depending on the lender and how thoroughly your application is completed, the approval process spans 7–15 business days. Collateral loans might take longer.
Can I get an education loan for part-time or online courses?
It depends on the lender. Some banks offer loans for part-time or online courses if a reputable institution recognizes them. However, loans for full-time, regular courses are more common.
