Summary
- Loans for studying abroad have flexible repayment options and when you have a job you can pay it back over a decade or more.
- On top of the stress of the admission and visa process, you have to contend with education loan eligibility, education loan interest rates, and so much more.
- Here are the key reasons why a student loan for study abroad is the best way to fund your international education.
Thousands of Indian students aspire to study abroad each year. At the end of 2024, there were 1.3 million students from India at various foreign universities and institutions.
But education abroad can be quite expensive. A master’s degree from a good university in the US can cost upwards of ₹50 lakhs or more. For most students, the best way to meet this enormous financial burden is through an education loan.
In this article, we shall look at the various aspects of an education loan including eligibility, interests, and more.
Why education loans are essential for studying abroad
Studying abroad is a life-changing experience. It also requires significant financial commitments from the student. Tuition fees, living expenses, travel, insurance, and visa charges – there are so many expenses before you graduate from a foreign university. This is where education loans become not just helpful, but essential.
Here are the key reasons why a student loan for study abroad is the best way to fund your international education:
Reduces Financial Burden
Let’s face it — studying abroad is expensive. Education loans allow you and your family to cover the costs without draining personal savings. There is also no need to sell off large assets. Loans for studying abroad have flexible repayment options and when you have a job you can pay it back over a decade or more.
Covers a Wide Range of Expenses
An education loan pays for tuition charges at a foreign university. However, that is not all that it pays.
It can also cover:
- Accommodation and food
- Travel and airfare
- Books and study materials
- Laptop and equipment
- Health insurance
- Visa fees
This ensures that you are never stressed about meeting day-to-day expenses while studying abroad. You can focus on your education and not worry.
Low-Interest Rates
There are many kinds of loans – home loans, auto loans, personal loans, and education loans. Banks and financial institutions offer lower interest rates on education loans. You can receive a loan for as little as 8.5 – 10% from some public sector banks. Most loans also have a repayment holiday known as the moratorium period. You don’t have to repay at this time. EMIs start after you have secured a job and settled down.
Builds Credit History
Credit history is a record of an individual’s past borrowing and repayment. If you have paid back a loan, you are likely to be more creditworthy. Repaying an education loan helps you build a good credit history early in life. This can be useful when you apply for housing loans and car loans. Since you are a trusted customer the bank might even give you a discount.
Better than Dipping into Savings
Using an education loan means your parents or guardians don’t have to dip into retirement savings. It’s a smart long-term financial strategy to take an education loan and repay it with your earrings.
No Need to Compromise on University
You might be able to finance higher education on your own. But you don’t have enough for the best universities. Education loans ensure that you don’t have to limit yourself to only affordable or low-cost universities. You can apply to your dream college, Stanford, LSE, or McGill, and fund your education confidently.
Also Read: Top Education Loan Providers in India 2025 [Best Banks & NBFCs]
How GradRight helps you find the best education loan options
Finding the right education loan for studying abroad can be an overwhelming experience. On top of the stress of the admission and visa process, you have to contend with education loan eligibility, education loan interest rates, and so much more.
GradRight is India’s first ed-fintech platform focused on international student loans. The platform is based on 3Ts – Technology, Transparency, and Trust – that allow it to deliver the best education loan options.
Here’s how GradRight education loans have changed the student experience in the past few years:
AI-Powered Loan Discovery
GradRight education loans flip the traditional loan process on its head. Instead of the student running here and there in search of an education loan, the banks come to the customer. There is no magic involved. Gradright lets banks and NBFCs compete for your education loan through a transparent reverse-bidding model.
Multiple Lenders
Over 15 lenders compete to offer you a loan. These include some of the largest banks in India including:
- State Bank of India
- Bank of Baroda
- IDFC First Bank
- ICICI Bank
- Union Bank of India
- HDFC Credila
- Axis Bank
- Yes Bank
- Tata Capital
- Auxilo
- InCred
- Leap Finance
- Avanse Financial Services
- Mpower Finance (NBFC)
- Prodigy Finance (NBFC)
Profile Matched Loans
GradRight doesn’t simply find you an education loan. It finds you the right one. The algorithm evaluates your:
- Academic background
- Preferred destinations
- Preferred universities
- Credit score
This means you have access to the most affordable loans in the market with the best terms and conditions possible.
If you are looking for a student loan to study abroad, sign up today.
Top education loan providers for study abroad: A comparison
When you take an education loan it is important to choose the right bank. Interest rates, collateral requirements, repayment flexibility, and processing speed all vary across lenders. Here’s a look at some of the top Indian banks offering education loans for studying abroad.
Top Indian Banks for Education Loans to Study Abroad
| Bank | Loan Amount | Interest Rate | Repayment Tenure | Moratorium Period | Collateral | Special Features |
| SBI | ₹20 lakh to ₹1.5 crore (Global Ed-Vantage) | Starts at ~10.15% p.a. | Up to 15 years | Course duration + 6 months | Required for loans >₹7.5 lakh | Low interest rates; covers top global universities |
| HDFC Bank | Up to ₹45 lakh (unsecured); ₹1.5 crore (secured) | ~10.5% – 14% p.a. | Up to 15 years | Course duration + 1 year | Optional for loans up to ₹45 lakh | Quick sanction; special rates for women |
| ICICI Bank | Up to ₹1 crore (abroad); higher on case basis | ~10.5% – 12.5% p.a. | Up to 10 years | Course duration + 6 months | Required for higher amounts | No margin money; 100% financing |
| Axis Bank | Up to ₹75 lakh (higher with collateral) | ~11% – 13% p.a. | Up to 15 years | Course duration + 12 months | Required for high-value loans | Covers travel, laptop, insurance, etc. |
| PNB (Udaan Scheme) | Up to ₹1 crore (abroad) | Starts at ~10.15% p.a. | Up to 15 years | Course + 1 year | Collateral for loans >₹7.5 lakh | Low processing fees; government interest subsidy options |
| Bank of Baroda | Up to ₹80 lakh (secured) | ~9.85% – 10.85% p.a. | Up to 15 years | Course + 1 year | Mandatory for loans >₹7.5 lakh | Wide coverage of global institutions; no margin for top universities |
Please note that the interest rates are indicative and vary depending on market conditions and borrower profile. Please check with the official website for the latest information.
Key features to look for in an education loan
Before you take out an education loan for studying abroad there is a lot to know. All education loans are created equal. There are a variety of terms you have to understand before you sign the loan contract.
Here are the key features of education loans you must know:
Interest Rate
Interest is the charge or fee for a loan. Education loan interest rates in India typically range from around 8.10% to 14.25% per year. It largely depends on the bank, loan amount, and repayment tenure. Most banks charge a lower interest rate for premier institutions and applicants with excellent CIBIL scores.
Moratorium Period
In simple words, a moratorium period is a repayment holiday. A student does not start earning the day after graduation. A certain amount of time is necessary to start employment and settle down. Usually, banks grant a six-month moratorium period that is extendable by another few months. Borrowers are not required to make EMI payments during this period.
Loan Coverage
An education loan primarily covers the cost of tuition fees. It also covers:
- Accommodation fees
- Travel expenses
- Expenses for books
- Fees for Examination/Library/Laboratory
- Purchase of laptop
- Health insurance premium
- Expenses related to Study Tours and Project Work/Thesis
- Caution deposit
Processing Time
For many students loan disbursement time is critical. You need to pay the university for an I-20 form which allows you to appear for a visa interview. Lenders with expedited processes are preferable. GradRight education loans connect you with lenders who can approve loans in a matter of 2-3 days.
Collateral Requirement
For education loans, collateral requirements typically depend on the loan amount and the lender. Most banks ask for residential property (house, apartment), land, or fixed deposit certificates. Each bank has its own policies regarding collateral requirements. Some like ICICI Bank grants education loans up to a crore without collateral.
Processing Fees
Processing fees usually range from 0.5% to 2% of the loan amount. Many banks cap it at ₹10,000. But don’t forget to ask about foreclosure penalties, late payment charges, or currency conversion fees. Hidden charges can add up to a lot over the tenure of a loan.
Also Read: Compare Education Loan Interest Rates of Top Banks in India 2024
How to apply for education loans through GradRight
GradRight education loans simplify what used to be a tedious and confusing journey. Here’s a quick look at how you can apply for an education loan through GradRight in just a few steps:
- Create an account with GradRight
- Provide your personal and academic details.
- Compare loan offers from 15+ banks and NBFCs
- Consult with expert advisors about the best terms and conditions
- Receive the loan in 2-3 days
It is a hassle-free experience that lets you compare and select the best loan from the comfort of your home.
Repayment options and tips for managing your education loan
Securing an education loan for studying abroad is just the beginning. How you manage it can make all the difference to your financial well-being after graduation. Here are a few tips to manage your education loan and repay it quickly.
Understand Your Loan Terms Clearly
Before you take the loan ensure you understand the interest rate, repayment start date, moratorium period, and any prepayment penalties. This will save you from penalties and hidden charges later.
Use the Moratorium Wisely
If you can, then pay during the moratorium period. If you have secured ealy employment within a week of graduation it is best to not use the moratorium period. Remember the interest continues to accumulate at this time.
Create a Realistic Budget
It is important to set up a budget for your monthly expenses and follow it. From your salary first subtract the education loan EMI amount and then use the rest for food, rent and utilities. Non-repayment can result in a bad CIBIL score which would cause problems.
Set Up Auto-Debit for EMIs
To follow up on the above, set up an auto debit of EMI so that you never by mistake spend the amount. This is financial hygiene and will improve your credit history.
Take Advantage of Tax Benefits
Keep records of your interest payments. You can claim deductions under Section 80E of the Income Tax Act (India) for the entire amount of interest.
Frequently Asked Questions
1. How can GradRight help me find the best education loans for studying abroad?
GradRight helps you find the best education loans. You can compare loan offers to 15+ lenders on our platform. This means you always get the most favorable terms based on your profile.
2. What are the top education loan providers for study abroad?
Top education loan providers for studying abroad include:
- State Bank of India
- Bank of Baroda
- IDFC First Bank
- ICICI Bank
- Union Bank of India
- HDFC Credila
- Avanse Financial Services
- Mpower Finance (NBFC)
- Prodigy Finance (NBFC)
3. What are the key factors to consider when choosing an education loan?
When choosing an education loan, consider factors such as:
- Interest Rates
- Repayment Flexibility
- Loan Coverage
- Eligibility Requirements
- Collateral Needs
- Lender’s Reputation
- Customer Service
4. Can GradRight assist with the loan application process for study abroad?
Absolutely we can assist your loan application. We have a team of expert financial counselors who will assist you in every way and help you get the most affordable loans on best terms.
5. What repayment options are available for education loans taken for studying abroad?
You have to repay through monthly EMIs. The tenure of an education loan usually varies between 8 and 20 years.
