Summary
- Typically, when a bank offers a loan, it wants collateral or an asset as security.
- To minimize risk, they prefer to offer an education loan without collateral to only those students who have no assets to offer.
- Before you apply for a study loan without collateral you have to understand the key features that sets it apart.
The latest data from the Ministry of External Affairs shows that currently 1.8 million Indian students are studying abroad, up from 1.3 million in 2023. That is a staggering rise and reflects the growing aspirations of the Indian youth and their wish to avail the best degrees from global universities. Every student wants to get study abroad loans without collateral and the good news is, it is possible.
Education abroad is expensive. Education in North America costs between ₹25 lakhs and ₹40 lakhs per year for Indian students. It is slightly more affordable in the UK, the EU, and Australia. Naturally, most students have to resort to education loans to bridge the financial gap between their own resources, scholarships, and the hefty fees and costs of living.
Lenders typically ask applicants to pledge one of their assets as a collateral, which a lot of students cannot provide. But this cannot be the reason for talented individuals to stop seeking the best education the world has to offer.
In India, study abroad loans without collateral are available from public and private sector banks. Besides, many NBFCs and international lenders also offer such facilities. This guide will help you navigate study abroad loans without collateral in a step-by-step manner. We will answer all possible questions and offer simple checklists to help you get the best possible educational loan to study abroad.
What is a study abroad loan without collateral?
Typically, when a bank offers a loan, it wants collateral or an asset as security. If there is a default, the bank can recuperate its loss by selling off the asset. A study abroad loan is no exception. However, since many students find it impossible to pledge assets, banks also offer study loans without collateral. It is what is known as an unsecured loan.
Approval for an unsecured loan is based on the applicant’s profile, the university and course, the co-applicant’s income, and credit score. Most Indian banks and quite a few NBFCs offer study loans without collateral.
How Does a Study Abroad Loan Without Collateral Differ?
Here is a quick view of the differences:
| Feature | Secured Loans | Unsecured Loans |
| Collateral Requirement | Requires collateral (asset as security) | No collateral required |
| Interest Rate | ~9% to 11% (lower due to reduced lender risk) | ~11% to 15% (higher due to higher lender risk) |
| If You Cannot Repay | The lender can take the pledged asset | No asset to seize; lender relies on legal recovery |
| Loan Amount | Up to ₹1.5 crores | Usually ₹40 lakhs to ₹1 crore |
| Repayment Tenure | Up to 15 years | Up to 10 years |
| Processing Speed | Slower (needs asset valuation and verification) | Faster (no asset checks) |
| Eligibility Criteria | More flexible; asset value is key | Stricter; it depends heavily on marks and credit history |
At this point it is worthwhile to note that for small loans up to ₹7.5 lakhs public sector banks offer collateral free loans to any student under the Credit Guarantee Fund Scheme for Education Loans.
Key features of unsecured education loans in India?
Unsecured education loans in India make it possible to study abroad without pledging any collateral. Before you apply for a study loan without collateral you have to understand the key features that sets it apart:
- Amount – Loan amounts from ₹ 40 lakhs to ₹1 crore is available.
- Interest Rates – Collateral-free study loans carry a 1.25 – 2% higher interest rate.
- Repayment Terms – 10 to 15 years, including a moratorium of 6 – 12 months.
- Processing Time – 7–15 days is the usual processing time for unsecured loans.
- Eligibility Factors – Good academic performance and co-applicant income play key roles.
Can anyone get an education loan without security?
The bank personnel have huge discretion when it comes to granting an education loan without any collateral. To minimize risk, they prefer to offer an education loan without collateral to only those students who have no assets to offer. For this purpose, they thoroughly scrutinize the co-applicant’s (usually parents’) income and financial standing.
Top lenders offering collateral-free study loans in India
ICICI Bank leads the market with the highest collateral-free loan limit of ₹1 crore for premium institutes. That is the most generous option for students seeking unsecured student loans. IDFC First Bank is offering up to ₹75 lakhs without collateral. State Bank of India has recently raised the limit to ₹50 lakhs.
We list the top ones below, with key details like loan amounts and rates, to help you choose.
| Bank Name | Loan Amount | Interest Rate (p.a.) | Processing Fee | Features |
| Public Sector Banks | ||||
| SBI | Up to ₹50 lakhs | 10.15% | ₹10,000 + GST | 96 approved universities abroad |
| Bank of Baroda | Up to ₹20 lakhs | 9.15% – 10.20% | Nil | Up to ₹40 lakhs for premier institutes |
| Union Bank of India | Up to ₹40 lakhs | 9.50% – 9.75% | ₹10,000 + GST | 159 premier institutes covered |
| Canara Bank | Up to ₹50 lakhs | 8.60% – 12.5% | Nil | Vidya Turant scheme: 0.50% concession for females |
| Bank of India | Up to ₹20 lakhs | 9.95% | Contact bank | Higher limits for foreign education |
| PNB | Up to ₹7.5 lakhs | 9.25% – 11.25% | ₹10,000 + GST | Multiple schemes available |
| Private Sector Banks | ||||
| ICICI Bank | Up to ₹1 crore | 10.25% – 13.75% | Up to 2% of the loan amount | Highest unsecured limit; Interest waiver for premier universities |
| HDFC Bank / Credila | Up to ₹45 lakhs | 8.64% – 9.55% | Up to 2% of the loan amount | Tax benefits under Section 80E; Up to ₹75 lakhs for select cases |
| IDFC First Bank | Up to ₹75 lakhs | Contact bank | Contact bank | 100% financing available |
| Federal Bank | Up to ₹20 lakhs | 11.95% onwards | 0.25% of the loan amount | Fed Scholars and Special Vidya schemes |
| Karnataka Bank | Up to ₹20 lakhs | 10.90% – 12.60% | 1%–2% (refundable) | 0.50% concession for female students |
| IDBI Bank | Up to ₹20 lakhs | 10.60% – 11.10% | 1% of the loan amount | Refundable processing fee upon disbursement |
Can I get a study abroad loan without collateral from NBFCs and fintech lenders?
Yes you can always seek loans from NBFCs and fintech lenders. Most of them are international lenders who lend to Indian students after online verification. These are the best among them:
- Avanse offers loans up to ₹1.25 crore without collateral.
- Prodigy Finance offers up to $220,000 with no collateral needed.
- MPower financing provides up to 100% of education expenses for USA universities.
Note that global lenders offer loans in US dollars while Indian banks provide rupee loans. The former also do not require a co-applicant. You have to carefully read and compare total cost, currency risk, and moratorium terms using each lender’s term sheet.
Eligibility criteria for study loans without collateral?
Getting an unsecured student loan is mainly about your overall profile, which includes your academic track record, your co-applicant’s income, and the lender’s policy. For study loans without collateral, lenders look at your strengths and situation to decide. Here is a quick outline:
Academic Merit and University/Course
This is likely the most important factor. If you have scored well in Class 10 and 12 board exams and have been a good student, you are going to receive a study abroad loan without collateral quite easily. Your past performance is, after all, the strongest predictor of your future growth.
You also require confirmed admission to a good university abroad. Most banks have a list of preapproved institutions for higher limits or relaxed security. SBI Global Ed-vantage education loan, for example, has a list of almost 100 preapproved institutions across the US, UK, EU, Southeast Asia, and Australia. It goes without saying that career-focused courses (medicine, engineering, management, etc.) get preferential treatment relative to degrees in foreign languages, drama, music, and liberal arts.
Co-Applicant Income and Credit History
A co-applicant is a must for securing a collateral-free study loan. The co-applicant can be the parents or guardian of the student borrower. In the case of a married person, it can be the spouse or the parents-in-law. Usually, other relatives and friends are not preferred.
The lender will thoroughly check the co-applicant’s income and credit score to judge repayment capacity. It helps if they don’t have too much debt beforehand.
Approved Countries
Most Indian banks primarily prefer students traveling to the USA, UK, Canada, Germany, France, Ireland, Australia, New Zealand, Europe, Hong Kong, Japan, and Singapore. This list is, however, not exhaustive, and loans are also given for study in other EU nations such as Belgium, the Czech Republic, Denmark, Estonia, Finland, and Greece.
Collateral-Free Limits Under CGFSEL
A government-backed CGFSEL loan is available to everyone. Though the amount is small, ₹7.5 lakh, it is helpful if you are studying in a country like Germany, where education is almost free. With some help from one’s own resources, it is quite possible to complete a one-year master’s degree abroad with a ₹7.5 lakh loan.
Step-by-step process to apply for a study loan without collateral
The application process is more or less similar across various banks and NBFCs. You have to plan and apply with at least eight weeks in hand.
- Research and Select a Lender
As the table above shows, you can obtain loans from at least a dozen lenders. Each of them has different terms and conditions regarding interest rates, tenure, moratorium period, and co-applicants’ income history.
Choose the bank whose terms are most attractive. Popular choices include State Bank of India, Bank of Baroda, HDFC Bank, ICICI Bank, and NBFCs like Avanse Financial Services.
- Determine Your Eligibility
Are you eligible for the loan? Do you meet the academic criteria and other requirements?
Generally, you’ll need to be an Indian national between 18 and 35 years old, with a good academic record. Of course, you need a confirmed admission to a recognized institution abroad.
- Prepare Necessary Documents
Gather all the required documents to ensure a smooth application process. This typically includes:
| Category | Required Documents |
| Student Documents |
|
| Co-applicant / Guarantor Documents |
|
- Submit the Application Form
Fill out the loan application form accurately and completely. Double check every fact that you have presented since it is difficult to alter a loan application document.
- Participate in the Interview
The applicant and co-applicant will be interviewed by the bank. The queries relate to your past achievements and what you wish to do in future. The co-applicant is asked about credit score, income stability and if there are other loans. Naturally there is a hard inquiry with the credit bureau (usually CIBIL).
- Await Loan Approval
In most cases a study abroad loan without collateral is approved within a week. The bank will issue a sanction letter outlining the loan terms and conditions. You have to sign the loan contract as the applicant.
Following this step, the bank will disburse the tuition fees to the university abroad and make arrangements so that you can withdraw funds for your cost of living as required.
Can you apply online for an education loan without collateral?
You can apply online or offline. Vidya Lakshmi Portal is a government initiative in India that lets you apply to multiple banks at the same time for education loans. Besides the portal, every reputed bank has a strong online presence.
You can also check GradRight’s loan search platform to find the best results for you.
Best no collateral loans in 2025: How to choose
Picking the right study abroad loan without collateral can be a difficult decision. Most banks have similar terms and conditions. Here is what you must focus on:
Quick Checklist: Collateral-Free Study Loans
| What to Check | Why It Matters | |
| 1 | Interest Rate & Cost |
|
| 2 | Loan Amount & Coverage |
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| 3 | Repayment Terms |
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| 4 | Processing Speed & Documents |
|
| 5 | Eligibility |
|
| 6 | Hidden Costs |
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| 7 | Compare Side-by-Side |
|
Pros and cons of collateral-free study loans
Collateral-free study loans have good and bad sides, so weigh them based on your situation to choose wisely.
What Are the Advantages of a Study Loan Without Collateral?
- For education loans without security, you don’t need to mortgage a property or FD certificates.
- Since scrutiny focuses on your profile rather than property valuation, lenders can approve your loan faster.
What Are the Disadvantages of a Study Loan Without Collateral?
- These loans often come with higher interest rates and fees compared to secured loans.
- Lenders place more emphasis on the co-applicant’s income and credit score.
- There is emphasis on admission to prepare institutes and courses that lead to well-paying jobs.
Final thoughts
Your dream to study abroad and secure a job in the best MNCs does not need to die because you don’t have property or other assets to pledge. In 2025, a collateral-free study loan will cover tuition and living costs. It makes financial sense for middle-income students to opt for a course abroad with unsecured student loans.
We advise that you plan early and apply to as many banks as possible. You will likely receive positive feedback from most of them.
Frequently asked questions
1. Can I get a study abroad loan without collateral in India?
All public sector banks and most private sector banks offer study abroad loans without collateral. However, you might have to pay a slightly higher interest rate.
2. Which banks offer unsecured education loans in India for international studies?
Here are a few banks that offer study abroad loans without collateral in India:
- State Bank of India (SBI)
- Bank of Baroda
- Union Bank of India
- Canara Bank
- Punjab National Bank (PNB)
- Bank of India
- Indian Bank
- IDBI Bank
- ICICI Bank
- Axis Bank
- IDFC First Bank
- Kotak Mahindra Ban
- HDFC Credila
3. What is the maximum loan amount without collateral?
ICICI Bank offers study loans without collateral up to ₹1 crore. In 2025, that is the highest amount of unsecured education loans in India.
4. How do I improve my chances of getting a no-collateral education loan?
You have to focus on:
- Good academic score in Class 10 and 12.
- Admission to a reputed university
- Select a course in STEM or management.
- Your co-applicant must have a stable income and a high CIBIL score.
5. Are unsecured student loans safe for Indian students going abroad?
Yes, they are absolutely safe, and thousands of students opt for them each year. You can avail a collateral-free study loan and pay it back when you have a stable job.
