Types of Education Loans to Study Abroad in 2024

Did you know?

• According to Business Standard, around 1.3 million Indian students studied abroad in 2023, making India one of the top countries sending students overseas.
• India Today projects a spend of about $70 billion on overseas education by Indian students till 2025.
• Financial institutions and Indian banks disbursed education loans worth about ₹30,000 crore in 2023. 

Why is the number of students opting for education loans increasing at this rate? 

There are many reasons, and education inflation is one of them. According to Inside Higher Ed, the inflation rate in the USA in 2023 was 4%. Today, a typical UG engineering degree in the USA costs up to $56,169+ per year. That would make a four-year program cost about INR 1.8 crores. And then there are additional expenses on top of that.

With the high cost of education, when savings aren’t enough, education loans can be a helpful solution. Read the full blog below to learn more about type of student loans and their types, and how to select one. 

What is an education loan to study abroad?

An education or study loan is a financial tool for affording education in India or abroad. It can cover tuition, additional program fees, living expenses, visa fees, flight tickets, and personal expenses. The terms, however, vary depending on the lender. 

Many lenders provide education loans to students abroad. Some of the top ones include HDFC Credila, Avanse, Auxilo, SBI, Union Bank, ICICI, etc. 

Before you read further in the blog and learn more about the types of education loans for studying abroad, you must know some important terms.

Here’s a list of terms that you would come across while researching ed-loans:

Terms	Definitions
Principal Amount	The total money borrowed from a lender, on which the interest rate is calculated
Interest Rate or ROI (Rate of Interest)	The percentage of the loan amount charged by the lender
Repayment Duration	The period over which the borrower must repay the loan
Moratorium Period	A grace period during which the borrower is not required to make loan repayments, often lasting until after graduation
Collateral	An asset pledged by the borrower to secure the loan, which the lender can seize if the loan is not repaid
Unsecured Loan	A loan that does not require collateral is typically offered based on the borrower’s creditworthiness and academic profile
Secured Loan	A loan that requires collateral reduces the lender’s risk, often resulting in lower interest rates
Processing Fees	The lender charges fees for processing the loan application, usually a percentage of the loan amount
EMI (Equated Monthly Installment)	The fixed monthly payment made by the borrower to repay the loan, including both principal and interest
Credit Score	A numerical representation of the borrower’s creditworthiness based on their credit history and financial behavior
Co-signer	A person who agrees to repay the loan if the borrower cannot
Prepayment	The option to repay the loan before the end of the repayment period, which can sometimes incur additional charges

Also Read: Education Loan for Abroad Studies (Comprehensive Guide)

Types of education loans based on collateral

Based on collateral, education loans can be divided into two categories:

1. Secured loans (with collateral): These loans require you to pledge an asset to secure your education loan. If the borrower fails to repay the loan, the lender can exercise their right to seize the pledged asset/collateral. 
2. Unsecured loans (without collateral): These loans don’t require you to pledge an asset or collateral to secure your education loan. These loans generally tend to have a higher interest rate. 

Let’s get to know both types of loans in detail:

Features	Secured Education Loans	Unsecured Education Loans
Collateral Requirement	Requires collateral such as property, fixed deposits, etc.	No collateral required
Loan Amount	Higher loan amounts (up to ₹1.5 crores)	Lower loan amounts (generally up to ₹40 lakhs or higher)
Interest Rates	Lower interest rates (9% – 11%)	Higher interest rates (11% – 15%)
Eligibility	Easier eligibility due to collateral	Stricter eligibility criteria, based on academic profile and credit score
Processing Time	Longer processing time due to collateral verification	Faster processing time
Processing Fees	Lower processing fees (up to 1% of loan amount)	Higher processing fees (1% – 2% of the loan amount)
Repayment Duration	Longer repayment periods (up to 15 years)	Shorter repayment periods (up to 10 years)
Moratorium Period	Flexible moratorium period (course duration + 6-12 months)	Fixed moratorium period (course duration + 6 months)
Approval Chances	Higher chances of approval	Lower chances of approval without a strong academic and financial background
Interest Subsidy	Eligible for government interest subsidies	Usually not eligible for interest subsidies

Here are some more details on non-collateral and collateral loans offered by top lenders:

Lenders	Non-collateral Loan Amount	Collateral Loan Amount	Interest Rate for Non-collateral Loans	Interest Rate for Collateral Loans
UBI	INR 40,00,000	INR 1,50,00,000	9.75%	9.25%
ICICI Bank	INR 1,00,00,000	INR 2,00,00,000	11.25-12.75%	10.25%
IDFC Bank	INR 75,00,000	INR 1,50,00,000	11-14%	9.25-10.5%
Axis Bank	INR 1,00,00,000	INR 2,00,00,000	10.5-12.5%	9.75-10.5%
Yes Bank	INR 50,00,000	INR 1,50,00,000	11-12.5%	11-11.5%
HDFC Credila	INR 75,00,000	INR 1,50,00,000	11.75-12.5%	10.15-10.75%
Avanse	INR 1,00,00,000	INR 80,00,000	10.5-13%	10.5-11.5%
Auxilo	INR 1,00,00,000	INR 1,00,00,000	11.3-13%	Marginally less
InCred	INR 80,00,000	INR 80,00,000	11.85-13%	Marginally less
TATA Capital	INR 75,00,000	INR 1,50,00,000	11.75-13%	10.75%
Prodigy Finance	$200,000	NA	11.5-15%	NA
MPower	$100,000	NA	12.99-15.99%	NA
Leap	$100,000	NA	11-12.5%	NA
Avanse Global	$120,000	NA	10.5-14%	NA

Types of education loans based on lenders

Three main types of lenders provide education loans to Indian students studying abroad. You can explore some of the top lenders in each category below:

Education loans to study abroad by public sector banks

Here’s a list of top public sector banks and the characteristics of their study abroad education loans:

Bank	Loan Amount	Interest Rate	Repayment Duration	Moratorium Period	Processing Fees
State Bank of India (SBI)	Minimum: INR 7.5 lakhs Maximum: Up to INR 1.5 crores	Starting with 11.15%	Up to 15 years	Course duration + 6 months	Up to INR 10,000 per application
Punjab National Bank (PNB)	Need-based financing	For female students – 10.25% – 12.25%For other students – 10.25%-12.75%	Up to 15 years	Course period + 1 year	1% – a minimum of INR 10,000/- (refundable after 1st disbursement)
Union Bank of India	Minimum: INR 7.5 lakhs Maximum: Up to INR 1.5 crores	For a loan of up to INR 40 L – EBLR*+0.50% For a loan of over INR 40 L – EBLR+0.25%/ EBLR	15 years (after moratorium period)	Course period + 1 year	For a loan of up to INR 40 L – INR 10,000 + GST For a loan of over INR 40 L – INR 20,000 + GST
Indian Bank	Up to INR 25 lakhs	12.50%	Up to 15 years	Course period	0.5% of the loan amount
Bank of Baroda	For premier institutes – Up to INR 1.5 crores For other institutes – Up to INR 60 lakhs	9.70% – 13.70%	10-15 years	Course duration + 1 year	For a loan up to INR 7.50 lakhs – NILFor a loan over INR 7.50 lakhs – 1% of the loan amount (maximum INR 10,000 + GST)

*EBLR stands for External Benchmark Lending Rate. It’s the interest rate that banks use as a reference point to set their loan rates. So, for a loan of up to INR 40 lakhs, the interest rate would be EBLR plus 0.50%. For loans over INR 40 lakhs, the rate is either EBLR plus 0.25% or just the EBLR rate.

Education loans to study abroad by private sector banks

Here’s a list of top private sector banks and the characteristics of their study abroad education loans:

Bank	Loan Amount	Interest Rate	Repayment Duration	Moratorium Period	Processing Fees
HDFC Bank	Up to INR 45 lakhs	12.5%	14 years (including moratorium period)	Course duration + 1 year	1.5% of loan amount + tax
ICICI Bank	Up to INR 3 Cr	Minimum – 9.5% Mean – 11.31%	For UG courses – Up to 12 years. For PG courses – Up to 14 years	Course duration + 1 year	Up to 2% of the loan amount
Axis Bank	Up to INR 1 Cr	13.7%-15.2%	Up to 15 years	Flexible	2% of loan amount + GST
Kotak Mahindra Bank	Up to INR 20 Lakhs	Maximum upto 16%	Up to 10 years	Course duration + 6 months	Varies
Federal Bank	Up to INR 20 Lakhs	12.55% onwards	Up to 15 years	Course duration + 1 year	Varies

Education loans to study abroad by NBFCs (Non-Banking Financial Companies)

Here’s a list of top NBFCs and the features for their study abroad education loans:

NBFC	Loan Amount	Interest Rate	Repayment Duration	Moratorium Period	Processing Fees
HDFC Credila	INR 1 lakh to no upper limit (almost 100% of the education cost covered)	Varies	Up to 12 years	Course duration + 6 months	Up to 1.25% + GST (non-refundable)
Avanse Financial Services	INR 1 lakh to no upper limit (almost 100% of the education cost covered)	14.25% onwards	1 to 15 years	Course duration + 6 months or 3 months after job	1% – 2% of loan amount
InCred	Up to INR 80+ lakhs	Varies	Up to 15 years	Course duration + 6 months	Up to 2% of the loan amount
Auxilo Finserve	Up to INR 1 Cr	11.3-13% (for collateral-free loans)	Up to 10 years	Course duration + 6 months	1% – 2% of loan amount
Prodigy Finance	No specific limit	11.5% to 15%	7 to 12 years	Course duration + 6 months	Up to 5% of the loan amount
Aditya Birla Finance	Up to INR 50 lakhs	10.55% onwards	Up to 7 years	NA	0.5% to 2.5% of loan amount

How to decide which education loan is the best for studying abroad?

Deciding on the best student loan to fund your education abroad requires comparing multiple lenders and loan characteristics. 

Here are 3 things you must do to get the best education loan offer for your needs:

Determine the loan amount 

You may need a loan of INR 10 lakhs or INR 1.5 crores. Whatever your loan amount requirement, you must ensure your lender can meet that. 

For instance, HDFC Credila offers education loans of as low as INR 1 lakh, whereas the Union Bank of India doesn’t offer a study abroad loan below INR 7.5 lakhs. Similarly, the maximum amount for an Indian Bank education loan is INR 25 lakhs, whereas ICICI Bank offers student loans of up to INR 3 crores. 

Compare interest rates

Your student loan’s ROI will determine the total cost you must spend on repaying your loan. Your interest rate will depend on your application. However, different lenders may offer varying interest rates for the same application or conditions. 

So, it’s important to compare different lenders and then decide. Some lenders (usually public sector banks) also offer interest rate waivers for specific students. 

Look at the repayment terms

Some lenders (e.g., Axis Bank) give you up to 15 years to repay your loan, whereas some (e.g., Aditya Birla Finance) require you to repay within 7 years. 

Apart from this, you should also look for additional benefits from getting an education loan. For example, the Bank of Baroda offers a free debit card to borrowers and doesn’t charge any processing fee for loans below INR 7.5 lakhs. Some lenders, like Axis Bank, also offer GRE-based funding if one’s scores meet its criteria. 

Easier and faster ways to get the best education loan to study abroad

In the previous section, we discussed the important things you must do to secure the best student loan. Now, however important and foolproof the suggestions may be, comparing the terms of every lender in India can make the entire ed-loan journey stressful for you.

So, how can you ensure the best education loan without doing the heavy lifting yourself? You must find a way to:

• Easily compare the offers or conditions of top lenders in one go
• Get expert assistance to run you through the entire student loan process
• Quickly receive offers from lenders that perfectly fit your specific requirements

Through FundRight, you can get all that and much more. With just one application, which would take less than 10 minutes, you can get competitive loan offers from 15+ lenders.

Here’s how FundRight works:

1. Provide detailed information about your educational plans and financial needs.
2. Within two days, get multiple competitive loan offers from top lenders tailored to your profile.
3. Evaluate the loan offers based on interest rates, repayment terms, and other conditions.
4. Get guidance from FundRight’s financial advisors to help you select the best loan and negotiate terms.
5. Securely upload all necessary documents through the FundRight platform and wait for loan approval, which can take as little as 10 days.

If you apply today, you can get your loan approved for the Spring ’25 admissions within 10 days.

Other Banks & NBFCs Offering Education Loan to Study Abroad:

• Union Bank of India Education Loan
• Yes Bank Education Loan
• IDFC Bank Education Loan
• Bank of India Education Loan
• State Bank of India Education Loan

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