Education Loan for Abroad Studies: How to Apply, Eligibility & Tips 2025

Latest Update: Budget 2025 waives TCS on education-related foreign remittances funded through loans from specified banks, easing costs for students abroad. Remittances above ₹10 lakh without such loans attract 5% TCS.

Studying abroad can be a life-changing experience, but the cost of studying and living abroad often poses a major challenge. An education loan for abroad studies helps cover tuition, living expenses, and other study-related costs. With the right guidance, you can secure a loan that suits your needs, meets eligibility criteria, and ensures a smooth application process. 

In this guide, you will get to know in detail about applying for an education loan abroad. We will cover eligibility requirements, step-by-step application process, interest rates, repayment options, and tips to maximize approval chances along with banks for abroad education loan and government education loans for abroad studies. By the end of this guide, you will have a clear roadmap to fund your international education confidently and efficiently. 

Why Education Loans Are Crucial for Studying Abroad

Studying abroad is a dream for many Indian students, but it comes with significant financial challenges. Tuition fees, accommodation, and living expenses can quickly add up. Planning finances carefully is essential to avoid stress and focus on your studies. An education loan for abroad studies provides a structured way to fund your international education without draining personal savings or putting undue pressure on family finances. 

According to recent data, over 1,50,000 Indian students went abroad for higher studies in 2023, with popular destinations including moving for studying in USA, UK, Canada, and Australia. The number continues to grow every year, highlighting the rising demand for financial support options like education loans. 

Rising Costs of Higher Education Abroad 

The cost of studying abroad varies by country and program. Tuition fees are often the largest expense, followed by accommodation and daily living costs. Here's an overview of average costs for Indian students: 

Country	Approx Tuition (Master’s/UG)	Approx Living Costs (per year)
USA	$25,000 – $50,000	$12,000 – $18,000
UK	£15,000 – £30,000	£10,000 – £15,000
Canada	CAD 18,000 – CAD 35,000	CAD 10,000 – CAD 15,000
Australia	AUD 20,000 – AUD 40,000	AUD 12,000 – AUD 18,000

These numbers show why education loans for abroad studies are often necessary. Without proper funding, covering tuition and living costs simultaneously can be difficult. 

Benefits of Taking an Education Loan 

Opting for an education loan provides several advantages for students planning to study overseas: 

• Flexibility: Choose loan amounts and repayment terms based on your needs. 
• Low-interest options: Many banks offer competitive rates for educational loans. 
• Deferment plans: Start repayment only after completing your studies or securing a job abroad. 

By leveraging an education loan, students can focus on academics and career growth rather than financial worries. It also builds a responsible credit history and helps plan expenses efficiently. 

Types of Education Loans for Abroad Studies 

When planning to study overseas, understanding the types of education loans available is essential. Students can choose from bank loans, NBFC loans, and government-backed schemes depending on their financial needs and eligibility. Knowing the right option helps in meeting tuition, living, and other expenses smoothly. Understanding the education loan criteria for abroad studies ensures a higher chance of approval and better repayment terms. 

Collateral vs Collateral-Free Loans 

Education loans are broadly classified into collateral-based and collateral-free loans. 

• Collateral Loans: Require security such as property, fixed deposits, or other assets. These loans usually offer higher amounts and lower interest rates. Eligibility depends on the value of the collateral and your repayment capacity. Collateral loans can go up to ₹50–100 lakh depending on the bank. 
• Collateral-Free Loans: Do not require any security, making them ideal for students who cannot provide assets. These loans usually have lower maximum limits, around ₹10–50 lakh, and slightly higher interest rates. Many banks provide options for how to get education loan for abroad studies without collateral. 

Loan Type	Max Amount	Collateral Required
Collateral Loan	₹50 – 100 lakh	Yes
Collateral-Free	₹10 – 50 lakh	No

Government-Backed Education Loan Schemes 

Government schemes provide structured support for students pursuing education abroad. Some popular options include: 

• Vidyalakshmi Portal: A centralized platform to apply for multiple government loans. 
• State Bank of India (SBI) Schemes: Offers loans under the SBI Global Education Loan with flexible repayment options. 
• Other State Bank Programs: Many state and public sector banks provide subsidized loans with lower interest rates and government guarantees. 

These schemes often offer favorable terms, especially for first-time borrowers, and clearly define education loan criteria for abroad studies. 

Private Bank & NBFC Education Loans 

Private banks and NBFCs provide faster processing and flexible repayment options. They are a popular choice for students seeking additional funding or specialized features. 

Some popular options include: 

• HDFC Bank: Offers loans up to ₹40 lakh with interest rates between 11–13%. Provides quick approval and top-up options. 
• ICICI Bank: Loans up to ₹35 lakh at 10.5–12% interest. Allows prepayment and flexible EMIs. 
• Axis Bank: Loans up to ₹30 lakh at 11–13% interest. Offers collateral-free options. 
• Bajaj Finserv NBFC: Loans up to ₹25 lakh at 12–14% interest. Minimal documentation and fast disbursal. 

Bank/NBFC	Max Loan	Interest Rate
HDFC Bank	₹40 lakh	11–13%
ICICI Bank	₹35 lakh	10.5–12%
Axis Bank	₹30 lakh	11–13%
Bajaj Finserv NBFC	₹25 lakh	12–14%

Choosing the right loan depends on your funding needs, repayment capacity, and eligibility. Combining government-backed and private options can also help cover full tuition and living expenses efficiently. 

Eligibility Criteria for Education Loans Abroad 

Before applying for an education loan for abroad studies, it is important to understand the eligibility criteria. Banks and financial institutions assess multiple factors to ensure the applicant can repay the loan responsibly. Being aware of these criteria helps students prepare documents, select the right co-applicant, and avoid delays in loan approval. 

The education loan criteria for abroad studies generally cover age limits, academic performance, confirmed admission, and financial standing. Meeting these requirements not only increases the chances of approval but also helps students plan their study abroad journey confidently. 

Academic and Admission Requirements 

Academic performance and admission to a recognized institution are the first checks for lenders: 

• Minimum GPA/Percentage: Most banks expect a solid academic record. Typically, undergraduate students should have at least 50–60%, while postgraduate students need 60–70% or above. 
• Admission Confirmation: A valid admission letter from a recognized university abroad is mandatory. It confirms your enrollment and demonstrates the legitimacy of the course to the lender. 
• Program Validity: Loans are approved only for full-time programs recognized by the host country’s education authorities. Short-term or part-time courses may not qualify. 
• English Proficiency (if applicable): Some banks may ask for proof of language proficiency if required by the university. 

Financial & Co-Applicant Requirements 

Financial stability of the applicant and co-applicant is a key factor in loan approval: 

• Income Threshold: The co-applicant, usually a parent or guardian, must meet the minimum income criteria set by the bank. This ensures repayment capability. 
• Credit Score: Both the applicant and co-applicant should have a good credit history. A higher score increases approval chances and may offer better interest rates. 
• Co-Applicant: A co-applicant shares repayment responsibility. Typically, this is a parent, guardian, or close relative. Some banks allow multiple co-applicants to enhance repayment capacity. 
• Age Limit: Most banks prefer applicants between 18 and 35 years old. Some lenders may provide flexibility for slightly older students depending on course duration and repayment ability. 

Requirement Type	Key Criteria
Academic	Minimum GPA/percentage, admission letter, program validity
Financial & Co-Applicant	Co-applicant income, credit score, age limit, co-applicant details

Understanding and fulfilling these eligibility criteria ensures that the education loan for abroad studies can be processed smoothly. Preparing documents in advance and selecting a reliable co-applicant can make the application process faster and less stressful. 

Countries Eligible for Abroad Education Loan in India 

Most of the study-abroad destinations are supported by Indian banks through education loans. However, loan eligibility varies by country and institution. This helps avoid delays and ensures your chosen university is covered. Below are popular countries and top universities where Indian students can access education loans for studying abroad. 

United States 

The US remains the top destination for Indian students seeking world-class education and global exposure. Indian lenders widely support students pursuing degrees at institutions such as the Massachusetts Institute of Technology (MIT), Stanford University, Harvard University, University of California Berkeley, Columbia University, and Carnegie Mellon University.  

United Kingdom 

The UK has long been a favorite among Indian students, particularly for programs in law, business, and engineering. Education loans are commonly available for top universities like the University of Oxford, University of Cambridge, Imperial College London, University College London (UCL), and the London School of Economics (LSE).   

Canada 

Canada is increasingly popular due to its quality of life, post-study work rights, and immigration-friendly policies. Indian banks provide loans for institutions such as the University of Toronto, the University of British Columbia, McGill University, the University of Waterloo, and Western University. 

Australia 

Australia offers excellent education in STEM, healthcare, and management. Loans are available for universities like the University of Melbourne, University of Sydney, Australian National University (ANU), Monash University, and the University of New South Wales (UNSW). Financial aid generally covers tuition fees, student health insurance, and accommodation. 

Germany 

Germany is attractive for its low or no tuition fee model, especially at public universities. Top funded institutions include the Technical University of Munich (TUM), RWTH Aachen University, Heidelberg University, and Freie Universität Berlin. 

Ireland 

Ireland is gaining traction for programs in technology, finance, and pharmaceuticals. Indian students applying to Trinity College Dublin, University College Dublin, or National University of Ireland Galway can secure loans for tuition and daily expenses, with simplified visa processes often adding to the appeal. 

Singapore 

Singapore offers globally ranked programs with a strong focus on business, tech, and engineering. Indian lenders usually support institutions such as the National University of Singapore (NUS), Nanyang Technological University (NTU), and Singapore Management University (SMU).  

The Netherlands 

Known for its quality education and English-taught programs, the Netherlands is a fast-growing study destination. Students applying to TU Delft, University of Amsterdam, Erasmus University Rotterdam, or Leiden University are eligible for loans to fund their education and living costs. 

New Zealand 

New Zealand’s research-driven institutions and student-friendly policies make it an emerging favorite. Students at the University of Auckland, University of Otago, and Victoria University of Wellington can avail of education loans to cover tuition, accommodation, and other essentials. 

How to Apply for Education Loan for Abroad Studies 

Applying for an education loan for abroad studies can feel overwhelming but breaking it into clear steps makes the process manageable. Knowing what documents are required, how banks evaluate applications, and strategies for approval helps you secure the loan efficiently. Understanding how to get an education loan for abroad studies ensures you don’t miss critical steps and reduces delays. 

Pre-Application Checklist 

Before applying, gather all necessary documents. Having them ready improves processing time and approval chances. Key documents include: 

• Admission Letter: From a recognized university abroad. 
• Identity Proof: Passport, Aadhar card, or voter ID. 
• Income Proof: Salary slips, IT returns, or income certificates. 
• Bank Statements: For the applicant and co-applicant, usually last 6–12 months. 
• Academic Records: Mark sheets and transcripts. 
• Passport and Visa Documents: If available. 

Application Process Step-by-Step 

Following a structured process ensures smooth loan approval: 

Step 1: Select Bank or Loan Provider 
Compare interest rates, repayment terms, and collateral requirements. Choose a provider that aligns with your needs. 

Step 2: Submit Documents 
Provide all required documents for verification. Ensure they are complete and accurate to avoid delays. 

Step 3: Verification & Approval 
The bank reviews your academic, financial, and co-applicant details. They may also conduct a credit check before sanctioning the loan. 

Step 4: Disbursement of Loan 
Once approved, the loan is disbursed directly to the university or your account as per the agreement. 

Tips to Get Collateral-Free Loans 

Collateral-free loans can be more accessible with proper preparation: 

• Apply through government-backed schemes like the Vidyalakshmi Portal for guaranteed support. 
• Choose banks offering non-collateral education loans for amounts up to ₹20–50 lakh. 
• Maintain a strong academic record and provide a credible co-applicant with a good credit score. 
• Submit a complete and well-organized document set to increase approval chances. 
• Consider combining a smaller collateral-free loan with other funding options if the total cost is high. 

Following these steps and tips helps students understand how to get an education loan for abroad studies efficiently and ensures they are financially prepared for their international education journey. 

Interest Rates, Repayment, and Loan Terms 

Understanding interest rates, repayment, and loan terms is crucial when planning an education loan for abroad studies. These factors directly impact the total cost of your loan and your financial planning during and after your studies. Knowing how EMIs work, prepayment options, and refinancing possibilities helps students manage their loans efficiently. 

Interest Rates and Loan Terms 

Interest rates vary depending on the bank, loan type, and whether it is collateral-based or collateral-free. Repayment terms and moratorium periods also differ, giving students some flexibility while studying abroad. Here's a concise overview of typical loans: 

Bank/Provider	Interest Rate	Moratorium Period	Repayment Tenure
HDFC Bank	11–13%	Course + 6 months	Up to 15 years
ICICI Bank	10.5–12%	Course + 6 months	Up to 15 years
Axis Bank	11–13%	Course + 6 months	Up to 12 years
SBI Global Loan	10–12%	Course + 12 months	Up to 15 years

EMIs and Repayment 

• EMIs (Equated Monthly Installments): Most banks calculate EMIs based on principal, interest rate, and tenure. Choosing the right EMI structure ensures repayment is manageable alongside other expenses. 
• Moratorium Period: This is the time during which you only pay interest or no EMI while studying. It usually extends till course completion plus a few months. 
• Prepayment Options: Many banks allow partial or full prepayment of loans without penalties. Prepaying, when possible, reduces the interest burden and overall loan cost. 

Refinancing Options 

Refinancing an education loan can help secure lower interest rates or better repayment terms: 

• Switching Banks: If your current lender offers high interest rates, you can refinance with another bank at a lower rate. 
• Extending Tenure: Lengthening repayment tenure reduces EMI burden but may increase total interest paid. 
• Combining Loans: Some students consolidate multiple education loans into one to simplify repayment. 

Being well-informed about interest rates, EMIs, prepayment, and refinancing helps students make smarter financial decisions. Understanding these aspects ensures that an education loan for abroad studies becomes a manageable tool rather than a burden. 

Common Challenges & How to Overcome Them 

Applying for an education loan for abroad studies can be straightforward, but students often face common issues during the process. These challenges usually relate to credit scores, missing documents, or delayed approvals. Understanding them in advance helps you plan better and avoid unnecessary setbacks. 

Here are some of the most common obstacles students encounter — and simple ways to overcome them: 

1. Low Credit Score 

A low credit score is one of the biggest hurdles in loan approval. Banks view it as a risk indicator. 

How to overcome it: 

• Apply with a co-applicant who has a strong credit history. 
• Clear existing debts or credit card dues before applying. 
• Maintain consistent repayment behavior to gradually improve your score. 
• Explore government-backed schemes that offer flexible credit requirements. 

2. Incomplete or Incorrect Documents 

Missing or inaccurate documents often cause delays or rejections. 

How to overcome it: 

• Prepare a document checklist in advance (admission letter, ID proof, income proof, bank statements, etc.). 
• Double-check all documents for signatures, dates, and accuracy. 
• If something is missing, communicate with your bank representative promptly. 

3. Delayed Loan Approvals 

Loan approval can take longer due to verification steps or high application volumes, especially during peak admission seasons. 

How to overcome it: 

• Apply at least 2–3 months before your university’s fee payment deadline. 
• Submit complete and verified documents in one go. 
• Follow up regularly with the bank to track progress. 
• Consider NBFCs or private lenders that offer quicker processing if time is limited. 

4. Difficulty in Getting Collateral or Guarantor 

Not every student has property or assets to pledge as collateral. 

How to overcome it: 

• Look for collateral-free education loans from trusted banks and NBFCs. 
• Apply through Vidyalakshmi Portal or similar platforms that list government schemes. 
• Strengthen your application with a co-applicant who meets the income and credit requirements. 

5. High Interest Rates 

Interest rates vary across lenders and can significantly affect total repayment. 

How to overcome it: 

• Compare multiple loan providers before finalizing one. 
• Negotiate interest rates based on your academic profile or co-applicant’s credit strength. 
• Opt for floating rates if you expect market rates to drop during repayment. 

By being proactive and well-prepared, you can handle these challenges effectively. Awareness and timely action make securing an education loan for abroad studies a smoother and more confident experience. 

Securing an education loan for abroad studies is one of the most practical ways to make your global education dream a reality. With the right knowledge of eligibility, loan types, and repayment terms, students can confidently manage their finances and focus on academics. Always compare lenders, understand interest rates, and prepare documents early to avoid delays. 

Government schemes, private banks, and NBFCs together provide multiple options tailored to different needs. Whether you choose a collateral or collateral-free loan, careful planning and timely action make all the difference.  

With the right preparation, and curated guiding & counselling sessions with upGrad expert counsellors, you can find some of the best education loans which can become a steppingstone to a successful international career.