Education Loans for Abroad Studies: Application, Eligibility, Tips to Apply

Education loans for abroad studies serve as a bridge to your dreams, enabling you to pursue world-class education without financial constraints. They help cover the significant costs associated with pursuing higher education overseas, which include tuition fees, accommodation, travel, and living expenses. 

By understanding the process, eligibility criteria, and documentation required, you can navigate the complexities of education loans with confidence and focus on achieving your academic and career goals.

Key Statistics Related to Education Loans for Abroad Studies

• Rising Popularity: In 2022, over 1 million Indian students were studying abroad, a 68% increase from 2016.
• Loan Amounts: The average education loan amount taken by Indian students for studying abroad ranges from ₹20 lakhs to ₹35 lakhs.
• Interest Rates: Interest rates for education loans typically range between 8.5% to 13.5% annually, depending on the lender and loan scheme.
• Repayment Period: Most education loans offer a repayment period of 5 to 15 years, with a moratorium period that usually covers the study duration plus 6 to 12 months post-completion.

Procedure to Apply for Education Loans For Abroad Studies

Step 1: Research and Choose a Lender

Identify banks or financial institutions that offer education loans specifically for studying abroad. Public sector banks, private banks, and non-banking financial companies (NBFCs) in India provide such loans. Compare their interest rates, repayment terms, loan amounts, and other conditions.

Step 2: Check Eligibility

Common eligibility criteria include:

• Admission to a recognized university abroad.
• Courses eligible for loans include undergraduate, postgraduate, doctoral, and professional programs.
• The applicant should be an Indian citizen.
• Co-applicant (parent/guardian) with a stable income source.

Step 3: Documents Required for Education Loans for Abroad Studies

Typical documents required are:

• Admission letter from the university.
• Loan application form.
• Academic records (certificates, mark sheets).
• Proof of identity and address.
• Passport-size photographs.
• Bank statements and income proof of co-applicant.
• Collateral documents (if required).

Step 4: Apply for the Loan

Submit the completed application form along with the required documents to the chosen lender. Some banks offer online application facilities.

Step 5: Loan Processing and Sanction

The bank will verify the documents and assess the applicant’s and co-applicant’s creditworthiness. This process may involve personal discussions and further documentation if needed. Upon approval, a sanction letter detailing the loan amount, interest rate, and repayment terms will be issued.

Step 6: Disbursement

Once the loan is sanctioned, the funds are disbursed in installments as per the university’s fee schedule, directly to the university or to the student’s account, depending on the lender’s policy.

Tips to Secure the Best Education Loans For Abroad Studies

• Compare Multiple Lenders: Look beyond interest rates; consider processing fees, prepayment charges, and other terms.

• Check for Collateral-Free Loans: Some banks offer unsecured loans up to a certain amount (e.g., ₹40 lakhs for premier institutions).

• Government Schemes: Explore government schemes like the Padho Pardesh Scheme for interest subsidies.

• Timely Application: Apply well in advance to avoid last-minute hassles and to ensure you have time to negotiate terms if needed.

• Coaching for Entrance Exams: Some lenders provide loans that also cover expenses for coaching classes for exams like GRE, GMAT, IELTS, etc.

The financial aspect of studying overseas can be daunting and the rising cost of education makes it sound like an impossible dream to achieve. This is where education loans play a significant role.

With careful planning, research, and timely action, you can secure a loan that best fits your needs and embark on a transformative educational journey.

Useful Resources

• Study Abroad: Visualize & Conquer

• IELTS America: A Guide to IELTS Cut Off for Study & Immigration

• Score BAND 7.5 in IELTS in Just 7 Days

• IELTS Recent Actual Tests 2024 | Listening, Reading, Speaking and Writing (Academic or General)

• Free IELTS Online Tests | Practice IELTS Mock Test Online