Most Indian families fund study abroad through a combination of savings and an education loan. Loans spread the cost over time and allow students to repay from future earnings.
Study abroad loans come from public banks, private banks and non-banking financial companies (NBFCs). Each has different rules on collateral, interest rates and which universities they lend for.
| Secured loan | Unsecured loan | |
|---|---|---|
| Collateral | Property, fixed deposits or other assets | None |
| Interest rate | Usually lower | Usually higher |
| Loan amount | Can be higher | Limited by profile and lender |
| Speed | Slower, due to property checks | Often faster |
What lenders look at
- University ranking and course
- Academic record and test scores
- Co-applicant’s income and credit history
- Collateral value and documents, for secured loans
Key terms to understand
- Moratorium: the period during studies, often plus a few months, when full repayment does not start
- Margin money: the share of costs you pay yourself
- Processing fee: charged by the lender for setting up the loan
- Floating vs fixed interest
Compare offers on
- Interest rate and how it changes
- Processing fees and other charges
- Whether interest is paid during the moratorium
- Disbursement process to the university
- Tax benefits on interest under Indian tax law
Tips
- Start loan discussions as soon as you have an offer letter.
- Keep all income and property documents ready.
- Get sanction letters in time for visa applications.
- Read the full loan agreement before signing.
Public banks, private banks and NBFCs
| Lender type | Typical strengths | Typical trade-offs |
|---|---|---|
| Public sector banks | Often lower rates for secured loans; government interest subsidy schemes for eligible families | More paperwork; slower processing; stricter collateral rules |
| Private banks | Faster processing; some unsecured options | Rates and fees can be higher |
| NBFCs | Flexible on courses and countries; quick unsecured loans | Usually the highest interest rates |
Step-by-step loan process
- Estimate your total cost and decide how much you need to borrow.
- Check eligibility with two or three lenders and get indicative offers.
- Submit the application with student, co-applicant and collateral documents.
- Lender verifies documents, values the property and checks credit history.
- Receive the sanction letter and use it for your visa application.
- Sign the loan agreement and pay any margin money.
- Lender disburses tuition to the university, usually term by term.
Worked example: how the moratorium affects cost
Imagine a two-year course with a moratorium of the course period plus six months. If you pay nothing during this time, interest keeps adding to the loan, so you start repaying a larger amount. If your family pays just the simple interest each month during studies, the principal stays the same and your EMIs after the moratorium are smaller. Ask each lender to show you both schedules side by side.
Common mistakes
- Comparing only the headline rate and ignoring fees and insurance add-ons.
- Borrowing the maximum offered rather than what you actually need.
- Missing EMIs after the moratorium, which damages the co-applicant’s credit score.
Frequently asked questions
Can I get a loan without collateral?
Yes, for many universities and courses, depending on your profile and co-applicant.
Is interest charged during studies?
Usually yes, though repayment of the full EMI starts later. Paying simple interest during studies reduces the total cost.
Can I repay early?
Many lenders allow prepayment; check the terms.
How we help
Education loans are easier to manage when you compare several offers before you commit. Our counsellors look at your admission, course, co-applicant’s income and collateral options, then help you compare offers from lenders through our education loan partner. We explain the interest rate, fees, moratorium and repayment schedule in plain language, so there are no surprises later.
Need an education loan?
Check your eligibility and compare education loan offers from multiple lenders through our education loan partner.
