Studying abroad is a dream for many students, but the increasing fees for education abroad turn out to be the biggest roadblock. Tuition, housing, travel, insurance and daily living expenses can add up quickly. This is why an education loan is a crucial pillar of support that makes it possible for students to explore global opportunities without the burden of financial stress.

This comprehensive guide for 2025 has all the information you require on Education Loan for Study Abroad - from who is eligible, what documents you need to send, your options for lenders, how much of your loan will be covered, the interest rates, and step-by-step instructions for applying. 

What is an Education Loan for Studying Abroad

An overseas study education loan is a type of loan product that enables a student to meet his/her education and living expenses while studying abroad. 

These loans usually have reduced interest rates, easier repayment options and a moratorium period when the student is not required to start repaying the educational loan until the course is completed.

It guarantees that the student can concentrate on studying rather than on financial constraints. 

Why do Students Need an Education Loan

The price of international education has dramatically risen over the years. 

Studying abroad is expensive; students have to pay for tuition, rent, health insurance and travel, among other things. 

An education loan enables students to save family savings, gain quality education and manage expenses through structured repayment. 

Types of Education Loans for Abroad Studies

There are two types of education loans in India, namely;

  • Secured education loan for abroad studies: Secured education loans are only offered to students who acquire a security to pledge as collateral to avail an education loan. These loans are mostly offered by Government/Public banks in India. 

  • Unsecured education loan for abroad studies: Unsecured education loans are only offered to students who are unable to pledge collateral to pledge. These loans are mostly offered by Private banks/NBFCS or international lenders in India. Here, they follow stringent eligibility criteria. Students are required to bring a strong financial co-applicant, i.e someone with a stable income source who files ITR to get an unsecured loan. 

How Education Loan Works

  • Check your eligibility according to your academic profile, course, country and co-applicant profile.

  • Pick the right lender – Banks, NBFCs, or International Lenders.

  • Upload documents (academic records, KYC, income proofs.

  • Get a loan sanction after credit and document verification.

  • Do your loan disbursement formalities and receive money either at your university or in your bank account.

  • Repay once you are out of the moratorium period.

Eligibility Criteria for Education Loans for Abroad Studies

Eligibility criteria may vary from bank to bank, but there are a few basic guidelines that students are required to meet in order to be eligible for one. Students who are applying for or already processing through an education loan must understand these basic criteria laid by the banks. 

  • The applicant must be a citizen of India.
  • The applicant should have secured and received the admission letter from a recognised university.
  • The university student who has applied should be recognised by UGC/AICTE/ Government, etc.
  • The applicant must have opted for a full-time UG/PG program.
  • The applicant who is willing to  pursue full-time courses requires a co-applicant (parent/guardian or spouse/parent-in-law/ siblings/ first cousins)

These are the basic criteria set by the banks which students are required to fulfil to be eligible for an education loan.  If you are eligible for one, get in touch with our team at WeMakeScholars, and our financial team will help you with the entire education loan process. 

Now, let’s learn a few terminologies which are used in the bank during the education loan process. These are very necessary for a loan applicant to understand.

Different Terminology Related to the Education Loan Process

There are some common terminologies which a student might come across during their education loan process. These few terms are very important to understand, as they will help you understand the terms and conditions of the bank, as well as guide you to form the right decision during your education loan process. 

1. Collateral Security: An immovable property like a house, flat, non-agricultural land, etc or Liquid security like Fixed deposit, Insurance policy and government bonds, which a student mortgages to the bank to borrow an education loan. 

2. Loan Margin: Many times, the bank doesn’t provide 100% finance for your education; instead, they want the student to pool in a certain percentage of the money every time you ask for a disbursement. This is a bit more complex to understand for students, and it is a very important part of the process for which you may connect with our team to get clarity on this.

3. Repayment tenure: Repayment is defined as the action of paying back a loan. Repayment tenure is the duration period in which a student is liable to pay the entire amount with interest in the stipulated time frame. For eg, SBI gives repayment tenure of 15 years after moratorium, therefore the student has to repay the entire loan amount in these 15 years.

4. Co-applicant/co-signer: A co-applicant or a co-signer, or a co-borrower is the person who is responsible for repaying the loan if a student won’t. Primarily accepted co-applicants are parents, Spouse, parents-in-law or Guardian.

5. Processing Fee: It is the upfront fee charged by the lender to the borrower. In Government banks, it is generally 10k plus GST, whereas in Private banks and NBFCs, it is around 0.95% to 1.5% of the loan amount.

6. Moratorium period: A moratorium period refers to a repayment holiday before the repayment tenure begins. During this time period, students are not expected or required to start their education loan repayment for their entire course duration, plus six months post the course. This period can extend up to 12 months. This provision gives students sufficient time to find employment or to arrange funds for their repayment. This advantage is particular only to Government bank education loans.

7. Legal opinion: This report is given by the bank’s approved lawyer. The lawyer states whether the property can be mortgaged or not. For this, you need to provide original property papers and a lot of supporting documents. Lawyers visit the property to inspect it.

8. Valuation report: This report is given by the bank’s approved engineer. The value of the property to be considered for the loan is mentioned here. The report has 3 values: Market value, Realisable value, and Deferred value. Deferred value is the lowest possible value of the property which the bank can get if they mortgage it. For old constructions, the deferred value will be much lower than the market value. The loan is sanctioned based on the realisable value.

There are a few other terminologies which a student might come across during their education loan process. If you are failing to understand the context of the terms, connect with our team, as they will explain these terms clearly. They will also throw light on the importance of these terms and how they will apply to you in the entire education loan process.

Procedure For Education Loan for Abroad Studies

The procedure for an education loan for abroad studies without collateral is slightly different as compared to collateral-based loans. As secured loans involve pledging of collateral security, the procedure is a bit daunting as it involves a documentation procedure. 

Here’s the procedure for a collateral-based education loan for abroad studies:

  • First, fill out the online application form.
  • Your financial officer at WeMakeScholars will assign you the list of documents to be submitted by the loan applicant and connect you with the nearest bank branch.
  • Visit the nearest bank branch to submit the required documents and acquire details of the lawyer and valuator.
  • Acquire the Legal Opinion from the lawyer and the Valuation report from the valuator. The lawyer and the valuator will submit the reports to the bank branch.
  • After this, complete documents are sent to RACPC.
  • Your processing officer looks into your loan application and verifies the application.
  • Once the processing officer has verified the application, they will sanction the loan.
  • After the loan is sanctioned, you will be required to sign the documents for which you will be required to visit the bank again
  • Post visa approval, students are required to visit the bank and complete the property mortgage process (Students prefer to complete this process after visa approval to avoid risk)
  • The disbursement agreement is signed, and the disbursement of the loan amount takes place.

This is the entire procedure of a study loan for abroad with collateral. Generally, secured loans are provided by Government/ Public banks, and they are known for their delayed processing of loans, as they take around 45 days to 2 months just to start the processing of the loan application. This delay may majorly affect a student’s study abroad plan.

Therefore, we recommend that you connect with our team at WeMakeScholars, as we share a professional affinity with the bank officials, and we can process your loan in just 15-20 days. WeMakeScholars will guide and assist you till the disbursement of the loan. We also assign a dedicated financial officer who will assist you throughout your education loan process. 

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Here’s the procedure for a non-collateral-based education loan for abroad studies:

  • First, request a callback on the official website of WeMakeScholars
  • Your financial officer at WeMakeScholars will connect you with the best lenders providing education loans for abroad studies without collateral
  • As soon as your financial officer connects you with the lending institutions, they will reach out to you directly for further processing
  • You will then be given a secure line to a portal by your financial officer, where you are required to upload the documents online. We request that you not send any documents from any other source, as the confidentiality of the documents will be at risk. Therefore, only upload the documents on the portal provided to you by your financial officer.
  • Banks lay their terms and conditions, rate of interest, loan amount, etc, in front of the student. As per the convenience of the student, he/she may accept or reject the deal.
  • Our financial officer also tries to negotiate on the rate of interest offered by the respective banks and the processing fee.
  • As soon as the student is ready with the agreement, he/she head towards the payment of the processing fee. 
  • Tada! And your education loan is sanctioned. 

This is the entire education loan for abroad studies without a collateral process. Therefore, if you are looking for an unsecured education loan, we recommend that you process through WeMakeScholars, as students get an automatic 0.5% reduction on the education loan interest rates. Apart from that, our financial team will also assist you throughout the education loan process and negotiate on terms even further if needed.

Documents Required For An Education Loan For Abroad Studies

Here are the common documents required for an education loan by the Government and private banks :

  • Duly filled and signed the loan application form with affixed photographs
  • 2 colored passport-size photographs
  • Passport( mandatory for abroad education)
  • Any one Identity proof (Voter ID card, Driving License, Passport, PAN Card, Government department ID card, Aadhar Card or Aadhar enrolment number)
  • Any one Residence proof (Valid passport, Voter ID card, Driving license, Gas bill and electricity bill, Updated passbook or bank account statement, Notarised rental agreement)
  • Academic Records(S.S.C, H.S.C, and Graduation Result)
  • Result of the entrance exam through which admission is being taken (e.g. CAT, GRE, TOEFL, IELTS, etc.)
  • Proof of admission

These are the few basic documents. Both secured and unsecured loans have different document requirements. Therefore, to know the latest checklist of the documents, connect with our team at WeMakeScholars. Our financial team will assist you with the entire education loan procedure. 

Benefits of Applying For An Education Loan

a. No requirement of liquidating valuable assets- Mostly parents liquidate valuable assets to bear education expenses, which eventually disturbs long-term financial goals like buying a land or a flat, children’s marriage, etc. By taking a study loan abroad, banks retain your liquid assets like FDs, insurance, and Government bonds as security and grant you a loan against that security. Therefore, the loan taken for your education would not get in between your long-term financial goals.

b. Wide range of expenses covered: Education loan for abroad studies covers almost every necessary expense that a student might need. It includes living expenses, tuition fees, travel (tickets), house rent, university fees, food expenses, a laptop, or any other apparatus required for your education.

c. Income tax benefits can be claimed: In Section 80E of the Income Tax of 1961, a loan applicant or the co-applicant can avail of the education loan income tax exemption. In simple terms, the loan applicant or the co-applicant can proclaim a definite percentage of the interest paid towards their education loan as deductible from the total income. 

There are many other benefits of taking an education loan, which can help lessen the burden on the students' as well as parents' shoulders. To know more, read this article: Top advantages of education loan you need to know

Top Banks and Financial Institutions Offering Education Loans 2025

Choosing the right lender is crucial in your study abroad loan process. Various banks and NBFCs have different interest rates, processing fees, margin money requirements and collateral. Knowing what each lender offers will allow you to make an educated comparison and choose the one that matches your educational plans and financial requirements. 

Public Sector Banks:

  • State Bank of India

  • Bank of Baroda

  • Canara Bank

  • Union Bank of India

Private Banks:

  • Axis Bank

  • ICICI Bank

  • IDFC Bank

NBFC’s:

  • Credila

  • Avanse

  • InCred

  • Auxilo

International Lenders:

  • MPOWER Financing

  • Prodigy Finance

What Does An Education Loan Cover

It is important to know what an education loan covers before applying, so that you can make proper financial plans. Lenders usually cover all types of tuition and living costs so that you don’t have to worry about finances while you’re studying. Most lenders cover:

  • Tuition Fees

  • Living Expenses

  • Accommodation

  • Food and Utilities

  • Flight Tickets

  • Laptop/Computer

  • Study material and books

  • Examination and library fees

  • Medical Insurance

How to Increase Your Education Loan Approval Chances

  • Maintain a Good Academic Record. 

  • Have a financially stable co-applicant.

  • Choose a well-recognised university/college.

  • Apply as early as possible.

  • Be clear and concise in your submission documents.

  • Take a secured loan for better chances of approval and lower rates of interest.

Common Mistakes to Avoid During the Loan Application

  • Don't apply without comparing multiple lenders first.

  • Submitting incomplete documents

  • Ignoring hidden charges

  • Not reading the terms for repayment

  • Selecting a lender based only on speed of processing. 

Conclusion

With appropriate advice and lender selection, obtaining an education loan for abroad studies in 2025 has become a convenient and more attainable dream for most students. Knowing the eligibility criteria, lender options, what is covered under the loan, and the terms of repayment will help you have an educated discussion on finances. Whether you are considering a secured or an unsecured loan, early planning and strategic application can go a long way in minimising your stress and maximising your chances of approval.