Best Education loan in India for Study Abroad

14 min read

As of 2024, over 1.5 million Indian students are studying internationally, according to the Ministry of External Affairs. Imagine yourself among them, sipping espresso in Italy, learning the art of sushi in Japan, or maybe even discussing the finer points of Shakespeare in England. But the real challenge is figuring out how to fund your adventure with the best education loan in India to study abroad.

According to the Reserve Bank of India (RBI), the outstanding portfolio of education loans grew by a whopping 17% to INR 96.8Cr in 2023. That means you’re not alone in seeking financial aid for your educational dreams! So, without worry, get ready to secure that loan.

Dive in! 

Key Highlights 

Here’s a quick overview of the key points discussed in this article about the best education loan in India to study abroad. 

Topic	Details
Top Reasons to Take an Education Loan	Affordable financing for quality education Flexible repayment options Favourable interest rates
Top Public Banks for Loans	State Bank of India (SBI) Punjab National Bank (PNB) Bank of Baroda (BoB)
Top Private Banks for Loans	HDFC Bank ICICI Bank Axis Bank
Top NBFC for Loans	Leap Finance
Average Educational  Loan Amount Granted	INR 7.5L (USD 9K) to INR 5Cr (USD 596K) – depending on the lender)
Average Interest Rates for Education Loans	8.50% – 16.5%
Repayment Periods	1-15 years
Eligibility Criteria	Academic Performance: Minimum 50% in previous qualifying exams Confirmed admission to a recognised institution Co-applicant requirement (parent/guardian)

Why Take an Educational Loan?

The best education loan in India to study abroad is your financial superhero, helping you fund your dreams. Yes, scholarships can significantly complement your funding needs, but they often cover only part of the total expenses. 

And with high earnings abroad, you won’t have to worry about repayment. For instance, while engineers in India earn around INR 66.6K (USD 7.9K) monthly, engineers in the US earn up to INR 97.2L (USD 11.6K) per month in places like California. That’s like getting a bonus level up in your career right from the start! 

If that’s not enough, explore more benefits of getting the best education loan in India to study abroad.

1. Affordable Financing for Quality Education

With the cost of international education rising, securing an education loan can make studying abroad more affordable. At top-tier US universities, for example, annual fees and living costs can reach around INR 50.2L (USD 60K) per year, making loans a crucial tool for aspiring scholars like yourself.

Also, check out LeapFinance’s comprehensive Expense Calculator articles to help you plan your finances with ease. Discover how much you’ll need for tuition, living expenses, travel, and more.

2. Favourable Interest Rates

Education loans in India often come with relatively lower interest rates compared to personal loans. As of 2023, the average interest rate for education loans was around 6.75% – 12.19%, significantly lower than the 10.5% – 21% for personal loans.

3. Flexible Repayment Options

Many banks offer flexible repayment plans for education loans. They provide a moratorium period, allowing you to start repayment after completing your studies. This means you can secure a job and then begin repaying your loan without immediate financial pressure.

4. No Need for Immediate Collateral

Most banks do not need immediate collateral, and some private loan institutions like Leap Finance eliminate this necessity. This allows you to pursue your education abroad without the additional stress of providing security. 

5. Tax Benefits Under Section 80E

Repaying an education loan also comes with tax benefits. Under Section 80E of the Income Tax Act, you can claim a deduction on the interest paid on your education loan for up to 8 years, providing significant savings over the loan tenure.

Also Read: Education Loan for Abroad Studies. 

Types of Educational Loans 

You can choose from various education loans from different funding bodies for your studies abroad. 

But before you proceed to apply for those student loans, here is a brief overview of the two main types available.

Education Loan Type	Collateral	Interest Rates
Secured Education Loan	Required	Lower
Unsecured Education Loan	Usually not required	Higher

Criteria for Choosing the Best Education Loan in India to Study Abroad

Sorting through the endless loan options can feel like trying to choose a movie on a Friday night, overwhelming and confusing. 

But fear not! 

Finding the best education loan in India to study abroad doesn’t have to be as hard as your toughest exam.

One key factor to consider is the repayment period. Most lenders offer an average repayment period of 5-15 years for education loans, including the moratorium period. Understanding this can help you plan your finances effectively and reduce future stress.

With that in mind, it’s time to make your decision easier. Below are the essential criteria for choosing the best education loan in India for studying abroad.  

1. Interest Rate

When searching for the best education loan in India to study abroad, the interest rate is a crucial factor. Opt for loans with competitive rates to reduce the overall cost. The cheapest education loan in India to study abroad will offer lower interest rates, making it more affordable over time.

2. Repayment Terms

Flexible repayment options are essential when choosing an education loan. Look for loans that offer moratorium periods (a deferment of payments while you’re studying) and grace periods after graduation. This flexibility helps you manage repayments effectively once you start earning.

3. Loan Amount

The best education loan in India to study abroad should cover all your financial needs, including tuition fees, living expenses, travel costs, and other associated expenses. Ensure the loan amount is sufficient to support your entire study period abroad.

4. Processing Fees

Lower processing fees can significantly reduce your initial costs. The cheapest education loan in India to study abroad typically has minimal processing fees, ensuring you save money from the start.

5. Collateral Requirements and Disbursement Process

Seek lenders offering unsecured loans for accessibility and ensure timely, direct fund disbursement to your institution or account for a smooth financial transition.

6. Eligibility Criteria

Clear and attainable eligibility requirements are vital. The best education loan in India to study abroad will have straightforward criteria based on your academic performance and admission status, making the application process easier.

7. Customer Support

Robust customer support is a significant factor when choosing an education loan. The best bank for an education loan abroad will provide excellent customer service, assisting you throughout the loan application and repayment process.

Looking for a loan to study in the US that has all the aforementioned features? Collateral-free loans by Leap Finance are your answers! Our no-collateral loans will cover all your study and living expenses in the US. Get a loan offer in just 10 minutes. 

The Best Education Loan in India to Study Abroad 2024

Did you know that while banks may often offer lower interest rates, Non-Banking Financial Companies (NBFCs) tend to be more flexible with eligibility and documentation? So which do you choose? 

First, you’ll need to read about them all, compare and understand. So, buckle up, and time to find the perfect NBFC or best bank for an education loan abroad. 

Here is an overview of the different lending sectors with their average loan amounts. 

Institution Type	Top Lenders	Average Educational Loan Amount (In Total)
Public Sector Banks	State Bank of India (SBI) Punjab National Bank (PNB) Bank of Baroda (BoB)	Up to INR 60L (USD 71.5K) Average 7.5L  (USD 9K)  Up to 1.5Cr (USD 178K)
Private Sector Banks	HDFC Bank ICICI Bank Axis Bank	Up to INR 45L (USD 53.6K) Up to 3 Cr (USD 357K) Up to 5 Cr (USD 596K)
Non-Banking Financial Companies (NBFCs)	Leap Finance	Up to 84L (USD 100K)

Please Note: All the INR conversions are based on current exchange rates, and the loan limit may vary based on different criteria of the student. For detailed information, please check the official websites. 

Public Sector Banks

Public sector banks benefit from government backing, which allows them to offer more favourable terms to students. 

According to Forbes Advisor India, which analysed 43 education loan products offered by major public and private sector banks, public sector banks can help ease the financial burden with their attractive interest rates.

While they are a dependable option, they may not always offer the flexibility that some students need. But understanding what they offer is a must. 

Time to look at the top 3 options and pick the best bank for an education loan abroad.

Bank	Average Annual  Interest Rate	Repayment Period
State Bank of India (SBI)	11.15%	5 to 7 years
Punjab National Bank (PNB)	11.25%	Up to 15 years
Bank of Baroda (BoB)	11.05% – 11.15%	Up to 15 years

Private Sector Banks

Private sector banks offer a range of benefits that can be particularly appealing to students seeking education loans for several reasons. Most private banks have education loans starting from as low as INR 50K (USD 596). They may also provide financing for up to 100% of the total cost of education, ensuring comprehensive financial support for students.

Time to look at the top 3 options and pick the best bank for an education loan abroad.

Bank	Interest Rate	Repayment Period
HDFC Bank	9.55 % to 13.25%	Up to 15 years
ICICI Bank	9.50% to 14.25%	Secured – Up to 8 yearsUnsecured – Up to 10 years
Axis Bank	8% to 16%	Up to 15 years

Non-Banking Financial Companies (NBFCs)

Non-Banking Financial Companies (NBFCs) are increasingly becoming a popular choice for students seeking education loans due to their flexibility and quick approval processes. 

Unlike traditional banks, NBFCs can give you a loan offer in as little as 10 minutes, making them a convenient option for students who need funds quickly. 

Additionally, NBFCs often have more lenient eligibility criteria and documentation requirements, providing greater accessibility to a wider range of students.

Here’s a look at Leap Finance and its education loan offerings.

NBFC	Interest Rate	Repayment Period
Leap Finance	11% to 12.25%	7-10 years

Eligibility Criteria for the Best Education Loan in India to Study Abroad 

Securing the best education loan in India to study abroad involves meeting specific requirements set by various lenders, including public sector banks, private sector banks, and Non-Banking Financial Companies (NBFCs). 

Each type of lender has its own set of criteria that you need to fulfil to ensure a smooth application process and increase your chances of approval. Explore the detailed eligibility criteria for each type of lender.

Public Sector Banks

Public sector banks are known for their reliability and lower interest rates. Their average processing time is usually 15 to 20 days. 

Here are the major eligibility criteria for securing an education loan abroad from public sector banks. 

Eligibility Criteria	Details
Admission Requirement	Confirmed admission to a recognised institution
Academic Requirement	50% for SC/ST60% for general category
Course Type	Full-time courses
Age Limit	No age restriction
Co-applicant Requirement	Mandatory (parent/guardian)
Collateral Requirement	Required for loans above INR 7.5 lakhs
Income Proof	50% for SC/ST60% for the general category
Credit Score	Preferably 300 to 900

Private Sector Banks

Private sector banks offer more flexibility compared to public sector banks, particularly in terms of eligibility and documentation. They have a processing time of approx. 15 days. 

Here are the other eligibility criteria for the best bank for an education loan abroad. 

Eligibility Criteria	Details
Admission Requirement	Confirmed admission to a recognised institution
Course Type	Mandatory for all full-time programs
Age Limit	Between 16 and 35 years of age
Co-applicant Requirement	Mandatory (parent/guardian)
Collateral Requirement	Required in certain cases
Income Proof	Required from co-applicant
Credit Score	Preferably 700+

Non-Banking Financial Companies (NBFCs)

NBFCs are known for their quick approval processes and flexible terms, making them a convenient choice for many students, with a quick 10-minute online process. 

Here are the other eligibility details for the best NBFC education loan. 

Eligibility Criteria	Details
Academic Performance	Minimum 50% in previous qualifying examination
Admission Requirement	Confirmed admission to a recognised institution
Course Type	Full-time and part-time courses (degree/diploma)
Age Limit	Above 18 years
Co-applicant Requirement	Mandatory (parent/guardian)
Collateral Requirement	Usually, none required
Income Proof	Required from co-applicant

The best part? Leap Finance does not look at your economic background, your work experience, or your credit score to sanction your loan. 

Knowing the eligibility criteria for loans is one thing, but you should also be aware of the eligibility criteria for the universities you want to get into. Read here.

Documents Required for Best Education Loan in India to Study Abroad

Getting the best education loan in India to study abroad is like prepping for a big trip — you’ll need to gather all the right documents to prove you’re ready and financially fit for the journey!

Below is a detailed list of the required documents for both the applicant and the co-applicant. 

1. For the Applicant

Meeting the document requirements listed below, as an applicant, is essential to secure your education loan for studying abroad.

• Duly filled and signed loan application form.
   
• KYC Documents that include:

• ID Proof
• Address Proof
• Signature Proof.
  
• The acceptable KYC documents are:

• PAN, Passport
• Voter ID
• Aadhar Card
• Driver’s License or any other government-issued identification document.
  

• Past academic records that include all previous mark sheets and pass certificates.
  
• Entrance exam results for the concerned course.
  
• Admission proof in the concerned institute.
  
• 2 Passport size photographs
  
• Statement of Expenses like tuition fees, travel and living expenses and others. 

2. For the Co-Applicant

A co-applicant, typically a parent or guardian, plays a crucial role in securing an education loan by providing additional financial security to the lender. 

Here are the documents they would need.

• Income Documents for Salaried Co-Applicant 

• Salary slips for the last 3 months
• A copy of Form 16 from the last two years
• Statement of assets and liabilities
• Last 6 months’ bank account statement

• Income Documents for Self-Employed

• Business address proof
• Last two years, IT returns
• TDS certificate (Form 16A, if applicable)
• Certificate of qualification ( for professionals)
• Statement of assets and liabilities
• Last 6 months’ bank account statement

How to Apply for an Education Loan?

Feeling daunted by the education loan application process? 

You’re not alone! Think of it like assembling a new piece of tech — confusing at first, but totally doable with the right guidance. 

 Here are the steps to apply for the best education loan in India to study abroad

1. Research and Check Eligibility Criteria

Start by researching and comparing different lenders, including public sector banks, private sector banks, and NBFCs. Look at the interest rates, repayment terms, loan amounts, and eligibility criteria. 

Ensure that you and your co-applicant meet all the requirements set by the lender, such as academic performance, admission proof, and income proof, to find the best option for your needs.

2. Gather Required Documents

Collect all the necessary documents for both the applicant and co-applicant. This includes academic records, admission letters, proof of identity, proof of residence, income proof, bank statements, and any collateral documents (if required).

3. Filling Out and Submitting the Loan Application 

Obtain the loan application form from your chosen lender and fill it out carefully, providing accurate information. Once completed, submit the form along with the required documents. Some lenders offer an online application option to expedite the process. 

Ensure all documents are properly attached and organised to avoid delays.

4. Loan Processing, Approval, and Disbursement 

After submitting your application, the lender will review it and may request additional information. Once approved, you will receive a notification, and the loan amount will be disbursed according to the agreed terms, usually directly to the educational institution or your account.

Also Read: How to Apply for an Education Loan? 

Conclusion

When it comes to securing an education loan for studying abroad without collateral, NBFCs like Leap Finance stand out as a notable option for Indian students. We support over 231 courses and have funded more than 2300 loans, totalling $175 million in financial aid.

We need no collateral and use advanced technology and data-driven insights to assess the creditworthiness of applicants, allowing for quicker and more accurate loan approvals. 

Ready to ace your financial planning and make your study abroad dreams come true? Calculate your loan repayment EMIs for FREE with our easy-to-use EMI Calculator and plan your finances effortlessly!

Frequently Asked Questions