For many Indian families, an education loan is what makes studying abroad possible. Understanding a few basics before you apply can save a lot of money over the life of the loan.
Secured vs unsecured loans
- Secured (with collateral): backed by property or fixed deposits. Usually a lower interest rate and higher loan amount, but takes longer to process because the property is valued and checked.
- Unsecured (without collateral): based on the student’s profile, the university, the course and a co-applicant’s income. Faster, but usually at a higher interest rate and with limits on the amount.
Who lends
Public and private sector banks, NBFCs (non-banking finance companies) and some international lenders all offer study-abroad loans. Each has its own list of approved universities and courses, so the same student can get very different offers.
Questions to ask every lender
- What is the interest rate, and is it fixed or floating?
- What does the loan cover — tuition only, or living costs, travel and insurance too?
- Is there a processing fee, and is it refundable if the visa is refused?
- Do I pay interest during the course (moratorium), or does it add to the loan?
- How long is the repayment period, and are there prepayment charges?
- How fast can you issue a sanction letter for my visa file?
Tax benefit
In India, interest paid on an education loan for higher studies may be eligible for a deduction under Section 80E of the Income Tax Act. Check the current rules with your CA.
Plan the timing
Start the loan process as soon as you receive an offer. A sanction letter is often needed for the visa, and secured loans in particular can take several weeks.
We can connect you with lenders and help you compare offers. Book a free session.