Studying abroad is a dream for many Indian students. However, the financial aspect of pursuing higher education overseas can be daunting. Tuition fees, accommodation, travel, health insurance, and daily living expenses together make studying abroad a significant investment. To manage this financial burden, Indian banks and financial institutions offer dedicated study abroad loan schemes. These loans are designed to support students in financing their education without compromising on quality or academic goals.
Having a clear understanding of these schemes, their benefits, eligibility criteria, repayment options, and government-supported subsidy schemes can help students plan their international education efficiently.
Understanding Study Abroad Loan Schemes
A study abroad loan scheme is essentially a financial solution for students who wish to pursue higher education outside India. These loans generally cover:
- Tuition fees for the course
- Accommodation and hostel expenses
- Travel costs, including airfares and visa fees
- Examination, library, and laboratory fees
- Other course-related expenses, such as books, software, and equipment
Most providers also offer a moratorium period, which allows students to begin repayment only after completing the course. This ensures that students can focus on their studies without the pressure of immediate financial obligations. Some banks even extend the moratorium period to six months after course completion to provide additional flexibility.
An important aspect of these abroad education loans is the interest rate, which directly affects the total repayment amount. Students can benefit from competitive rates offered by leading banks, along with options for interest subsidies provided by the government to make education abroad more affordable for eligible candidates.
Key Providers of Education Loans for Overseas Studies
Several Indian banks and financial institutions provide specialised loans for students planning to study abroad. Each lender has different features, interest rates, collateral requirements, and repayment terms. Some of the major providers include:
1. State Bank of India (SBI) – Global Education Loan Scheme
SBI’s Global Education Loan Scheme is one of the most popular options. It provides loans up to Rs. 1.5 crore, depending on the course and country of study. Key features include:
- Collateral-free loans up to Rs. 7.5 lakh
- Competitive interest rates starting at 8% per annum
- Repayment tenure of up to 15 years
- Moratorium period covering the duration of the course plus six months after completion
SBI also facilitates applications for government interest subsidy schemes, making it easier for students from economically weaker backgrounds to pursue higher education abroad.
2. HDFC Bank – Education Loan for Studies Abroad
HDFC Bank offers loans up to Rs. 1 crore for international studies. Its key advantages are:
- Fast processing and disbursal of loans
- Interest rates starting at 9% per annum
- Flexible repayment tenures ranging from 5 to 15 years
- Comprehensive coverage including tuition fees, living expenses, and travel costs
This makes HDFC Bank an attractive option for students seeking quick and reliable financial support for their overseas studies.
Also Read: HDFC Bank Education Loan
3. Punjab National Bank (PNB) – Udaan Scheme
PNB’s Udaan Scheme is designed specifically for students studying abroad. It provides loans up to Rs. 20 lakh without requiring collateral for certain amounts. Features include:
- Interest rates starting at 10.25% per annum
- Repayment tenure of up to 15 years
- Concessions and additional benefits for students under government-sponsored programmes
This scheme is particularly beneficial for students who qualify for government-supported interest subsidies, reducing the overall cost of borrowing.
4. Axis Bank – Education Loan for Abroad Studies
Axis Bank provides loans up to Rs. 1 crore, including:
- Collateral-free loans up to Rs. 20 lakh
- Interest rates starting at 10.5% per annum
- Flexible repayment schedules
- Top-up loans are available for additional expenses such as travel or accommodation upgrades
Axis Bank also focuses on providing tailored solutions for students with specific educational requirements, helping them manage costs effectively.
5. ICICI Bank – Education Loan for Overseas Studies
ICICI Bank offers loans up to Rs. 75 lakh, with features such as:
- Moratorium period until six months after course completion
- Repayment tenure of up to 15 years
- Collateral-free loans up to Rs. 20 lakh
- Coverage for tuition, travel, accommodation, and living expenses
The bank also provides customized repayment options and guidance on loan applications, simplifying the process for students and their families.
Interest Subsidy Schemes for Education Loans Abroad
The government provides interest subsidy schemes to encourage students from economically weaker sections to pursue higher education abroad. These subsidies reduce the interest burden during the moratorium period and make international education more affordable.
Key highlights include:
- Subsidy applicable for families with an annual income below Rs. 4.5 lakh
- Applicable during the course duration, plus six months post-course
- Administered through banks such as SBI and PNB, which facilitate applications for eligible students
These schemes not only make education abroad more accessible but also provide financial relief, allowing students to concentrate on their studies rather than worrying about repayment.
Eligibility Criteria for Overseas Education Loans
While specific requirements may vary by lender, the general eligibility criteria include:
- Indian citizenship with a valid ID and address proof
- Admission to a recognised university or institution abroad
- Minimum academic qualifications (e.g., graduation or equivalent for postgraduate courses)
- Co-applicant, often a parent or guardian, particularly for collateral-free loans
- Proof of income for co-applicants to establish repayment capability
Meeting these criteria ensures a smoother approval process and timely disbursal of funds.
Factors to Consider Before Selecting a Loan
Students should carefully evaluate several factors when choosing a study abroad loan:
- Interest Rate – Lower rates reduce total repayment. Compare rates offered by various banks and consider eligibility for government subsidies.
- Collateral Requirement – Collateral-free loans are convenient but may have lower limits; higher loan amounts often require security.
- Repayment Terms – Look for flexible tenures and moratorium options. A longer tenure reduces EMI amounts but may increase overall interest.
- Processing Fees and Charges – Be aware of hidden charges, prepayment penalties, and service fees.
- Top-Up Loans – Some lenders offer additional funds if unexpected expenses arise, such as higher accommodation costs or travel emergencies.
Students can also benefit from guidance provided by platforms like SpocTree, which provide insights on loan options, interest rates, repayment plans, and eligibility criteria, helping students make well-informed financial decisions.
Also Read: Best Education Loan in India for Study Abroad: Compare and Choose!
Conclusion
Pursuing higher education abroad is a significant investment that requires careful financial planning. Leading Indian banks such as SBI, HDFC, PNB, Axis Bank, and ICICI Bank offer a variety of study abroad loan schemes, while government-supported interest subsidy schemes provide additional support for eligible students.
Before selecting a loan, students should evaluate interest rates, collateral requirements, repayment flexibility, and top-up options. Platforms like SpocTree offer valuable guidance, helping students navigate the complex loan process efficiently and make informed decisions.
