With over 13 lakh study abroad enrollments from India at present, the potential of the international education sector is projected to become much brighter in the coming years. As per reports, in 2025, as many as 1.5 to 2 million Indian students are expected to apply for study abroad, in countries like the UK, US, Canada and Australia. The allure of a world-class education, global exposure and enhanced career opportunities has fueled this surge, making financial assistance more crucial than ever. While the prospect of studying abroad is exciting, the rising costs of tuition, accommodation and living expenses often pose a significant hurdle. Many students find themselves at crossroads, wondering how to fund their dreams without financial strain.
Thankfully, education loans have emerged as a lifeline, bridging the gap between aspirations and affordability. Reflecting this trend, India’s education loan market for international studies has been growing at an impressive 30–40% annually, with outstanding loans surpassing ₹75,000 crore, according to RBI data. As global education aspirations soar, access to the right financing options has become a game-changer for students determined to chase their dreams. However, despite the availability of education loans, the application process can feel overwhelming. Students often grapple with pressing questions like:
- Which financial institutions offer the best student loan options?
- How does the loan application and disbursement process work?
- What documents are required for a study abroad loan?
Understanding these key aspects is essential for making informed decisions and ensuring a smooth, stress-free loan approval experience. This comprehensive guide breaks down the entire study abroad education loan process, covering everything from eligibility criteria and documentation to loan approval and disbursement. Whether students are just starting their research or are ready to apply, this step-by-step roadmap will help them navigate the process with confidence, bringing them one step closer to their global academic goals.
Types of Lenders for Abroad Education Loan
When an applicant is considering an education loan to fund their educational journey, they need to consider all options available to them. This is a crucial step as it helps applicants identify the best loan option that suits their needs. Here are the types of lenders available in India to help fund their education journey.
- Public Banks: Public banks are basically all the government-owned financial institutions. This option is sought after by many scholars due to the low interest rates promised. Plus, they also have special schemes targeted towards different types of students. This loan is more secured and reliable for many as it is backed by the government.
- Private Banks: Private banks are basically all the privately owned financial institutions. While they do offer a variety of advantages, they generally have higher interest rates than public banks but they offer better personalised services like customer service and faster loan processing.
- NBFCs: NBFCs stand for non banking financial institute, they offer education loan as a part of their financial services. They generally have a more relaxed eligibility criteria and no collateral requirements. These factors make them a very good financing option.
- International Lenders: International lenders offer loans in foreign currency to students based on their country and course. The plus point about international lenders is that they offer loans without the need of any collateral and co-signer. Making it the best option for students without ownership of assets.
Eligibility Criteria for Study Abroad
After choosing the type of lender suitable for the applicant, they need to check the eligibility criteria for study abroad educational loans. The eligibility criteria may vary according to the loan one applies for, but the basic criteria that everyone must meet is given below:
- Nationality: Must be an Indian citizen, international lenders may have different requirements.
- Age Limit: Typically between 18 to 35 years at the time of application.
- Academic Eligibility: Applicants must have completed higher secondary (12th grade) for undergraduate programs or a bachelor’s degree for postgraduate programs. They must have secured admissions into a recognised institute.
- Language proficiency: Applicants must be able to communicate in English. This is determined by submitting language proficiency tests like IELTS or TOEFL.
- Co-Applicant Requirement: A co-applicant (parent/guardian/spouse/sibling) is mandatory for most lenders.
- Course Eligibility: Must be a recognized full-time program (UG, PG, Diploma, PhD).
Documents Required for Study Abroad Education Loan
The documentation process for any education loan varies depending on various factors such as the lender, type of loan and country of study. Below-mentioned is a detailed checklist of all the required documents while applying for an education loan to study abroad:
- Student’s Personal Documents: Passport, aadhaar card/PAN card, birth certificate and recent passport-sized photographs.
- Academic Documents: Class 10 and 12 marksheets and certificates, undergraduate degree certificate and transcripts (if applying for a Master’s program), entrance exam scorecards (GRE/GMAT/SAT/IELTS/TOEFL, as applicable), university admission letter and course fee structure and estimated expenses document.
- Financial Documents: Bank Statements of last 6-12 months of student/sponsor, net worth statement, income tax returns (ITR) of the last 2–3 years and salary slips(if employed).
- Co-Applicant (Guarantor) Documents: KYC documents, employment proof, bank statements of 6-12 months, income proof.
- Collateral Documents (For Secured Loans): Property documents, insurance policy documents, legal opinion and valuation report by a bank-approved lawyer and fixed deposit receipts (If kept as collateral).
- Additional Documents: Duly filled and signed loan application form, affidavit of relationship between student and co-applicant (if required), statement of purpose (SOP) (In some cases, lenders request a brief note on why the loan is required) and any other specific requirement by the bank/NBF.
Study abroad education loan procedure – Key steps
While the fundamental structure of domestic and study abroad education loans remains the same, the operational details vary significantly for Indian students seeking international funding. Many believe that securing an education loan for studying abroad is difficult, but with evolving banking policies, government subsidies and improved financial services, the process has become much more streamlined. Today, Indian students can access international student loans with greater ease than ever before.
The key differences lie in the documentation process, loan security requirements and transaction values. Understanding these variations is essential for a smooth application experience. The application process involves three stages which an international student has to go through, pre-application approvals, post-application approvals and student loan agreement confirmation. Below, we break down the step-by-step process of applying for a study abroad education loan, ensuring students are well-prepared to secure the necessary funding for their global education journey.
Pre-application approvals: This process generally involves research for appropriate education loan providers and submission of basic documents for loan consideration. The key points to consider during this process are:
- Initiate loan request: Submit a loan request to the bank or financial institution. Provide basic KYC documents (Aadhaar, PAN, passport, etc.). Attach financial proofs (income documents of co-applicant, bank statements, ITRs).
- Submit academic and admission documents: Provide academic records (10th, 12th, and higher education mark sheets), submit exam scores (IELTS, TOEFL, GRE, GMAT, SAT if applicable), include the university admission letter or conditional acceptance letter. Attach the visa application proof.
- Declare loan requirements: If the student has received a scholarship, submit relevant documents to justify the remaining fund requirement. Specify whether the loan is for full or partial tuition fees and living expenses.
- Provide collateral proof: Immovable property documents (land/house papers) and liquid asset documents (fixed deposits, LIC policies, government bonds). The bank will assess the collateral value for loan eligibility.
- Co-Applicant expression of interest: A co-applicant (parent/guardian/spouse) must submit a formal expression of interest to be a guarantor for the loan. Banks evaluate the co-applicant’s income stability and credit score.
- Verification process: The lender will verify all the documents submitted in this step.
As an outcome of this process, one gets a conditional offer of loan approval from the banking institution, which can be used as ‘Proof of Funds’ while applying for Student VISA at various International Immigration Offices. Some international scholarships also require these approvals as proof to continue partial tuition fee assistance to the applicant. Most of such scholarship programs are research fellowships and project-based fellowships.
Post-Application approvals: Once a conditional loan offer is received, students must complete admission and visa formalities to proceed with the final loan approval. Below are the key steps:
- Obtain admission confirmation letter: Secure an official admission confirmation letter from the foreign academic institution. This serves as proof of enrollment and is required for both visa processing and loan approval.
- Submit scholarship or financial aid documents (If applicable): Students receiving study abroad financial aid, federal student aid, scholarships, or fellowships must obtain an award certificate/letter. This document is essential to determine the final loan amount required.
- Complete the visa application process: Apply for the relevant student visa (e.g., F-1 for the USA, Tier 4 for the UK, etc.). Submit the visa approval forms to the bank as proof of eligibility for international studies.
- Conduct property inspection and asset validation (For secured loans): Complete property inspection, asset validation, and employer verification (if applicable for F-1, H1B, or J-1 visa applicants). This step is mandatory for secured loans to ensure the collateral’s value meets the lender’s requirements.
- Co-Applicant’s Formal Consent & Loan Agreement Signing: The co-signer or co-applicant (parent/guardian/spouse) must provide a formal, binding consent to secure the loan. This step ensures that the co-applicant takes responsibility for loan repayment if needed.
- Loan insurance application (For unsecured loans): For unsecured student loans, property verification is waived. Instead, students may need to apply for a Loan Insurance Policy (mandatory for some lenders, optional for others). This insurance ensures loan repayment in case of unforeseen circumstances.
- Loan approval and disbursement: Once all documents are verified, the lender finalizes the loan approval. The loan amount is then disbursed directly to the university or the student’s account as per the agreed schedule.
As an outcome of this process, the student is able to get a Study Abroad Education Loan Approval which they can now practice to have their funds disbursed and submit to their academic institution for final verification/alignment of payment cycles.
Tips for smooth loan application process
The application procedure can be very smooth if the applicants follow these steps:
- Start early: Always start as early as possible, on doing so the procedure becomes much more simple. If there are any possible issues during the procedure, starting early will allow students to access the situation faster and smoother. This way they will have ample amount of time to ready the required documents.
- Gather necessary documents: Check the documents required for the loan you are applying for and prepare them beforehand. Doing this will help you streamline the approval process.
- Improve CIBIL score: An education loan will be easily obtained considering the applicant has a good CIBIL score. Above 700 is considered ideal for an education loan. Those with scores less than 700 may encounter approval issues.
- Check out different lenders: There are many education loans available in the market, all with various different criteria. Reviewing all loan terms carefully helps applicants choose the most suitable option.
- Calculate the amount needed: Carefully add the entire amount needed for the loan beforehand. Understanding how much money you need can help you avoid borrowing too much or too little.
Also read: Common Education Loan Problems and Solutions for Study Abroad
Top Banks Offering Education Loan for Abroad
Several banks and financial institutions in India offer education loans specifically designed for students aspiring to study overseas. These loans cover a range of expenses, including tuition, accommodation, travel and daily living costs, making international education more accessible. With competitive interest rates, flexible repayment options and special schemes for meritorious students, these banks play a crucial role in enabling students to achieve their global academic ambitions. Below is a list of the top banks offering education loans for studying abroad.
| Bank Name | Scheme | Loan Amount | Interest Rate |
| State Bank of India (SBI) | Global Ed-Vantage scheme | Loan amount of ₹20 lakhs to ₹1.5 crore | Ranges from 9.65% – 10.15% per annum |
| Bank of Baroda | Baroda Scholar Scheme | Up to ₹1.5 Crore for premier institutions; up to ₹60 Lakhs for others | Ranges from 9.70% to 13.70% per annum |
| Punjab National Bank (PNB) | PNB Udaan | Need-based finance; typically up to ₹20 Lakhs | Approximately 9.25% to 12.75% per annum |
| ICICI Bank | Education Loan for Higher Studies Abroad | Up to ₹ 3 crore | Starting at 10.50% per annum |
| Axis Bank | Education Loan | Up to ₹75 Lakhs | Between 13.70% to 15.20% per annum |
FAQs
Can I get a 100% loan for studying abroad?
Yes, some lenders provide 100% financing, but this depends on factors like the university, course, co-applicant’s financial standing, and collateral security.
How long does it take to process the loan?
It typically takes 2 to 6 weeks, depending on the lender, loan type, and documentation. Fast-track processing is available with some private lenders.
What is the interest rate on study abroad loans?
Interest rates range from 8% to 16%, depending on the bank, loan amount, and collateral. Government banks generally offer lower rates than private banks or NBFCs.
What happens if I am unable to repay the loan?
If repayment is not made, the bank can take legal action and seize collateral (if applicable). It may also affect your credit score.
Who can be a co-applicant for the loan?
Parents, siblings, spouse, or legal guardian can be a co-applicant.