Types of Education Loans by Indian Banks: What Students Need to Know Before Studying Abroad

Education loans in India can broadly be divided into two types based on the loan amount and whether or not collateral is required.

1. Secured Education Loans (With Collateral)

These loans require you to pledge an asset, like property, fixed deposits, or LIC policies, as security.

Key Features:

• Loan Amount: ₹7.5 lakhs and above
• Collateral: Mandatory (immovable property, fixed deposits, etc.)
• Interest Rates: Typically lower (9%–11% per annum)
• Repayment Tenure: Up to 15 years
• Loan Coverage: Tuition, living expenses, travel, insurance, exam fees, laptop

Best For:
 Students applying to top universities abroad or planning to borrow over ₹7.5 lakh

Top Banks Offering Secured Loans:

• State Bank of India (SBI Global Ed-Vantage Scheme)
• Bank of Baroda (Baroda Scholar)
• Union Bank of India (Union Education Loan)

2. Unsecured Education Loans (Without Collateral)

These loans do not require any assets to be pledged.

Key Features:

• Loan Amount: Up to ₹7.5 lakhs (some banks extend up to ₹40 lakhs for top institutions)
• Collateral: Not required
• Interest Rates: Higher (10.5%–13.5% per annum)
• Repayment Tenure: Up to 10–12 years
• Loan Coverage: Tuition and basic living costs

Best For:
 Students with strong academic records, admission to reputed universities, or salaried co-applicants

Banks Offering Unsecured Loans:

• ICICI Bank
• Axis Bank
• HDFC Credila (NBFC)
• IDFC FIRST Bank

Most Indian banks cover:

• Tuition fees
• Travel expenses
• Living/accommodation expenses
• Exam/library/lab fees
• Insurance
• Laptop or study-related equipment

Pro Tip: Always read the fine print, some banks may exclude health insurance or require pre-approvals for expenses.

• Indian citizenship
• Confirmed admission to a recognized university (abroad or in India)
• Co-applicant (parent or guardian) with stable income
• Good academic background
• Collateral if required (for secured loans)

Did you know? Interest paid on education loans is tax-deductible under Section 80E of the Income Tax Act. This benefit is available for up to 8 years after the repayment starts. It applies only to interest and not the principal amount.

Most banks offer a moratorium period, which means you begin repayment only after completing your course and a grace period (typically 6–12 months).

Repayment terms:

• Starts 6–12 months after course completion
• Tenure: 10–15 years
• Interest during moratorium: Simple or compound (varies bank to bank)

As one of the overseas education consultants in India, My Study Offers simplifies the education loan process for you and your family. Here’s how we help:

End-to-End Loan Support

• Compare interest rates from top banks and NBFCs
• Assist with documentation and co-applicant requirements
• Help you understand secured vs unsecured loan options

Personalized Counselling

• Match you with banks that fund your chosen country, course, and university
• Share real-time eligibility insights based on your profile

Documentation Made Easy

• Help prepare income proof, collateral documents, admission letters, etc.
• Coordinate with the bank to resolve application delays

Transparent Guidance

• Explain your EMI burden, repayment timeline, and tax benefits
• No hidden charges, no confusion-just clear advice

Choosing the right education loan can be overwhelming, but it doesn’t have to be. With the right strategy and guidance from a trusted advisor like My Study Offers, you can secure the funding you need without financial anxiety clouding your study abroad dreams.

Ready to fund your global future the smart way?
Book your free counselling session with My Study Offers and take the first confident step toward your international education journey.