Overseas Education Loans: Benefits, Types, Features & More

When academic aspirations meet professional ambition and the need for an international perspective, the modern student’s mind often goes towards studying abroad. The USA, Canada, Australia, the UK, New Zealand, Europe, and other such study destinations offer qualifications at world-class Universities that put graduates on the global playing field for research and work opportunities. However, getting admission into a foreign University is easier said than done, with a lengthy application process and considerable financial investment.

In a time when students may face uncertainty about scholarships or savings covering their expenses, overseas education loans are a reliable and trustworthy way to ensure that financial constraints do not hold them back. In fact, according to a survey by HSBC, 40% of families prefer overseas education loans over traditional sources of funding. This article will explore overseas education loans from A to Z, giving students insight into every aspect for their next step.

Benefits of Overseas Education Loans

According to a CRISIL report in 2024, the portfolio of overseas education loans is predicted to reach over INR 3 trillion by 2028. This can be credited to the growing ambitions of students from diverse backgrounds, as well as the availability of tailored overseas education loan schemes. Let us discuss the advantages of taking such a loan below.

1. Quality Education without Financial Strain
   Dreams of studying abroad are often accompanied by strong visuals of state-of-the-art research facilities, diverse classrooms led by experienced faculty members, and internships or interaction with the top industry partners worldwide. Most overseas education loans cover the overall cost of these resources, from the tuition fees to the living expenses and the travel costs. It also accounts for changing currency rates, inflation, and changes in taxation, making sure that students can keep their savings intact and focus on their studies.
   

2. Security for Long-Term Financial Goalsb Many times, parents and students tackle the financial challenges of studying abroad as a team. Parents may sell valuable assets to invest in their child’s education, which affects their financial goals in the long run. However, this can be avoided with the help of an overseas education loan.
   
   Parents can still use these assets as collateral against secured education loans, but they can keep ownership of them once the loan is repaid. Additionally, there are loan options for students who want to independently finance their overseas education without relying on their parents.
   

3. Diversity of Schemes & Offers
   The Indian financial market has a plethora of loan options for students with different goals and academic profiles. From Diploma courses to Master’s or PhD, students have the freedom to forge their path. Loan schemes also offer different loan amounts, competitive interest rates, and flexible repayment tenures to help students comfortably invest and repay the loan as per their preferences.
   

4. Simple Repayment
   The overseas education loan repayment process does not start immediately after disbursement. Instead, students are given a moratorium period during their course, so they can pursue their academic goals without worries.
   
   This period also extends for 6 to 12 months beyond graduation, enabling students to find employment before starting repayment. The repayment is broken down into EMIs and can be discussed with the lender at length for full clarity.
   

5. Tax Benefits
   Overseas education loans in India offer overseas education loan tax benefits for international students. A part of these benefits is collected during TCS, as overseas education loans are not charged any TCS, as opposed to the 10% TCS applicable for other funding methods. Additionally, students are exempt from paying any tax on the interest paid towards overseas education loans according to the Income Tax Act.
   
   With all these benefits, an overseas education loan becomes an easy and accessible way to fund higher education abroad. Students also learn about financial discipline, like budgeting and money management, which has a positive impact on their future. Now that we have learnt about the benefits, let us move on to the options that international students seeking loans can consider.
   

Types of Overseas Education Loans

When it comes to education loans, students can find domestic and international versions through various lenders across the country. Similarly, overseas education loans have a bifurcation based on the student’s financial profile and requirements. Let’s get a brief look below.

Secured Education Loans for Abroad Studies

This type of loan requires a tangible or intangible asset (urban residential property, Fixed Deposits, etc.) as collateral against the loan amount. Generally, it has lower interest rates and more structured repayment timelines.

Unsecured Education Loans for Abroad Studies

This type of loan does not require an asset; instead, the loan amount is based on the borrower’s financial profile and credit score. It has more flexible repayment tenures and faster processing times on average.

Many lenders in the Indian financial market offer both secured and unsecured loans with various benefits and diverse features. In the next section, we will mention some lenders with an excellent reputation among international students.

Top Lenders Offering Overseas Education Loans

There are many unique overseas education loan schemes across India, each defined by the rules and functioning of the lender. There are 4 distinct types of lenders in the country: Nationalized Banks, Private Banks, Non-Banking Financial Companies (NBFCs), and International Lenders. It is important to know whom one can trust with their study abroad journey, so we have mentioned a few options below.

These lenders offer overseas education loans that meet the University and visa criteria of dozens of study destinations worldwide, bringing students closer to their goals. When researching loan options from these varied sources, it is important to narrow down options based on the loan’s most important features. Read on to get an idea of them.

Features of Overseas Education Loans

Opting for an overseas education loan is a wise financial decision, but one that takes a lot of thought and attention to detail. During the research phase, students may be inundated with information and technical language surrounding this decision. However, filtering the loan schemes by their features may help students make an informed decision. A brief description of the important ones is given below.

1. Maximum Overseas Education Loan Amount
   The loan amount changes across lenders and loan types. International students can get secured loans of up to INR 3 crores and unsecured loans of up to INR 1 crore, depending on their cost of attendance and chosen University.
   

2. Coverage of Expenses The loan margin differs across lenders, especially for Nationalized Banks. Students should try to opt for an overseas education loan scheme that covers 100% of the expenses, from tuition fees to accommodation expenses, and visa costs. Many schemes also cover incidental costs like health insurance, study material, a laptop, etc.
   

3. Courses/Universities Supported
   Many lenders have a list of Universities that they support with lower interest rates, exclusive loan amounts, and other such benefits. Similarly, they may have restrictions on which types of courses they support. It is important to check how one’s chosen course corresponds with the loan type and lender’s specifications.
   

4. Rate of Interest
   The interest rates for overseas education loans vary from 8.65% per annum to 14% per annum, depending on the University, loan type, and the lender’s internal decisions. Some lenders offer an interest rate concession for certain students, or may be willing to negotiate for a lower interest rate.
   

5. Moratorium Period & Loan Tenure
   The moratorium period is generally 6 or 12 months beyond the course duration, with most lenders requiring simple interest payments during this period. The repayment tenure can also be flexible, around 10-15 years long for most lenders. This helps students repay the loan in smaller amounts and save up enough for pre-payment in some cases.
   In addition to these major features, students should also pay attention to the processing time, processing fees, and disbursement schedule of the lender, and confirm whether they offer pre-visa disbursement if necessary. It is also important to look at the lender’s co-applicant requirements, interest rate subsidies, and eligibility criteria before sending a loan application form. Students can get a quick glimpse of the latter section below.
   

Eligibility Criteria for Overseas Education Loans

The eligibility criteria for an overseas education loan determine whether their loan application is accepted. This is based on various parts of the borrower’s financial profile, documents, and overall creditworthiness. Each lender has slightly different requirements, so we will provide a general idea below.

• The student should be an Indian student more than 18 years old.

• They must have confirmed admission for an accepted course from a recognized foreign University.

• Their academic profile and standardized test scores must meet the University and visa requirements.

• The co-applicant (wherever required) must be the student’s relative or guardian with a steady income and a good credit/CIBIL score.

• The collateral (wherever required) needs to meet the lender’s requirements regarding value and validity.

The eligibility and documents required are specified by lenders separately, so students need to check their profiles thoroughly. It can be difficult to wade through all the technical terms alone, which is where experts like Élan Overseas Education Loans comes into the picture. Go through the next section to see how our presence makes a difference.

How Does Élan Loans Assist with Overseas Education Loans?

Élan Loans has more than 7 years of experience guiding thousands of global aspirants across the world. Our capable team analyzes the student’s profile and understands their requirement as per the chosen country and University. This is only the first step of our hands-on process. Read on for more insight into our comprehensive services.

• We help students create a realistic budget that accounts for the tuition fees, living expenses, travel, visa, health insurance, and other such costs.

• Our experts match students with the best lenders and loan types according to their unique financial profiles and visa requirements.

• The counsellors provide updated information about policies, schemes, and advantages available in the Indian financial market to students.

• Élan helps students negotiate for the lowest interest rates and most advantageous repayment schedules.

• We guide students on the documentation required from application to disbursement, ensuring a quick and smooth process.

With Élan’s ready assistance, students can enjoy a hassle-free overseas education loan process and gain assistance even after they move to their intended destination. This way, students need not worry about their loan obligations while they study.

In the end, an overseas education loan is a reliable source for the investment that is a foreign education. By reaching out to our overseas education loan advisors, students can kick back and focus on the big picture while we tackle the details. Whether one needs help clarifying confusing loan terminology or applying for government interest rate subsidy schemes, ÉLAN is the one-stop solution to everything loan-related for international students.

Overseas Education Loans FAQs

1. Which courses are eligible for an overseas education loan?

Eligible courses for an overseas education loan vary across lenders and loan types. E.g., Some lenders may offer secured loans for Master’s and Bachelor’s degrees, PG & UG Diploma courses, Pathway programs, and Foundation courses, but only offer an unsecured loan for Master’s degrees. It is best to check with each lender before proceeding with the application.

2. What is the benefit of an admission letter from a Listed University?

Ans. Many lenders have a comprehensive list of Universities and study destinations they support. Having an admission letter from one of those Universities may unlock faster approvals, higher loan amounts, exclusive interest rates, and a lot more for students.

3. Is it necessary to have a co-applicant for overseas education loans?

Ans. No, it is not necessary. International lenders offer unsecured education loans without a co-applicant, which can be more accessible for students wanting to finance their higher education abroad independently.

4. Is there a way to get a 100% interest rate concession on an overseas education loan?

Ans. Yes, in some cases. Some government schemes, like the Dr. Ambedkar Central Sector Scheme, offer interest rate subsidies for aspiring international students from minority or economically weaker communities. Students should check the eligibility criteria for the subsidy scheme before applying.

5. What is the application process for overseas education loans?

Ans. The very first step to applying for overseas education loans is researching and comparing lenders. The next step is to check the eligibility criteria and gather the documents before submitting the loan application form. The lender will verify the documents and approve the loan amount. After this, all that is left to do is final negotiations and additional documentation before the disbursement process begins.