If higher education abroad was a classic journey like the Odyssey, overseas education loans would be the favorable winds that get you to the chosen study destination. Think about it this way: when you’re preparing to apply for the most sought-after institutions and programs across the world, you choose options based on the academic insights, research opportunities, and career prospects after graduation. The academic profile you build to get an admission letter from these in-demand institutions becomes the vessel for your journey, reinforced with all your achievements and hard work so far. Your budget also plays a role in this selection, with loans being a preferable means to make this investment without having to rely on your family’s savings.

 The real journey doesn’t start after this point, as you need to arrange your finances, apply for the student visa, and get everything ready to reach the study destination. Once the course starts, your days are filled with transformative experiences on campus. However, with the cost of tuition and living expenses rising steadily in popular study destinations, your funding can fall short even halfway through your journey. This is where overseas education top-up loans can be the wind in your sails and keep you moving towards graduation or your first job. Let’s find out more about these loans through this article.  

Table of Content

1. When is an Overseas Education Top-Up Loan Needed?
2. Overseas Education Top-Up Loan Calculation
3. Secured Overseas Education Top-Up Loans
4. Unsecured Overseas Education Top-Up Loans
5. Lenders Offering Overseas Education Top-Up Loans
6. Overseas Education Top-Up Loans vs Initial Loans
7. Overseas Education Top-Up Loans: Application Process
8. Overseas Education Top-Up Loans: Factors to Consider
9. Overseas Education Top-Up Loans: FAQs

When is an Overseas Education Top-Up Loan Needed?

An overseas education loan top-up is the process of borrowing an additional amount on an existing loan. These loans are most useful when international students face a study abroad funding gap in the middle or towards the end of the course to cover any unexpected or unforeseen costs. A loan top-up is an excellent strategy for more financial resources, as it increases your existing loan amount without having to take a new loan altogether. Sometimes, certain circumstances may lead you to request a top-up loan from a trusted lender. Here are some of the reasons this happens:

• Hike in tuition fees and living expenses. This is the most common reason why you might need a loan top-up.  
• Insufficient initial loan. Sometimes, first-time international students can underestimate their total expenses when creating the budget.
• Unexpected expenses. Sometimes, you may face medical emergencies, family issues, or other unforeseen expenses that create a study abroad funding gap.
• Fluctuations in the currency exchange rate. This is especially relevant if you’re an Indian student, as the gap between the rupee and the dollar or euro is subject to change quite often.
• Additional funds for academic expenses not covered in the loan. You might need a new laptop, materials for project work, or funds for research.
• Change in academic plans. If your course is extended or you decide to take up an additional course alongside/after it, you may need additional funding. 
• Covering expenses during the job search. It may take a few months to find full-time employment after graduation, and applying for post-study work visas or covering living expenses requires additional funds.  

No matter what your situation may be, getting the necessary funds is essential to continue your journey without any turbulence. In the next section, we’ll help you calculate the necessary amount.  

Overseas Education Top-Up Loan Calculation

A top-up increases the overall loan amount that students owe so that they can cover the gap in funding. The top-up amount offered depends on various factors, including the overall cost of education, the type of loan and lender, the co-applicant’s income, etc. Another major factor is whether the repayment has already started. Before you start applying for an overseas education loan top-up, you need to identify the amount you need to borrow. There’s also a way to calculate the amount you’re eligible for, as we’ll explain below. 

Scenario 1: Loan Top-Up is Required During the Course 

Suppose that you were eligible for a loan of INR 50 lakhs for the chosen course, but you only availed INR 35 lakhs according to your budget calculations. 

Therefore, when you apply for an overseas education loan top-up, you can get a loan equivalent to your [Eligible Amount] – [Borrowed Amount] = [INR 50 lakhs] – [INR 35 lakhs] = INR 15 lakhs.  

*Note: The lender can offer loan top-ups based on your overall eligibility, so this total amount may change according to those considerations. 

Scenario 2: Loan Top-Up is Required after Repayment Starts

Here, the situation changes slightly, as lenders will only approve top-up loans for further education.

Say, for example, that you took an overseas education loan of INR 50 lakhs for your first course and ended up completing the course with INR 20 lakhs. If you decide to apply for a Diploma or Degree after this course ends, you may not be automatically eligible for the remaining amount from your previous loan.

Instead, you will need to request a top-up loan according to your intended course’s total costs. For example, if the overall cost comes to around INR 15 lakhs, you can submit the tuition schedule and other necessary documents as per the lender’s requirements. 

Whether you are eligible for an overseas education loan top-up or a second abroad education loan depends on your type of loan and chosen lender. In the next section, let’s explore both situations for secured education loans. 

Secured Overseas Education Top-Up Loans

When you take a secured education loan for studying abroad, you pledge an asset like property, land, or a Fixed Deposit as collateral. So, when you approach the same lender for a top-up loan, you need to ensure that the value of your asset can also cover the new loan amount needed. This is essential to ensure that your loan top-up is sanctioned. Some lenders may allow you to pledge a different asset as collateral (belonging to you, a family member, or even a friend) for the second education loan. The amount can vary according to your situation, so let’s go over a few common ways of getting a secured top-up loan.

• When you’re applying for an overseas education loan top-up from the same lender before starting repayment, you might be more likely to receive it if you’re starting a subsequent course. The EMI and moratorium period will extend according to this loan application.
• If you’re applying for a top-up after starting repayment, a moratorium period would likely not apply for the top-up amount. However, the available loan amount and repayment norms can vary greatly from the first scenario.
• If you’re approaching a different lender for a loan, this would be considered a second education loan. In such a case, it is generally only possible after you have closed your existing loan.
• You may also be able to transfer your existing loan to the lender you’ve approached and then apply for an additional loan, based on your eligibility. You may incur some transfer charges in the process.  

If you’re considering a secured second education loan, make sure you can meet the necessary collateral requirements before applying. Next up, it is time to learn how overseas education loan top-ups work in the case of unsecured loans. 

Unsecured Overseas Education Top-Up Loans

As you may already, unsecured abroad education loans do not require any collateral for the loan, and are generally based on your academic background and your co-applicant’s financial stability (if one is required by the lender). Generally, if your initial loan is unsecured, you can also get an unsecured loan top-up. You can also try to get a second education loan from other lenders if top-up loans are not an option according to your current lender’s policies. Let’s understand your options below. 

• If you received your initial loan from a Nationalized Bank or a Private Bank, you can look for options from Non-Banking Financial Companies (NBFCs) and International Lenders after closing the first loan.
• Whether you choose a top-up or a second loan, your co-applicant needs to have a good credit score and stable income for the best interest rates and repayment schedules. 
• You need a No Objection Certificate (NOC) to withdraw a second loan. If you don’t wish to go through this process, you can always try to refinance or transfer your loan to a lender willing to provide a top-up.

As we can see, a lot of the details in the overseas education loan top-up process are determined by your chosen lender. The next section will go over some lenders that offer this service/product.  

Lenders Offering Overseas Education Top-Up Loans

When you’re applying for an overseas education loan for the first time, you have tons of secured and unsecured options offered by Nationalized Banks, Private Banks, NBFCs, and International Lenders. However, not all of these lenders support loan top-ups or second education loans for international students. Therefore, when you look for a lender in the Indian financial market that can help you cover the study abroad funding gap, make sure you approach one of the following financial institutions:

• State Bank of India (SBI)
• Punjab National Bank (PNB)
• Bank of Baroda (BOB)
• ICICI Bank
• Axis Bank
• Credila
• Avanse and many more…

Remember, each lender has different eligibility criteria, collateral requirements, loan amounts, interest rates, and repayment tenures for both initial and top-up loan amounts. What they offer for each type of loan may also differ, so let’s understand this aspect next.

Overseas Education Top-Up Loans vs Initial Loans

When you’re borrowing an overseas education loan for the first time, there are a lot of details to get familiar with – from the type of interest rate and moratorium period to the sanction and disbursement processes. Many times, you never expect to need a top-up for this loan. So, if you end up facing a study abroad funding gap due to rising costs or other such situations, it’s essential to get familiar with how all these factors work for loan top-ups. Since both your initial and top-up loans serve different purposes, the rules that lenders set around them are also different. Get a glimpse of the important factors in the table below.

Now that we have this clarity, it’s time to go over the application process for an overseas education loan top-up.

Overseas Education Top-Up Loans: Application Process

A study abroad funding gap rarely, if ever, appears overnight. You identify it as soon as the tuition fees or rent increases at your institution, or a few months before graduation when you decide you want to study further. Often, you’ll still have some funds left from your previous overseas education loan. However, it’s best to start researching loan top-ups at this time, so you can receive the disbursement in time and avoid any delays or hassles in necessary payments. The general steps to apply for an overseas education loan are mentioned below.

• Step 1: Contact your previous lender or one that supports top-up loans. Inform them about your situation and discuss the required loan amount. 
• Step 2: Understand the lender’s requirements for a top-up loan and submit the necessary documents. These may vary according to your reason for a top-up loan.
• Step 3: Submit the application form and wait for the lender to reassess your and your co-applicant’s (wherever required) eligibility. 

If you’re going for refinancing or a second education loan, the application process may vary accordingly. Before you start the application process for a top-up loan, there are certain factors you need to consider to ensure that you’re making the best decision. We’ll go over those factors in the upcoming section.

Overseas Education Top-Up Loans: Factors to Consider

It’s natural to be stressed or nervous when you’re applying for an overseas education loan top-up. You’re trying your best to keep your academic or professional life on track while you’re dealing with an unexpected situation. However, just like your initial loan application, your top-up loan also deserves careful thought and consideration. After all, it will affect your repayment journey and financial priorities in the future. We’ve gone over several important factors to consider before you apply for a top-up loan. 

• The interest rate required for the top-up loan and how it will impact your overall repayment.
• Lenders pay close attention to your co-applicant’s income and credit score. Some may even require a different co-applicant for the top-up loan amount. 
• Collateral value for secured top-up loans. Since the lender may reassess the existing collateral or require additional assets according to the loan amount, it’s important to ensure that you have the necessary assets.
• How the top-up loan amount affects the repayment amount, especially the EMI expected throughout the remaining tenure. 

Details like what exactly the loan top-up will cover, the processing time, and the disbursement schedule should also inform your decision.

As we come to a close, it’s important to remember that an overseas education top-up loan is an additional financial responsibility, so you need to adjust your repayment plan accordingly. Get as much information as possible about the loan terms, overseas education loan eligibility criteria, interest rates, documentation requirements, etc. It’s better to discuss these things with professionals who understand your situation and background thoroughly, such as Élan Overseas Education Loans’ trusted team. Our Loan Experts will help you navigate this unique situation and get the funding you need for a smooth academic and professional life abroad. 

Overseas Education Top-Up Loans: FAQs

Q1. Can I transfer or refinance my existing education loan and take a top-up at the same time?

Ans. If you’re transferring or refinancing your initial loan to get a top-up, there is generally a waiting period involved before you can ask the lender for a top-up. However, you may be able to get the top-up immediately if you communicate with the lender beforehand.

Q2. Is there a limit on how many overseas education top-up loans I can apply for?

Ans. Yes, absolutely. Overseas education top-up loans are provided based on your financial need, eligibility, and the lender’s discretion. Usually, only one top-up is allowed for an existing loan.

Q3. Does the moratorium period on a top-up loan align with my initial loan?

Ans. Yes, if you’re applying for an overseas education loan top-up before starting repayment. If repayment has already begun, the moratorium period generally does not reset.

Q4. Can I prepay or foreclose a top-up loan early?

Ans. Prepayment or early foreclosure policies for top-up loans vary across lenders. Some may allow you to repay the loan amount, while others may charge a prepayment/foreclosure fee. It’s best to discuss this aspect with the lender. 

Q5. Do I still get tax benefits for overseas education top-up loans?

Ans. Yes, for the most part. Many overseas education loans in India, including top-ups, fall under Section 80E of the Income Tax Act, which allows you to gain tax benefits on the interest paid on the loan amount.