Every year, Indian students fly to popular educational destinations like the US, the UK, Canada, and Australia to pursue higher education in different streams. According to the Ministry of External Affairs, 2024 saw almost 1.33 million Indian students studying abroad.
To cover the education costs, students often opt for education loans for studying abroad. It has emerged as the go-to financial solution for students particularly studying in STEM (Science, Technology, Engineering, and Mathematics) fields. As these fields have a higher cost of education, students rely on education loans to pay for the entire expense.
Why is the Education Loan Demand Rising?
Personal Preferences: Many students want to earn the self-made badge and do not want to spend their parent’s money on expensive foreign programs. They opt for cost-effective education loans to cover overall education costs.
Surge in the Lending Ecosystem: The education loan lending ecosystem has improved immensely. The presence of NBFCs helps students get lucrative loan offers and attractive loan features.
Upskilling and Reskilling Needs: Many professionals want to pursue executive programs in foreign countries. Top lenders provide education loans to these individuals to broaden their career prospects.
Which Educational Loans Are Available for Studying Abroad?
Indian students can get education loans from banking and non-banking financial companies (NBFCs). Often, banks provide secured loans whereas NBFCs provide secured as well as unsecured loans. It helps students from diverse backgrounds get financial assistance for higher education in international locations. A co-applicant is required by most institutions to get an educational loan. A co-applicant is a person who repays the loan in case the applicant fails to make loan payments.
Secured Loans
Secured loans are education loans taken against pledged security, such as fixed deposits, property documents, and other tangible assets. The lender grants a loan after proper document verification.
Unsecured Loans
Unsecured loans are educational loans in which the borrower does not pledge any collateral. Those applicants who do not have any assets to pledge for security can opt for unsecured loans. Applicant’s academic profile, co-applicant credit score, and type of degree are some of the factors affecting unsecured education loan approval.
Eligibility Criteria for Education Loans
For the Applicant
- They must be above 18 years of age.
- They must be an Indian citizen.
- A university application letter is mandatory before loan approval.
For the Co-applicant
- They should hold Indian citizenship.
- They should be a relative of the applicant.
- They should have an income source in India and an active bank account.
- They should be the primary borrower.
The Process to Apply for an Education Loan
The loan application process varies from one institution to another. These are some of the common steps for an education loan to study abroad:
- Check whether the lender offers an education loan for the preferred course.
- Calculate the education loan using an online EMI calculator.
- Fill out the application form for an education loan; mention all the details correctly.
- Provide necessary documents, such as an application letter from the university, identity proof, address proof, etc.
- The lender disburses the loan amount after the verification is completed.
Top lenders offer 100% loan financing, lenient eligibility criteria, and quick loan disbursal. Students should choose a lender that offers personalized education loans based on their requirements.