The HDFC bank study abroad loan covers all costs of your education outside the country with no margin. Even their unsecured/ no collateral loan can cover a significant portion of your fees and costs. The loan is available for education in more than 35 countries, and they have 950 courses listed that they cover.

One of the significant aspects of HDFC bank study abroad loan is that they do approve unconventional courses on a case-to-case basis so if your course is not covered by other banks, it is worth giving HDFC a shot. You must confirm your admission in the course before the loan is disbursed although you can get approval for the funds beforehand.

HDFC also understands the unique requirements of study in different countries and adapts the loan product appropriately. For example, for students heading to Germany, where living expenses are very high, HDFC Credila (the education loan arm of HDFC) has customized loan options.

• Maximum loans up to Rs 45 lakhs without collateral
• Secured loans come with no maximum limit
• Covers tuition fee, living/ hostel expenses, exam/ lab/ library fee, travel, materials (books, uniform/ equipment/ computer)

ICICI Bank

If you are applying for a postgraduate course and do not have a co-applicant with a steady income, ICICI may be a good choice as lender. They offer loans for applicants who have a two-year stint of experience even if the co-applicant is not earning an income. The bank also has special loans for students heading to the UK, Germany, and Canada for higher study. With no margin to be paid by you if you are heading to a premier institution, ICICI is a good option, especially if you cannot put up any part of your study abroad cost yourself. 

• Unsecured loan amount of up to a maximum of 1 crore
• Secured loan amount of up to 2 crores
• Special offers for government employees and CXOs
• Covers fees, exam/ library/ lab fees, travel, student insurance, study materials (books, computer, equipment, uniform etc.), caution deposit, and refundable deposit.
• The loan also covers other expenses to be undertaken mandatorily to complete the course, such as study tours or project work.

SBI

With loans for graduate and postgraduate studies as well as diplomas and certifications, SBI’s Global Ed-Vantage is a comprehensive offering. The processing and disbursal are quite fast, and approval can be taken even before your i20/Visa is in your hands. The bank also accepts collaterals by third parties to back your secured loan. Any scholarship you get can be added to the margin amount, thus freeing up your/your family’s finances a little more than you would expect.

• Minimum loan amount Rs 7.50 lakhs
• Maximum loan amount Rs 1.5 crore
• Covers tuition fees, exam/ lab/ library fees, travel, study materials (books, uniforms, computer, equipment) and study tours or projects that are mandatory for the completion of the course (limits may apply).
• Caution deposit/refundable deposit is covered provided it is within 10 per cent of the total course tuition fee amount.

Other major banks like Canara Bank and Axis Bank also offer education loans. Axis Bank offers education loans of up to 75 lakhs without collateral.

What is the rate of interest for education loans to study abroad?

The rate of interest on educational loans offered by different banks varies based on the country you study in, the loan amount, whether you provided collateral or not and your creditworthiness. However, the interest rate can range from 8 per cent to 12.5 per cent.

HDFC Credila offers secured loans starting at 9.75% per annum. Connect with IDP counsellors for more information about the special offer.

Some important points:

• If you are paying a hefty interest on your educational loan to study abroad it is in your best interest to repay the loan quickly, in a disciplined manner. Applying for the loan with a joint- borrower who has a steady, substantial income can help make it easy to get a loan with affordable terms. Comparison shop between various lenders to find the cheapest one that addresses all your needs.
• Try to keep the loan amount as limited as possible to reduce the total cost of it. Take help from family/ friends, and apply for scholarships so that you can keep your loan amount (and your outgo) to a minimum.
• Check if you are eligible for lower rates by dint of belonging to a lower income family or any other such reason. Read up on subsidized loans and what qualifies one for them and see if you can avail of the concession.
• Understand everything about the loan, read the documentation thoroughly and grasp all the terms and conditions so there are no rude shocks later once you have taken the loan—especially, understanding repayment terms, timelines, and early and late payment repercussions.
• Do NOT default on your student loan. It could damage your credit standing and overall financial credibility and make it very difficult for you to get further loans.

FAQs on study abroad loans

• What is a secured or collateral-based loan?

A secured loan is one for which you put up collateral or security. This could be property, assets, or a fixed deposit. Secured loans are easier to get than unsecured loans.  Many banks have a maximum limit for unsecured loans but offer a no-upper-limit loan if you can provide collateral.

• Who can apply for loans to study abroad?

Different lenders have different eligibility criteria but in general, you can apply for a student loan to study abroad if:

• You and your co-applicant are at least 18 years of age (ICICI bank offers loans for students with a minimum age of 16 years, in which the parents take the loan on behalf of the student).
• You are an Indian citizen.
• You match the specified minimum percentage of marks in your HSC and graduation (usually 50 per cent).
• You have confirmation of admission to a career-oriented course in a reputed college/university abroad.
• You have a consistent academic record.

• Can I apply for an overseas education loan for any kind of course abroad?

Generally, if you are accepted by a reputed college/university for a professional graduate, postgraduate or diploma course you can get a bank loan quite easily. Some banks also offer loans for non-conventional courses on a case-to-case basis.

• Can I have all my costs covered with my educational loan to study abroad?

Many private banks offer 100 per cent, no-margin loans to cover all your costs. A 10 to 15 per cent margin is more likely to be the norm for public banks that offer overseas education loans.

• Can I get an education loan for studying abroad without collateral?

Yes, most major banks in India offer education loans for foreign education without collateral. However, the upper limit of the loan amount will be lower than that of a secured loan.

Conclusion

Making sure that you have the right student loan for your studies abroad is a critical part of the groundwork you lay before you fly towards your new horizons. Explore your loan options even as you start looking at course and college choices abroad so you know what programs you can cover with financing help. Get all the paperwork in place and understand exactly how the loan disbursement works, to ensure that you do not have any hiccups when you are in a foreign land, unable to instantly access funds from family or friends. With the right groundwork, your overseas education loan can take the financial anxiety out of your study abroad stint and allow you to focus all your attention on excelling at your chosen program.

Editor's note: This article was originally published in April 2016 by our content writer, Mahesh Ramani. We have since revised it to include up-to-date information and ensure its comprehensiveness.