How Education Loans Work for Study Abroad

Most Indian students fund study abroad through a mix of family savings, scholarships and education loans.

Two main types

Secured loans — backed by collateral. Lower interest rates (8–11%). Unsecured loans — no collateral, usually co-signed. Higher rates (11–15%).

What lenders look at

• Your admission letter and program
• Total cost vs. loan amount
• Co-applicant's income and credit
• Collateral value

Key terms

• Margin money — portion you fund yourself, often 5–15%
• Moratorium period — no repayment while studying
• Section 80E — interest paid is tax-deductible for 8 years

Be careful with

• NBFCs that offer quick approvals at very high rates
• Loans with hidden processing fees
• Over-borrowing beyond your repayment capacity