When Should You Apply for an Education Loan?


If you are preparing to study abroad, a crucial point of concern, and in many cases, the deciding factor, can be your financial readiness. Especially if you are targeting study abroad destinations like the USA and the UK, you will need to arrange for funds before you can start planning your admission. However, the question that remains is when you should ideally start applying for an education loan for studying abroad.

Regardless of when you apply for an education loan to study abroad, you need to start planning well in advance. This process starts almost as soon as you decide on the program you wish to pursue in a foreign land. Begin by checking the loan criteria of different banks and shortlist the ones that you feel comfortable with. Next, check the bank guides as the requirements for each bank will vary. An important point to check in this guide is if your shortlisted bank provides loan approval to fund the program of your choice; typically banks have a preference for job-oriented courses.


Now, to the Important Question – When to Apply for an Education Loan?

Most banks ask for proof of admission when sanctioning your loan requests. In that case, you will obviously have to wait till you hear back from your school of choice. On the other hand, few schools allow only so much time between rolling out admission offers and confirmation of admission with payment of the necessary fees. Besides, a few schools may also need your proof of solvency to issue you your I-20 forms, leaving you with little time to apply for and secure funds from an education loan. Hence, when applying to any program, check their requirements properly and accordingly plan your application for the education loan.

A safe bet would be to start applying for education loans as soon as you send in your program application. Thus, you will be ready with the funds as soon as you hear back from your school and even start the process as soon as you receive your admit offer. This is, however, applicable only in cases when schools don’t require proof of funds at the time of application. If that is the requirement, you will obviously have to apply well in advance to receive the loan sanction letter before the application deadline. Moreover, if you wish to secure your chances better, you can consider InCred, HDFC – Credila, and Avanse, all Non-banking financial companies (NBFCs) that offer education loans without the requirement of an admission letter. With Credila, you can avail of student loans at a competitive floating rate of interest and which has to be repaid within a tenure of ten years. With Avanse too, you get floating rates of interest with a 1 – 2% processing fee charged on the loan amount. Avanse is the most popular NBFC option and covers 100% of expenses in terms of tuition fees and miscellaneous costs.

Hence, if you are comfortable taking loans from these NBFCs, you should apply for an education loan before sending your study abroad application to your program of choice. This will assure your funds, helping your school of choice make a more informed decision as regards your solvency. Calculate the amount that you need to loan for studying abroad. This should include the tuition fees, travel costs, accommodation costs, emergency funds, and also provision for a scholarship if you plan on applying for one. As approval of scholarships is also dependent on several factors, it is better to consider the minimum percentage when calculating the necessary loan amount.

Banks such as HDFC, one of the largest private banks offering education loans for study abroad, do not need confirmation of an admit to sanction your loan amount. You can get loans of up to INR 20 Lakhs. With SBI, you can get a maximum study loan of INR 30 lakhs with a 15% loan margin and interest rate of up to 2% on SBI’s current base rate. It offers you a comfortable tenure of 1 to 15 years to repay the loan. Similarly, you can get up to INR 20 Lakhs from Axis Bank as an education loan. Here too, you will have to arrange for a loan margin of 15% if your loan amount exceeds INR 4 Lakhs. Punjab National Bank’s PNB Udaan is perhaps the most affordable education loan for Indian students studying abroad. With the base rate as the interest rate, the bank mandates allowing a loan margin of 15% for loan amounts upwards of INR 4 Lakhs for studying in the top 200 universities across global destinations.

For further details on applying for an education loan to study abroad, connect with our expert advisors at Manya – The Princeton Review.


Manya – The Princeton Review Advantage

Manya – The Princeton Review offers end-to-end study abroad services encompassing admissions consulting services, test preparation, English language training, career assessment, and international internship opportunities to study abroad aspirants. Founded in 2002, Manya holds an impeccable track record of enabling more than 4 lac students to accomplish their study abroad dreams through its network of 47+ centers across India.

Manya has formed long-lasting global alliances with several market leaders in the education industry in order to maximize the benefits of its large service portfolio. Their list of esteemed partners and affiliations includes – The Princeton Review (TPR), Cambridge University Press (CUP), Cogito Hub, British Council, Tuding to name a few. Manya has also forged 600+ partnerships with international universities across top study abroad destinations.

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When should I apply for an education loan?

Application for an education loan depends on a number of factors. While it is practical to apply for a study loan prior to submission of your application, check if your desired bank needs an admit offer to grant a sanction letter. On the other hand, a few schools may need proof of solvency for processing your application. Hence, start early. Look into the requirements and accordingly plan your application process.

Will I get an education loan without receiving an admit?

Yes, you will. A lot of banks, NBFCs, and financial organizations grant education loans for study abroad programs even without the offer of admission. HDFC, InCred, Credila, and Avanse are a few such options. Do your research and find out the requirements for each bank prior to proceeding with the loan application.

How do I check my eligibility for an education loan?

Every bank and loan-granting organisation publishes their list of guidelines and requirements for given loan programs. You can check your eligibility in this list. If you are a tax-paying citizen of India, you will receive income tax benefits under section 80E when taking out an education loan for your study abroad program.

Will I need to provide collateral for applying for an education loan?

The need for collateral will depend on a number of factors such as the scholarship earned, the kind of course and the university, and the cost and duration of the program. However, if your loan amount is upwards of INR 7.5 Lakhs, you will have to provide collateral to obtain the necessary loan.

How much money can I get as an education loan?

Banks typically provide maximum funds of INR 20 – 30 Lakhs as education loans depending on your eligibility.

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