Studying abroad comes with a price tag few families can pay outright, tuition, living costs, and travel add up fast once you look past the acceptance letter. An education loan bridges that gap, but the type you choose changes what you'll actually pay back over the years ahead.

Different Types of Education Loan

Education loans for studying abroad are broadly split into two categories, each having their own pros and cons. 

Comparison Criteria

Secured Education Loan

Unsecured Education Loan

Collateral Requirement

Required. Must pledge assets like property and fixed deposits.

No asset pledge is needed.

Basis of Approval

Based on the pledged assets which reduce the lender's risk.

Based on your academic profile and the co-applicant’s financial strength.

Loan Amount

Offers a higher loan amount

Subject to lower loan limit

Interest Rate

Lower interest rate 

Higher interest rate

Repayment Tenure

Longer repayment tenure

Shorter repayment tenure

Approval Rate

Takes time due to the verification process.

Faster to approve

 

Eligibility Criteria

Students who wish to pursue their higher education should meet the eligibility parameters:

  • Nationality: Should be an Indian citizen

  • Academic Profile: Minimum 60% in school or undergraduate degree

  • Age: Between 18 to 35 years

  • Admission Status: A confirmed offer letter from a recognised university.

  • English Proficiency: Valid scores from TOEFL and/or IELTS

  • Standardised Test Scores: Scores for GRE and/or GMAT

For Co-Applicants:

  • Must be an immediate family member of the student.

  • Must provide proof of stable source of income to repay the education loan.

  • Have a high credit score to avail a lower interest rate.

Education Loan Interest Rate

The interest rate for an educational loan varies depending on the lender you choose. They use custom pricing tailored to your unique academic profile, target university pedigree, and future earning potential rather than offering a one-size-fits-all percentage.

However, if you choose a secured educational loans for studying abroad, you will receive a lower interest rate. Conversely, choosing an unsecured loan relies completely on the student’s academic track record and the co-applicant’s financial stability.

If you are planning to pursue higher education abroad, the loan you choose should meet your finances and requirements. Weigh your eligibility, decide whether collateral is something you or your co-applicant can offer, and compare how each lender's education loan interest rate. A little research now saves years of repayment stress later.