Education loans for study abroad and MBBS abroad
Secured or unsecured?
The first choice is whether to offer collateral. It changes the cost, the paperwork and how long approval takes.
| Loan type | Collateral | Typical use | What to compare |
|---|---|---|---|
| Secured loan | Property, a fixed deposit or other security pledged to the lender | Larger amounts, such as a full degree with living costs, or MBBS abroad over six years | Interest rate, processing fee, valuation and legal charges, margin money, how long the property papers take |
| Unsecured loan | None; approval depends on the course, the university and the co-applicant's income | Students at universities and courses the lender rates well, or families without property to pledge | Interest rate (usually higher), maximum amount, the list of universities the lender covers, prepayment charges |
Rates and limits change often and differ by lender, so ask at least three lenders for a written quote on the same amount and compare the total cost, not just the headline rate.
Who lends for study abroad
Public sector banks
Often the lowest rates for secured loans. Expect more paperwork and a branch visit; property valuation can take time.
Private banks
Faster processing and more unsecured options for well-known universities. Compare fees and the fine print carefully.
NBFCs (non-banking finance companies)
Specialist education lenders that may fund courses or universities banks will not, often unsecured, usually at a higher cost.
International lenders
Some overseas lenders fund Indian students at selected universities without an Indian co-applicant. Check the currency of the loan and how repayment works if you return to India.
What a loan usually covers
- Tuition fees, paid directly to the university
- Living costs and accommodation for the course
- Travel to the country
- Health insurance and visa fees
- Exam and application fees, with some lenders
- A laptop or study materials, with some lenders
What is included, and how much, is set by each lender. Ask for the list in writing, and check whether living costs are paid to you in instalments.
Documents you will need
Lenders ask for three sets of documents. Our document checklist generator lists them for your country and funding.
Student
- Offer or admission letter and the fee statement
- Class 10, Class 12 and degree mark sheets
- English test and any entrance test scores
- Passport, PAN and Aadhaar
Co-applicant
- PAN and Aadhaar
- Income tax returns and salary slips, or business accounts
- Bank statements
- Proof of relationship to the student
Collateral (secured loans)
- Title deeds or fixed deposit receipts
- Valuation report by the lender's valuer
- Legal opinion on the property
- Encumbrance certificate, as the lender asks
Moratorium and repayment
Most education loans have a moratorium: a period, usually the course length plus some months, when you do not have to repay. Interest may still be added during it. Paying the interest while you study, if the family can, keeps the final loan smaller.
After the moratorium you repay in monthly instalments (EMIs). Use the loan EMI calculator in our student calculators to see the instalment for different amounts, rates and terms, and the Mantra Cost Planner to work out your monthly living costs, which, with tuition, tell you how much you need to borrow.
Tax, sending money and government schemes
Section 80E tax deduction
The interest paid on a loan for higher education of yourself or a relative can be deducted from taxable income under Section 80E. The Income Tax Department lists it under the old tax regime only. incometax.gov.in
Sending money abroad (LRS)
Under the RBI's Liberalised Remittance Scheme, resident individuals can send up to USD 2,50,000 a financial year, and studies abroad is a permitted purpose. Tax collected at source (TCS) may apply; ask your bank for the current rules before you transfer. rbi.org.in
PM-Vidyalaxmi
A central scheme, launched in November 2024, offering collateral-free education loans and interest subvention for merit-based admission to quality higher education institutions in India. It does not fund study abroad. pmvidyalaxmi.co.in
Using the loan as proof of funds
Student visas ask you to show you can pay tuition and living costs. Many countries accept an education loan sanction letter from a recognised lender, usually with bank statements. The amount, the form of the letter and how long funds must be held differ by country; see our student visa guide for each country's rules.
Step by step
- 16–9 months before the courseEstimate the full cost, decide how much to borrow and whether you can offer collateral. Collect the co-applicant's documents.
- 2After your first offersAsk three or more lenders for written quotes on the same amount. Compare the rate, fees, moratorium and prepayment terms.
- 3Once you accept an offerApply formally with the offer letter and fee statement. For a secured loan, start the property valuation and legal checks early.
- 4Before the visa applicationGet the sanction letter in the form your visa rules ask for, and arrange any deposit the university needs.
- 5Before you flyAgree how tuition will be paid to the university and how living costs will reach you, and keep copies of every loan document.
Education loan questions
Can I get an education loan before I have an admission letter?
Most lenders sanction the final loan only against an admission or offer letter and the university's fee statement. Some give an in-principle approval earlier, which helps you plan, but the amount is confirmed once you have the offer.
Do I need collateral for a study abroad loan?
Not always. Secured loans use property or deposits as collateral and usually cost less; unsecured loans need no collateral but lenders look harder at the course, the university and the co-applicant's income. Compare both before you decide.
Who can be the co-applicant?
Usually a parent, and sometimes a sibling, spouse or other close relative with an income in India. The lender checks the co-applicant's income and credit history, so choose the family member whose finances are easiest to show.
Can a loan sanction letter be used for the student visa?
Many countries accept an education loan sanction letter from a recognised lender as proof of funds, alongside other documents. Each country sets its own rules on the amount and how long the money must be available, so check the visa guide for your country.
Is the interest on an education loan tax deductible?
Section 80E of the Income Tax Act allows a deduction of the interest paid on a loan for higher education of yourself or a relative. It is available under the old tax regime only. Check the current rules on incometax.gov.in or with a tax adviser.
Does the PM-Vidyalaxmi scheme cover study abroad?
No. PM-Vidyalaxmi is for students who take merit-based admission to quality higher education institutions in India. For study abroad, apply to banks and other lenders directly.
Sources
Checked October 2026. Rules change; confirm with your lender, bank and the official pages.
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