Since the onset of the pandemic, foreign universities are seeing a significant rise in the number of applications from students. Industry estimates suggest that approximately 3 lakh students from India travel abroad every year to study and at least one in three takes a property-backed loan. In a country like India, where the average household income is close to 4-5 lakhs per annum and the average cost of studying abroad ranges from 8-18 lakhs per annum, falling back on an education loan is the easiest option for students.
A number of banks offer a student loan for study abroad at a cheap interest rate as indicated in the chart below, making it easier for students to fulfill their dreams.
| Name of Bank | Interest Rate (p.a.) |
| SBI | 6.85% to 8.65% |
| Axis | 13.70% to 15.20% |
| Bank of Baroda | 7.85% to 9.85% |
| HDFC | 9.55% to 13.25% |
Taking any type of loan comes with an added burden and stress of repaying it especially if the amount is large. Education loans are comparatively different since the duration and the cost (as
compared to other types of loans like housing etc.) is less. Another added advantage is that
students after the completion of their course get a decent salary package. The average earnings of Indian students abroad is $2000 – $3000 (1.5 lakhs – 2.5 lakhs). This is when the students are working part-time while they are studying. After graduating, the average salary package is close to $80,000 (60 lakhs p.a.) if you are a MBA or an Engineering graduate.
The average salary for other courses is somewhat close to this range. Not to mention, it all depends on how well you perform – on your application process (please look out for scholarship schemes as well) and your exams and other co-curricular activities.The math is simple. If you are afraid of taking an education loan, just think of it as an investment with long term benefits and returns. Indian students are known for their hard work and intelligence and in a couple of years, not only are they able to repay their loans but are living a decent lifestyle abroad. To sum everything up in a more sophisticated manner, take a look at the pointers below.
- Pay after education- If you take a secured loan (loan where you can guarantee collateral), you are not required to pay the EMI during the course of your study and an additional grace period of 6-12 months. This entire duration is called Moratorium Period and it is really helpful, since after completing your course, you’ll most likely land up a job and you’ll be paying your own EMI and you don’t have to rely on someone.
- Wide range of expenses covered- Some study abroad loans cover not only the tuition fees but also other expenses like travel, study materials, a student laptop and more.
- Easy repayment terms- Some PSUs (SBI and BOB) and even some private banks like (AXIS, HDFC, and ICICI) offer reasonable interest rates and loan tenure of up to 15 years.
- Self-reliance- Taking on an education loan is a great opportunity for students to pay for their education, without depending on the family. Besides, when you pay a loan, you start building your credit history. A good credit profile will help you get cheaper loans in the future.
- Tax benefits- The interest on an education loan is eligible for a tax rebate under Section 80 E of the Income Tax Act 1961.
- Refundable deposits- Many banks and education lenders also fund refundable deposits that universities ask students to pay. This is generally capped at 10% of the tuition fee.
- No collateral- Some lenders give no-collateral loans (unsecured loans) if the loan amount is not high. Axis Bank funds a higher amount up to Rs 40 lakh based on university/college and co-applicant profile.
To sum up, if you have made up your mind to study abroad but are thinking about the
financial aspects, don’t worry. Take a deep breath and start looking up scholarships as well
as banks that are offering cheap education loans.