Do you constantly dream of studying abroad and having the best experience living your dream life, but the thought of high tuition fees is weighing you down? We know you’ve been up all night searching on Google for “how to study abroad without spending a fortune.” Well, what if we told you that fulfilling your study abroad dream is now possible without sacrificing your parents’ assets? With education loans emerging as one of the most affordable and feasible options to pursue your studies abroad, Indian lenders have stepped up their game by offering education loans without the need for security or collateral. Let’s dive deeper into how to get an education loan for abroad studies without collateral and how this can be a game changer for all students worrying about investments for studying abroad!
Education Loans without Collateral
An unsecured education loan or education loan without collateral for studying abroad is where the
lender promises to offer you a loan for your higher studies abroad without the need of a collateral or security in exchange. These loans are offered on the basis of academic record, admission to a
recognised institution, and future earning potential.
Collateral refers to the tangible or intangible assets that you pledge to secure your loan. This can
include properties, land, shares, gold and mutual funds.
Interest rates for education loans without collateral are higher than those for secured loans as the
lenders have a high risk involved due to no security. The amount for such loans also is determined by the lenders’ policies and your profile.
Secured vs Unsecured Education Loans for Studying Abroad
To make it easier for you to understand, let’s highlight some of the key differences between education loan with and without collateral!
| PARAMETER | EDUCATION LOAN WITH COLLATERAL | EDUCATION LOAN WITHOUT COLLATERAL |
| Loan amount offered | Up to Rs 2 crores (or 100% cost of education) | Up to Rs 85 lakhs (or 100% cost of education) |
| Collateral Requirements | Collateral required in the form of property, land, shares, gold or mutual funds | No collateral required |
| Interest Rates | Comparatively lower as a reason of security | Comparatively higher as a reason of no security |
| Processing Time | Comparatively more due to documentation, property valuation and more. | Comparatively less due to less documents involved |
Features of a Non-Collateral Student Loan for Abroad Studies
Some of the significant features of an education loan for studying abroad without collateral are:
- Without pledging any security, you can secure an education loan for your abroad studies upto Rs 85 lakhs. This would mean you don’t have to worry about investments or sacrificing your parents’ assets for your academic dream.
- As per the lender you opt for securing your study abroad loan, your loan amount can cover the cost of your education completely or partially including your tuition fees, accommodation, books, equipment, and other related expenses.
- You can even get a Pre-Admission Loan i.e., you can secure your sanction letter even before your admission and get it disbursed at the time of your admission.
Expenses Covered in a Non-Collateral Study Abroad Loan
Let’s walk you through a list of expenses covered by a non-collateral loan for your abroad education! These expenses to be covered vary as per the lenders’ policies.
- Tuition fees, examination fees, lab fees, and library charges.
- Accommodation (on-campus or off-campus)
- Air travel fare
- International health insurance
- Study material, laptop, and other equipments
- Other required expenses needed for completion of the course like study tours and project work.
Banks Offering Non-Collateral Loans for Studying Abroad
Wondering which banks offer study abroad education loans without needing collateral? Here’s a list of some of the best lenders for education loans to study abroad without collateral along with their loan amounts and interest rates.
| LENDER | FINANCIAL INSTITUTION TYPE | MAX LOAN AMOUNT DISBURSED | INTEREST RATE | PROCESSING FEE | COUNTRIES COVERED |
| State Bank of India | Public Bank | Rs 75 lakhs | 10.15%* onwards | – | USA, UK, Canada, Australia, Germany, Ireland & many others |
| Union Bank of India | Public Bank | Rs 40 lakhs | 9.25%* onwards | – | USA, UK, Canada, Australia, Germany, Ireland & many others |
| Axis Bank | Private Bank | Rs 50 lakhs | 10.50%* onwards | 0.75% + GST | USA, UK, Canada |
| ICICI Bank | Private Bank | Rs 1 crore | 10.25%* onwards | 0.75% + GST | USA, UK, Canada |
| IDFC Bank | Private Bank | Rs 85 lakhs | 10.50%* onwards | 1% + GST | USA, UK, Canada, Australia, Germany, Ireland & many others |
| Ascent | NBFC | 100% cost of education | 3.79%* onwards | – | USA |
| Auxilo | NBFC | Rs 40 lakhs | 11.50%* onwards | 1% + GST | USA, UK, Canada, Australia, Germany, Ireland & many others |
| Avanse | NBFC | Rs 75 lakhs | 11.50%* onwards | 1% + GST | USA, UK, Canada, Australia, Germany, Ireland & many others |
| Earnest | NBFC | 100% cost of education | 3.74%* onwards | – | USA |
| HDFC Credila | NBFC | Rs 75 lakhs | 10.50%* onwards | 1% + GST | USA, UK, Canada, Australia, Germany, Ireland & many others |
| Incred | NBFC | Rs 60 lakhs | 11.75%* onwards | 1% + GST | USA, UK, Canada, Australia, Germany, Ireland & many others |
| MPower Financing | NBFC | $100k | 12.99%* | 5% + GST | USA, UK, Canada |
| Prodigy Finance | NBFC | 100% cost of | education 11.50%* onwards | $100 5% + GST | USA, UK, Canada, Australia, Germany |
| Sallie Mae | US Public Bank | 100% cost of education | 3.49%* onwards | – | USA |
| Tata Capital | NBFC | Rs 75 lakhs | 11.50%* onwards | – | USA, UK, Canada, Australia, Germany, Ireland & many others |
Student Loans Without Collateral: Eligibility
To apply for a non-collateral study abroad loan, the lenders mandate that you meet certain eligibility criteria for seamless processing. Let’s discuss it in detail, so that you ace all those requirements!
- Your academic profile
Due to no collateral or security involved, lenders prioritise your academic excellence as one of the key parameters to offer you a loan for your abroad education. - The co-applicant’s finances
Your cosigner’s CIBIL score should be extremely good and their income should meet the criteria stated by the lender. This adds to your chances of your loan being approved. - Preferred course, destination and university
Almost all lenders have a list of countries they cater to as well as the universities and courses that they cover. Ensure that your dream course, destination and university are listed with the lender you opt for your study abroad loan. - Proficiency exam scores
To secure your education loan seamlessly, you need to ensure scoring well in your language proficiency exams as well as other standardised exams.
Education Loans without Collateral: Documents Required
Your non-collateral study abroad loan is within reach with the help of the following documents. Let’s jot them down together, so that you add them to your bag or your drive and submit to your lender at the earliest!
For you (the applicant)
- ID proof (PAN Card, Aadhar card, voter ID)
- Loan application form
- Valid passport
- Acceptance letter from abroad university
- Cost of education as mentioned in the Statement of Expenses provided by the University
- Past academic records (10th and 12th mark sheets, bachelor’s mark sheet)
- Proficiency test scores
- Address proof (recent copy of telephone/electricity/water bill)
- If you have any previous loans, loan account statement of one year
- Passport-size photographs
For the cosigner
- ID proof
- Income proof
- Address proof
If the cosigner runs their own business, they’d be required to submit the following additions documents to show their income.
- Last 2 years IT returns
- Bank account statement of last 6 months
- Certificate of qualification
- Business address proof
- TDS certificate
If the cosigner is salaried, they’d be required to submit the following additions documents to show their income.
- Salary slips of the last 3 months
- Bank account statement of last 6 months
- Copy of Form 16 for the last 2 years or copy of IT Returns for the last 2 years
How to get a Student Loan for Abroad Studies Without Collateral?
Let’s understand the application process of applying for a study abroad non-collateral education loan better!
Step I: Shortlist the lender for securing your non-collateral loan for studying abroad
After thorough research, choose the lender best suitable for you to secure your unsecured study abroad loan. You can reach out to these lenders online through their official website or physically by visiting a branch. You will be required to fill an application form and provide accurate and complete information. Ensure inquiring about the interest rates, any hidden costs, repayment term and other information in the loan agreement.
Step II: Sharing your documents
Once you’re assured of all the terms and conditions of your chosen lender, and are ready to proceed, the next step is to submit the required documents for your non-collateral education loan. These documents may include academic records, admission letter, financial statements, and any other documents requested by the lender.
Step III: Credit check & verification
After successfully submitting your documents with the lender for your education loan for studying
abroad without collateral, the lender’s team will conduct a credit check and even verify certain
information with you, if required.
Step IV: Determining the final status of your non-collateral education loan
Once the credit check is completed all other information is verified, the lender reaches out to you
informing of the final decision on your unsecured study abroad loan. If confirmed, your loan officer
communicates your loan’s interest rate, the loan amount offered, processing fees, repayment plan, and other terms regarding your education loan.
Step V: Loan Sanction & Disbursal
To get your non-collateral study abroad loan sanctioned in time, you need to pay your loan processing fee. Once paid, the lender rolls out your sanction letter, prepares your loan agreement and shares it with you. After signing the loan agreement, the loan is disbursed as per the university’s payment plan on the date discussed. If this sounds too lengthy, simply connect with us at Lorien Finance, and we’ll take care of the entire process on your behalf. On connecting with our loan counsellors, they try and understand your requirements and negotiate interest rates with the lenders, so that you can fulfil your study abroad dreams feasibly. All you have to do is provide your details and submit the required documents, and you’re done!
Additional Costs in Study Abroad Education Loan without Collateral
Before signing your loan agreement, ensure verifying that no additional costs are involved. These
additional costs can be in the form of:
Payment during moratorium period
Post moratorium period, some banks will calculate and charge Simple interest and some banks do
compound interest. This interest will get accumulated into your principal amount and accordingly you will get your EMIs.
Processing fee
The processing fee for your non-collateral education loan for studying abroad varies from lender to and can be as high as 2% of the loan amount.
Loan insurance
Some lenders require you to take an insurance to cover your education loan. This one-time payment ranges from 1-2% of the loan amount.
Prepayment penalties
Many of you would opt to prepay your loan as you secure a job after the completion of your course.
But, some lenders levy a prepayment charge as high as 5% of the outstanding loan amount.
Margin money
This is the percentage of the loan amount that needs to be paid upfront to the lender. Margin money can range from 2 to 15% of the loan amount.
Forex charges
If you’re planning to secure an unsecured study abroad loan to study in the USA, for instance, the
lender may levy currency conversion charges.
Late payment fee
If you fail to make the EMI payment in time, the lender fines you with a late payment fee ranging from 1-3% of the EMI amount.
Legal charges
This is a one-time payment of INR 5000 and above levied by the lender for the legal work involved in processing the education loan application.
Disbursement charges
This amount is levied by the lender for disbursing the loan amount to the university’s account. At
present, remittances made for international studies using an education loan are subject to a 0.5% TCS (Tax Collected at Source) on any amount sent above Rs 7 lakh.
Reasons for Rejection of Non-Collateral Student Loan for Abroad Studies
Wondering why so many students face a rejection while applying for an unsecured education loan for studying abroad? Well, apart from failing the eligibility criteria set by the lenders, there are some other parameters on the basis of which lenders reject students’ loan applications. Let’s learn about the same so that you don’t have to face it!
Low CIBIL score of the applicant or the cosigner
The CIBIL score is one of the top parameters that lenders utilise for evaluating the profile of an
applicant to offer an unsecured loan for studying abroad. A CIBIL score of 700 and above can help you secure a non-collateral loan for abroad education, anything less can result in rejection.
Applicant’s age
Age is an important criterion for both the applicant and the cosigner. An applicant of maximum 28
years of age is eligible to get an unsecured education loan. If you are older than 28 years, the chances of your loan being rejected. The cosigner’s age is also considered while sanctioning the loan. Even though the cosigner is employed but is close to retirement, the loan might get rejected as they will have low repayment capacity. Also, The foreign education system is rigorous when it comes to studying gaps. In ideal situations, a one year gap is acceptable, but if it exceeds a year, the study gap needs to be extensively justified with evidence.
Academic performance of the applicant
The applicant’s previous academic performance is a key aspect in their loan being approved or rejected. If a student’s previous academic records have been excellent, their chances of securing a loan increase. In case of average or below average grades, the lenders are more likely to reject your loan.
Cosigner’s income
In case the applicant fails to repay the loan, the cosigner is supposed to do it. Thus, lenders consider the cosigner’s income for sanctioning of the education loan without collateral. The cosigner completes the applicant’s loan payments during the moratorium period. With the cosigner’s low income or repaying capacity, the bank is likely to reject the application.
Preferred university and course not listed with the lender
Financial lenders consider the university ranking and type of course selected by the applicant for
granting unsecured education loan.
How can Lorien Finance help you get a Study Abroad Loan for your Abroad Studies?
Having partnered with more than 15 Indian and international lenders, from public and private banks to NBFCs, we offer our students multiple options to compare and choose the most suitable lender as per their needs. Moreover, our Loan Counsellors connect with you to have a better understanding of your requirements and help you complete the application process. To add to the benefits, availing any of our services is completely free, there’s no hidden charges at all! Doesn’t that add to your savings again?
FAQs
Can I get an unsecured loan for pursuing my bachelors abroad?
Not a lot of lenders offer unsecured loans for a bachelor’s degree. However, some lenders do provide non-collateral loans if you wish to pursue your under graduation abroad.
Is there a fee for applying for a loan?
When applying for a study abroad loan, public banks charge you zero processing fee. However, private banks and NBFCs can charge you a processing fee ranging from 0.5 – 5% of the total loan amount.
How much loan can I get without collateral?
You can secure an education loan without collateral of upto INR 1crore for your abroad education.
With Lorien Finance, non-collateral loans are even more seamless and achievable.
How can I apply for education loan for abroad studies?
To secure a loan for your abroad education, simply fill out the form on our website and our team will contact you to better understand your requirements and help you choose the lender best suited for you. We do all the hard work for you as you focus on the other important things!
What is the minimum percentage required to apply for an education loan for study abroad without collateral?
While the percentage may differ with various lenders, for a majority of loans, the minimum required
percentage is usually observed to be 60%.
