Education Loan Eligibility Criteria for Studying Abroad

With a rapid rise in demand for studying abroad, an estimated 2 million Indian students are expected to pursue higher education overseas by 2025. As education costs continue to climb, attending prestigious international institutions often involves significant expenses. Understanding education loan eligibility criteria for studying abroad is essential to make these aspirations financially feasible.

Realising the same thing, parents start preparing financially for their children’s education from the time they are kids. From investments to Fixed Deposits to whatnot, they try to save the maximum to provide their kids with the best possible education. But, there are still times when all of these can’t fulfil your dream of studying abroad. In such times, education loans for studying abroad act as your Genie from the Magical Lamp to help you study abroad without any financial hassle.

Education loans for studying abroad are typically categorized into secured and unsecured options. At Lorien Finance, we partner with over 15 domestic and international financial institutions, including public and private banks and NBFCs, to provide students with the best interest rates for overseas education. To qualify for an education loan for studying abroad, it’s essential to meet the eligibility criteria set by these financial institutions, ensuring you’re fully prepared to secure funding for your international studies.

Let’s go through some of the basic eligibility criteria stated by these institutions for students planning to study abroad with an education loan!

Note: Eligibility criteria differ as per each lender’s requirements. The parameters mentioned are some of the common criteria required by almost all lenders.

Eligibility Criteria for Applying for an Education Loan for Abroad Studies

When applying for a study abroad loan, the following basic eligibility guidelines stated by the lenders need to be met:

• The student must be a citizen of India.
• The student availing the loan must be at least 18 years old, or else their parents would have to avail the loan.
• The student must have secured admission to a prestigious university abroad.
• The student must hold an excellent academic record.

Eligibility Criteria for Secured Education Loan for Studying Abroad

Secured loans for studying abroad are taken against collateral, which in most cases is in the form
of property. To be eligible for applying for a collateral loan for abroad education, you must be
aware of the following facts:

• The property you plan to pledge as collateral should come under the Municipal Corporation,
  Improvement Trust property and Nagar Parishad.
• As per the norms stated by the Reserve Bank of India (RBI), agricultural lands or farmhouses,
  whose tax is paid to Gram Panchayat or Nagar Panchayat aren’t considered as collateral.
• Whatever the market value of your property is, banks only consider 80-85% of it while offering
  the loan.
• The layout plan and building plan of the property pledged should be sanctioned by their
  respective departments and handed over to the bank.
• Document chain of the property from 30 years is required by the banks to be eligible for a study abroad loan.
• To be eligible for a secured education loan, the CIBIL score of the student’s parents should be
  above 700 and they must have a good credit history.

Eligibility Criteria for Unsecured Education Loan for Studying Abroad

Unsecured loans for overseas education do not require pledging any collateral in exchange. Banks
consider the student’s and the cosigner’s Income Tax Return (ITR), their CIBIL score as well as the student’s past academic records to offer the loan. To be eligible for applying for a non- collateral loan for studying abroad, you must be aware of the following facts:

• To be eligible for an unsecured loan, the annual income of the student’s parents should be more than INR 6lakhs without any liabilities.
• If the student’s parents own a business, they would be required to submit their ITR along with
  balance sheets, profit and loss, and business registration certificates.
• To be eligible for a non-collateral loan, students whose parents’ business is not registered,
  Udyog Aadhar registration is mandatory.
• In case your parents are in the farming industry and don’t have their ITR filed, you can get a
  non-collateral education loan based on your GRE score.
• To be eligible for an unsecured education loan, the CIBIL score of the student’s parents should
  be above 700 and they must have a good credit history.

Documents Required for a Study Abroad Education Loan

Now that we are well-versed with the eligibility criteria, it is essential to know all about the documents required for applying an education loan for overseas studies. Let’s have a look:

For the Student:

• Education loan application form
• Proof of admission to a prestigious university abroad
• Scores from proficiency exams like IELTS/TOEFL/GRE/GMAT etc.
• Identity proof in the form of an Aadhaar card or PAN Card or Passport or Driver’s License or
  Voter ID card
• Address proof in the form of a recent copy of your telephone bill or electricity bill or water bill
  or piped gas bill or Driver’s license or an Aadhaar card
• Academic mark sheets from classes 10th, 12th and bachelor’s
• Statement of expenses as shared by the university
• Bank account statement
• Loan account statement
• 2 passport-size photographs

For the Cosigner:

• Identity proof in the form of an Aadhaar card or PAN Card or Passport or Driver’s License or
  Voter ID card
• Address proof in the form of a recent copy of your telephone bill or electricity bill or water bill
  or piped gas bill or Driver's license or an Aadhaar card
• Bank account statement for the last 6 months
• In case of any ongoing loan, the loan account statement for the last 1 year
• 2 passport-size photographs

Salaried Cosigner:

• Salary slips for the last 3 months
• Bank account statement for the last 6 months
• Copy of Form 16 for the last 2 years
• A statement of assets and liabilities

Self-employed Cosigner:

• Income Tax Returns for the last 2 years
• TDS certificate
• Bank account statement for the last 6 months
• A statement of assets and liabilities
• Business address proof
• Certificate of qualification

Extra Documents Required for a Secured Study Abroad Loan

To secure a collateral loan for your studies abroad, some additional documents related to the property you pledge are required. These documents include:

• Registered Sale Agreement
• Property Title Deed
• Original Registration Receipt of Sale Agreement
• Previous chain of Sale Deed
• Authorised Government sanctioned Allotment Letter
• Recent Property Tax or Electricity Bill bearing the same address
• Approved building plan
• Mutation Document

How to Improve Your Education Loan Eligibility for Studying Abroad?

While providing education loans for your overseas education, banks scrutinise every detail and
document shared. There’s always a way of improving your eligibility in securing an education loan for your abroad studies. To score higher on the lenders’ charts, these are the steps you can follow:

• Maintain a strong academic record
• Have a financially stable cosigner
• Provide confirmed admission status to a prestigious university
• Score high grades in proficiency exams
• Demonstrate a strong possibility of future employment

Documents Required for First Disbursement of Study Abroad Loan

• A demand letter from the University
• Signed Loan Agreement
• Signed Sanction Letter
• Signed Disbursement Request Form
• Proof of margin money paid to the University
• Documents of collateral security (in case of a secured loan)
• Signed Form A2

Documents Required for Subsequent Disbursement of Study Abroad Loan

• A demand letter from University
• Signed Disbursement Request Form
• Proof of margin money paid to the University
• Mark sheets of the previous semester
• Signed Form A2

Now that we’ve topped the exam on education loans, it’s important to remember factors such as
academic qualifications, availability of collateral, credibility, and creditworthiness. By understanding all these criteria, you can seamlessly start your loan application process for your abroad education and give wings to your dream of gaining an education globally.

If any step of this process seems challenging, at Lorien Finance, we are always ready to support you throughout your journey. Whether it’s applying for an unsecured or secured education loan, our loan experts navigate the entire process and help you find the best interest rates in the market to help you finance your study abroad dream. We walk with you every step of the way so that your journey is smooth and hassle-free.

FAQs

Do I need confirmed admission before applying for a loan?

Yes, most lenders require a confirmed or conditional admission offer from your university to process the education loan.

Is there a minimum academic score required?

Yes, lenders typically expect a minimum percentage or GPA, though it varies by lender.

I don’t think my course would be eligible for an education loan. How do I proceed?

Lenders usually have a list of courses and universities they cover in abroad education loans. Connect with our team to help you find the best lender for your desired course.

Can I get an education loan if I have an existing loan?

Having an existing loan does not hinder your chances of securing an education loan for your abroad studies, but it may affect the amount you borrow. Lenders consider your total debt-to-income ratio to ensure you can manage additional loan repayments. Connect with our loan counsellors to know how much you can avail for your abroad education.