For many Indian students, studying overseas is a dream, but the financial burden of foreign education may be overwhelming. Particularly in a nation like the US, UK, Canada, or Australia, where education is very expensive, all elements, including tuition fees, living expenses, and travel costs, start adding up quickly. Most families struggle with organizing big sums of money at once; hence, an education loan would be a great financial instrument for someone wishing to study overseas.
Fortunately, Indian banks and financial institutions provide students a lifeline in collateral-free education loans of up to ₹20 lac for overseas study. These are becoming increasingly accessible for students from all walks of life; there is no need to commit any security or asset to benefit from one such loan. The qualifying requirements, advantages, and institutions offering a ₹20 lac collateral-free education loan in India are discussed in this article, and how to apply for such loans.
What’s a Collateral-Free Loan
Under a collateral-free school loan, applicants are not obliged to pledge any security or assets—such as gold, fixed deposits, or property—against the financial help given by the lending organization. Usually enrolled in reputable universities overseas, these loans go to students with good academic performance. Security-free loans have the benefit of not stressing students and their families too much, who might not have enough assets to offer security.
Why International Studies Use Collateral-Free Loans
No need for collaterals here. Many students and their families might not have any assets to provide as collateral—that is, property or savings. Collateral-free loans remove this barrier, therefore enabling more students to leap forward and study overseas.
Process of Quick Approval: Banks may issue collateral-free loans more quickly as there is no collateral to appraise and handle, enabling students to meet strict deadlines for tuition payments or even visa applications.
She said, “The main concentration is academics.” On the other hand, deserving students easily get the same as lenders search for the student’s academic record, the standing of the school where he or she is receiving admission, and the subject they want to study in order to offer the loan.
Qualifications for ₹20 Lakh Collateral-Free Education Loan
Although collateral-free loans seem like a dream come true for students, banks and other financial institutions have specific qualifying requirements meant to lower the risk of supporting one. Knowing these criteria ahead of time becomes essential for students applying for loans.
General eligibility criteria:
- The candidate must either be an Indian citizen or have official documentation proving Indian residence.
- Students should have been accepted into reputable overseas colleges or educational institutes. These loans would cover courses offered in the US, UK, Canada, Germany, and Australia.
- The applicant should have a good academic background. Banks might look for ongoing proficiency in past tests taken by the student or clearing entrance tests run by foreign colleges.
- Typically, banks grant loans for professional courses, undergraduate and graduate degrees in medicine, engineering, management, and the sciences, and for course types.
In most cases, many banks want a cosigner—a parent or guardian who would be held legally accountable for compensating the loan amount should the student fail. The cosigner’s salary and credit record might also influence the approval of such loan applications.
The main advantages of education loans are devoid of collateral
A collateral-free loan for studying overseas has various benefits. It enables students to fulfill their ultimate desire without endangering the stability of their families. Some of these benefits include no commitment to assets.
One of the most remarkable aspects of collateral-free student loans is that you are not under obligation to pledge any valuable asset or real estate as security. This lowers the risk for families that either lack funds to contribute or are not ready to expose their financial portfolio to danger.
Choice of Flexible Repayment
Banks let students choose different repayment terms to fit their circumstances. Many loans contain a moratorium, or repayment holiday, whereby the student makes loan payments once they have completed their education and secured suitable employment. After graduation, a six—to 12—month moratorium might be approved to let the student find employment before starting payback.
Fair Interest Rates
Relatively typically cheaper than personal loans or credit card debt, several banks and financial organizations provide school loans at reasonable interest rates. Depending on the financial institution and the student profile, India’s interest rates for education loans fall between 9 and 12% annually. Apart from this, under government programs for economically underprivileged groups of society, students receive rebates on the interest rate.
Taxes: Benefits
Section 80E of the Income Tax Act lets the borrower exclude loan interest repayments paid against loans taken out for further study from their taxable income. This also covers the total interest payment for an eight-year continuous term beginning the year the loan is being repaid. This helps students and their families lessen their load.
Different Courses Starting from undergraduate courses through post-graduation to doctorate and even diploma courses, eligible loans without collateral are accessible for many academic paths. Bank loans include technical and non-technical courses spanning fields like engineering, medicine, arts, management, etc.).
Ideal Financial Institutions and Banks for Collateral-Free Loans
Collateral-free education loans from several banks and NBFCs are available to Indian students planning overseas studies. Here is the top among these establishments:
One is the State Bank of India
Under the “SBI Global Ed-Vantage” plan, SBI grants collateral-free loans. Loans up to ₹20 lakh are available to students studying abroad, mainly for STEM degrees. SBI provides reasonable interest rates, and the loan term can be stretched for 15 years.
HDFC Credit Letter
HDFC Credila is an exclusive education loan provider for Indian students seeking to study abroad. It uses collateral-free loans to evaluate loans based on a student’s academic background and the reputation of the university he or she has been accepted to. HDFC Credila provides the means to accommodate varying loan amounts based on student needs.
Third Axis Bank
Axis Bank provides educational loans to students seeking overseas higher education. It provides loans free of collateral up to ₹20 lakh. Students pursuing higher degrees in engineering, management studies, medicine, and applied sciences are also eligible for bank loan assistance. Including a moratorium, its loan term is up to 15 years.
Fourth: ICICI Bank
Under its “ICICI Education Loan for Higher Studies Abroad” campaign, ICICI Bank grants collateral-free loans. This lets students borrow up to ₹20 lakh for overseas studies without using collateral. ICICI offers loans for a broad spectrum of foreign courses, and the interest rate is competitive.
Baroda Bank of Australia
Bank of Baroda grants loans to Indian students for overseas higher education. Under the “Baroda Education Loan” program, a student can obtain a loan of up to ₹20 lakh free from collateral security. The loan is provided for reputable universities in the US, UK, Canada, and Australia.
Required Documents for Collateral-Free Loans
- Applications for a collateral-free ₹20 lakh education loan must include academic credentials, admission records, and identity-verifying documentation. Thus, the following are a few of the most often-needed criteria one usually needs:
- Essential Documents: – Course and duration- stating admission letter from an international university or institution.
- Academic records, including past mark sheets, certificates, and transcripts.
- Details of tuition fees, living expenses, and other academic-related costs define the cost of study.
- Usually from income tax returns or wage slips of the cosigner—typically parents or guardians
- Recent last six to twelve-month bank statements for the cosigner
- Proof of Identity: Passport of Student and Cosigner, Aadhaar card or PAN card.
- Utility bills, ration cards, or voter ID as address verification proof of residence.
How One Applies for a Loan Free of Collateral
First step: investigate and contrast
Before seeking a loan, one should investigate numerous banks and other financial institutions that grant collateral-free school loans. The interest rates should also be evaluated, along with the qualifying rules and repayments.
Second Step: Gathering of Essential Materials
Prepare all required materials for processing, including admission letters, academic transcripts, financial information, and so forth, in order and neatly.
Third step: application submission.
Apply either at the bank office or online. Attach all the necessary course-related paperwork and specifics for your intended overseas study.
Fourth step: loan processing
The bank next handles your loan application and asks about your eligibility; occasionally, this takes several days or weeks.
Fifth Step: Sanction and Distribution
If authorized, the bank will provide the loan either in one lump sum or in installments, per the institution’s guidelines and the student’s financial necessity.
Conclusion
For students in our nation who want to follow their academic aspirations free from the weight of pledging any asset, a collateral-free education loan of ₹20 lakh for abroad studies may be a suitable start-up. Today, many banks and financial organizations provide such loans at reasonable rates to let students pursue their studies without financial concerns. Well-planned, aware of the eligibility requirements, and picked rightfully; with the support of a lender, it runs smoothly, and one may plan their abroad education sans trouble.
