Most Indian families fund a degree abroad with an education loan as well as savings. Loans come from public sector banks, private banks, NBFCs and international lenders, and each has different rules on collateral, interest and repayment. This guide explains how to get an education loan for abroad studies in 2026, including collateral rules, interest rates, tax benefits and TCS, checked on 28 October 2026.
- SBI lists Global Ed-Vantage at 9.65 percent for general institutions with collateral and 9.15 percent for select institutions, linked to its external benchmark rate of 8.15 percent (updated 22 October 2026)
- TCS does not apply to education remittances funded by a loan from a specified financial institution, and self-funded education remittances attract 5 percent TCS only above 10 lakh rupees a year
- PM-Vidyalaxmi covers selected Indian institutions, not universities abroad.
How Do You Get an Education Loan for Abroad Studies?
Apply once you have an admission offer. Compare at least three lenders on interest rate, collateral, margin and processing fee. Arrange a co-applicant, usually a parent. Submit identity and address proof, academic records, the admission letter, a cost estimate and the co-applicant's income documents. After sanction, the lender pays fees directly to the university.
- Identity and address proof: passport, Aadhaar, PAN card
- Academic records: Class 10 and 12 marksheets, degree transcripts, test scores
- Admission proof: offer letter and a schedule of costs from the university
- Co-applicant documents: income proof, PAN, six months of bank statements and tax returns
- Collateral documents, if required: property papers or fixed deposit details
Many lenders can issue a sanction letter before your visa, which you can use as proof of funds. Apply early, because property valuation and legal checks for secured loans can take several weeks. Keep copies of every document, because visa officers may ask for the same papers.
Government Education Loan for Study AbroadRead →How Much Collateral Do You Need?
Under the Indian Banks' Association model scheme that public sector banks follow, loans up to 4 lakh rupees need no collateral, loans from 4 to 7.5 lakh usually need a third-party guarantee, and larger loans usually need tangible collateral such as property or fixed deposits. Private banks and NBFCs can lend larger unsecured amounts.
Most abroad-study loans are well above 7.5 lakh rupees, so expect to offer collateral for the lowest interest rates. Unsecured loans from NBFCs are faster and can cover more of the cost, but usually charge higher interest. Banks also ask for a margin, the share of costs you pay yourself, often around 15 percent for study abroad.
Which Lenders Offer Abroad Education Loans?
Public sector banks such as SBI and Bank of Baroda usually offer the lowest rates on secured loans. Private banks such as Axis Bank and ICICI Bank, and NBFCs such as HDFC Credila and Avanse, offer faster processing and larger unsecured loans at higher rates. International lenders lend to students at some universities without Indian collateral.
| Lender type 2026 | Typical strengths | Watch out for |
|---|---|---|
| Public sector banks (e.g. SBI, Bank of Baroda) | Lower rates on secured loans; long repayment | Collateral and paperwork; slower sanction |
| Private banks | Faster processing; some unsecured options | Higher rates on unsecured loans |
| NBFCs (e.g. HDFC Credila, Avanse) | Large unsecured loans; cover more costs | Higher interest and processing fees |
| International lenders | No Indian collateral for listed universities | Limited university list; foreign-currency loans |
SBI's Global Ed-Vantage scheme funds full-time courses abroad, with collateral-backed loans up to 3 crore rupees and loans without collateral up to 50 lakh rupees for select institutions, according to SBI's rate page. Rates float with SBI's external benchmark rate, so recheck them before you sign.
Loan to Study in CanadaRead →What Interest Rate Will You Pay in 2026?
Rates depend on the lender, collateral, university and your co-applicant's profile. SBI lists its Global Ed-Vantage loan at 9.65 percent for general institutions with collateral and 9.15 to 9.65 percent for select institutions, floating with its benchmark rate. Unsecured loans from NBFCs and private banks usually cost more.
SBI also lists a 0.50 percent concession for girl students at general institutions. Ask each lender for the exact rate, whether it is fixed or floating, the processing fee, any insurance you must buy, and whether interest during the moratorium is simple or compound. A small difference in rate can add lakhs of rupees over a 10 to 15 year repayment period, so compare the total cost, not just the headline rate.
Is PM-Vidyalaxmi Available for Study Abroad?
No. PM-Vidyalaxmi, approved in November 2024, gives collateral-free and guarantor-free loans to students admitted to selected quality higher education institutions in India, chosen using NIRF rankings. It does not cover universities abroad. For study abroad, use bank or NBFC loans, and the Vidya Lakshmi portal to apply to several banks at once.
Some older guides suggest PM-Vidyalaxmi helps with study abroad, but Indian Bank's scheme page states that foreign campuses and foreign institutions are not covered. The Vidya Lakshmi portal itself still lets you compare and apply to education loan schemes from many banks, including loans for study abroad.
What Tax Rules Apply to Education Loans?
Interest on an education loan from an approved lender can be deducted from taxable income for up to eight years, with no upper limit, under the old tax regime. This was Section 80E and is reported as Section 129 under the Income-tax Act, 2025. TCS does not apply to fees paid abroad from such a loan.
If you pay fees abroad from your own savings, banks collect 5 percent TCS on education remittances above 10 lakh rupees in a financial year, which you can claim back in your tax return. Paying through a loan from a specified lender avoids TCS. Speak to a tax adviser, because the new Act renumbered several sections.
How to Get a Scholarship to Study Abroad for Indian StudentsRead →When Does Repayment Start?
Most lenders give a moratorium covering your course plus six to twelve months, after which monthly repayments start. Repayment usually runs for up to 10 to 15 years. Paying the interest during your course, if you can, reduces the total cost and the size of your monthly repayments later.
Plan repayments using a realistic starting salary in the country where you will work, not the highest figures you see online. If you return to India, remember that repayments in rupees may be easier to manage than a loan in a foreign currency.