Education loan checklist for studying abroad

The most common mistake families make is borrowing for tuition and forgetting everything else. Before approaching a lender, list the full cost of your course: tuition for every year, living costs, visa and health charges, flights, insurance, deposits for accommodation, and a buffer for exchange rate movements.

Then decide how much will come from family savings, scholarships and part-time work (be conservative), and borrow the rest. Lenders usually finance tuition and living costs, and some include travel and a laptop, but each has its own limits.

• Public sector banks: often the lowest interest rates for secured loans, but more paperwork and longer processing, and they may prefer a branch near your home.
• Private banks: faster processing, slightly higher rates, and some offer unsecured loans for strong profiles at well-known universities.
• Non-banking financial companies (NBFCs) that specialise in education: flexible on collateral and quick, with higher interest rates. They may lend without collateral based on the university and course.
• International lenders: some lend to Indian students at selected universities abroad without an Indian co-borrower, usually in US dollars and at higher rates.

A secured loan is backed by collateral, such as residential property, a fixed deposit or approved securities. Secured loans usually carry lower interest and allow larger amounts. Unsecured loans depend on the student's admission, the university's reputation and the co-borrower's income, and generally cost more.

If you plan to offer property as collateral, check early that the title documents are clear and in the name of the co-borrower or an acceptable owner, because valuation and legal checks take time.

• What is the interest rate, and is it fixed or floating? What benchmark is it linked to?
• Is there a concession for female students or for particular universities?
• What is the processing fee, and is it refundable if the loan is not disbursed?
• How long is the moratorium (usually course duration plus six to twelve months), and is simple interest payable during it?
• What is the maximum repayment period?
• Are there prepayment or foreclosure charges?
• Is insurance on the loan mandatory, and what does it cost?
• How and when will funds be disbursed: directly to the university, and in how many instalments?
• Can the lender issue a sanction letter before the visa application, and will it be in the form the embassy accepts?

• Admission letter or offer, with the fee schedule.
• Student's academic records, test scores, passport and KYC documents.
• Co-borrower's KYC, income proof (salary slips, income tax returns, bank statements) and, for business owners, audited financials.
• Collateral documents, if secured: title deeds, valuation report, and approved building plan where relevant.
• Cost estimate for living expenses, often taken from the university's own figures.

Interest paid on an education loan taken from an approved lender for higher studies can be deducted from taxable income by the borrower for up to eight years, without an upper limit. This benefit has long been available under section 80E of the Income-tax Act, 1961; check with your tax adviser how it applies under the Income-tax Act, 2025, which took effect on 1 April 2026.

When loan money is remitted abroad for education from a specified financial institution, no tax is collected at source (TCS). If you use your own funds above ₹10 lakh in a financial year, TCS applies. Read our separate guide to TCS on education remittances.

Apply for your loan as soon as you have an offer. A sanction letter is often needed for the visa file (for example to obtain a US I-20 or to show Canadian proof of funds), and disbursement must reach the university before its deadline. Allow three to six weeks for secured loans and longer if property valuation is involved.