Education Loans for Studying Abroad: Eligibility, Interest Rates and Application Process

Last verified: November 4, 2026

Education loans for studying abroad can cover most of a foreign degree, but the offers you get can look very different. One lender wants property as security, another wants an earning parent as co-applicant, and an international lender may ask for neither but charge a higher rate plus fees in US dollars. A small difference in the rate, the margin money or the moratorium can change your total cost by several lakh rupees over a 15-year loan.

This guide compares rates published by State Bank of India, Bank of Baroda, HDFC Credila, Avanse, Prodigy Finance and MPOWER Financing. It explains eligibility, collateral, margin money and co-applicant rules, the new Section 129 tax deduction (formerly Section 80E), how TCS applies to loan-funded fees, and how to apply through the government’s PM-Vidyalaxmi portal. Every rate and fee below is stated as of November 2026. Lenders change them often, so check the latest figure before you sign.

How Study Abroad Education Loans Work

An overseas education loan funds tuition and related costs for a recognised course abroad. Repayment does not start during the course: lenders offer a moratorium (the course plus six months at SBI, or plus one year at Bank of Baroda), after which EMIs begin. Interest usually accrues during the moratorium, so paying simple interest while studying reduces the final bill.

Lenders fall into three groups: public sector banks (SBI, Bank of Baroda) with the lowest rates but collateral for larger amounts; specialist NBFCs (HDFC Credila, Avanse) with faster decisions and more unsecured options at higher rates; and international lenders (Prodigy Finance, MPOWER) that lend in US dollars against your future earnings, usually without collateral or an Indian co-signer. Most bank rates are floating, linked to a benchmark such as the RBI repo rate.

Eligibility Criteria

Each lender sets its own rules, but the core requirements are similar:

• Nationality and age: Avanse, for example, requires you to be an Indian citizen aged 18 or over.
• Confirmed admission: Most lenders need an admission letter from a foreign university. SBI says a Global Ed-Vantage loan can be sanctioned before you receive your I-20 or visa, which helps when you need to show funds for the visa.
• An earning co-applicant: Avanse requires a parent or guardian with an income as co-applicant. Indian banks generally ask for the same.
• Institution category: Banks put universities into tiers. Bank of Baroda prices loans differently for “premier” and “non-premier” institutions, and SBI has better terms for a list of “select institutions”.
• Loan size bands: SBI Global Ed-Vantage covers loans above ₹7.5 lakh and up to ₹3 crore. Bank of Baroda’s Baroda Scholar goes up to ₹150 lakh for premier institutions and ₹60 lakh for non-premier ones.

Interest Rates Compared: Banks, NBFCs and International Lenders

Published or starting rates as of November 2026; “from” rates go to the strongest profiles.

How to read these rates

• SBI rates took effect on 15 October 2026. SBI’s external benchmark lending rate (EBLR) is 8.15%: the repo rate of 5.50% plus a spread of 2.65%. Girl students get a 0.50% concession, except at select institutions.
• Bank of Baroda publishes its benchmark, BRLLR, at 8.15% from 8 October 2026, and lists the spreads: +0.55% for premier institutions, +2.00% for non-premier up to ₹7.5 lakh, +1.05% for non-premier above ₹7.5 lakh, and +2.55% for Canada above ₹7.5 lakh. The effective rates in the table are derived (benchmark plus spread), not stated by the bank. Girls get 0.20% off for non-premier institutions only.
• HDFC Credila also offers fixed rates, set at the floating rate plus 1%, or plus 1.5% if the tenure is five years or more.
• Avanse lists a base rate of 14.80% from 1 November 2026.
• Prodigy Finance runs a waitlist for the Fall 2027 intake. MPOWER has paused new loans for 2026 and also runs a waitlist.

A US$ loan also carries currency risk: if the rupee weakens, each EMI costs more in rupees unless you repay from a salary earned abroad.

Collateral vs Non-Collateral Loans

Collateral (usually property or fixed deposits) earns lower rates and higher limits; unsecured loans are faster and risk no family asset, but cost more.

Which to choose? Families with clear-title property who need a large amount usually pay least with a secured public sector bank loan. If your university is on SBI’s select list, you may get a bank rate without collateral up to ₹50 lakh. Otherwise compare NBFC unsecured offers with international lenders on total cost, including origination and admin fees.

Margin Money Explained

Margin money is the share of the cost your family pays: a 15% margin on ₹20 lakh means ₹3 lakh from you and ₹17 lakh from the lender.

• Bank of Baroda: nil margin up to ₹4 lakh; 15% for loans of ₹4–7.5 lakh; above ₹7.5 lakh, nil for premier institutions and 10% for non-premier institutions.
• SBI: scholarships can count towards the margin, so a university award may cover your contribution.
• HDFC Credila: no margin money requirement.

Plan the margin early; it is usually paid before the lender releases its share.

The Role of the Co-Applicant

Most Indian lenders need a co-applicant, usually a parent, guardian, spouse or sibling, who shares legal responsibility and whose income and credit history support repayment.

• Avanse requires an earning parent or guardian as co-applicant.
• For loans up to ₹4 lakh, Bank of Baroda accepts a parent as co-obligant without other security. For ₹4–7.5 lakh it requires a third-party guarantee.
• Prodigy Finance needs no co-signer. It lends on the student’s own profile.

A co-applicant with a strong credit score and documented income improves approval chances, and missed EMIs hit their credit record too.

Tax Benefit: Section 129 (Formerly Section 80E)

From 1 April 2026, the education loan deduction known as Section 80E became Section 129 of the Income-tax Act, 2025. According to the Income Tax Department, the main features carry over:

• The full interest paid on the loan is deductible, with no upper limit. Principal repayments are not deductible.
• You can claim it in the year you start repaying interest and for the next seven years, up to eight years in all, or until the interest is fully paid if that comes first.
• The loan must come from a bank, a notified financial institution or an approved charitable institution. Loans from relatives or employers don’t qualify.
• The loan can be for your own higher education or for your spouse, children or a student for whom you are the legal guardian.

Check whether the tax regime you choose allows this deduction before relying on it in your plans.

TCS on Foreign Remittances for Education

Tax Collected at Source (TCS) applies when money is sent abroad under the Liberalised Remittance Scheme. As reported by banks in their customer notices and in Budget 2026 coverage:

• Nil TCS where the remittance is financed by an education loan from a financial institution.
• For self-funded education remittances: nil up to ₹10 lakh in a financial year, and 2% above ₹10 lakh from 1 April 2026, down from 5% earlier.

These figures come from bank notices and news reports rather than a government notification we checked, so confirm with your bank. For living-expense transfers, see our guide to international money transfer fees.

PM-Vidyalaxmi Portal

The PM-Vidyalaxmi portal (pmvidyalaxmi.co.in) is the Government of India’s single window for education loans. You fill in one common application and send it to participating banks. SBI tells Global Ed-Vantage applicants to apply through this portal, and Bank of Baroda also directs education loan applicants there.

NBFCs and international lenders take applications on their own websites.

Documents Checklist

Exact lists vary, so always use your lender’s final checklist. The documents below are the ones most commonly asked for in overseas education loan applications.

Step-by-Step Application Process

1. Work out the full cost. Total tuition, living, insurance, travel and visa costs, minus scholarships and savings.
2. Check your university’s category. Find out whether it is on SBI’s select list or counts as premier for Bank of Baroda. This decides your rate, margin and collateral.
3. Decide on security. Choose between a secured loan using family property, which is cheaper, and an unsecured loan, which is faster.
4. Compare at least three offers. Look at the rate, processing or origination fees, margin money, moratorium length and prepayment charges.
5. Apply. Use PM-Vidyalaxmi for banks such as SBI and Bank of Baroda, and the lender’s own website for NBFCs and international lenders.
6. Submit documents. The lender verifies KYC, income and admission, plus property valuation and legal checks for secured loans.
7. Receive the sanction letter. Read the rate type, reset terms, moratorium and repayment schedule. You can often use the sanction letter as proof of funds for your visa.
8. Pay the margin and get the money released.
9. Plan repayment. Consider paying interest during the moratorium, and keep interest certificates for your Section 129 claim.

Frequently Asked Questions

What is the lowest interest rate for an education loan to study abroad?

As of November 2026, SBI’s Global Ed-Vantage starts at 9.15% with collateral for select institutions. Bank of Baroda’s Baroda Scholar works out to about 8.70% for premier institutions, a figure derived from its 8.15% BRLLR plus a 0.55% spread. Rates change often, so confirm with the bank.

Can I get a study abroad loan without collateral?

Yes. SBI lends up to ₹50 lakh without collateral for select institutions at 9.65%. HDFC Credila’s unsecured loans start at 11.25% and Avanse’s at 11%. Prodigy Finance and MPOWER lend without collateral or an Indian co-signer, but at higher costs in US dollars.

What is margin money in an education loan?

It is the part of the course cost your family pays. Bank of Baroda asks for nil up to ₹4 lakh, 15% for ₹4 to 7.5 lakh, and above ₹7.5 lakh nil for premier or 10% for non-premier institutions. HDFC Credila asks for no margin money, and SBI lets scholarships count towards it.

Is education loan interest still tax deductible after Section 80E was replaced?

Yes. From 1 April 2026, Section 129 of the Income-tax Act, 2025 replaced Section 80E. The full interest is deductible with no cap for the first year of repayment and the next seven years, if the loan is from a bank, notified financial institution or approved charitable institution. Check whether your chosen tax regime allows it.

Do I pay TCS when my education loan money is sent abroad?

As reported by banks, TCS is nil when the remittance is financed by an education loan from a financial institution. Self-funded education remittances are nil up to ₹10 lakh and 2% above that from 1 April 2026. Confirm with your bank before remitting.

Conclusion

The cheapest education loans for studying abroad usually come from public sector banks like SBI and Bank of Baroda, especially if you have collateral or a place at a select or premier institution. NBFCs like HDFC Credila and Avanse give you speed and unsecured options at higher rates. International lenders like Prodigy Finance and MPOWER help students with no Indian collateral or co-signer, though both are currently running waitlists.

Compare total cost including margin money and fees, use PM-Vidyalaxmi to reach several banks at once, and keep interest certificates for Section 129. Still choosing a destination? See our guides to studying in the USA, the cheapest universities in Canada, IELTS vs TOEFL and the UK post-study work visa.

Official References

• SBI Global Ed-Vantage Scheme
• SBI Education Loan Interest Rates
• Bank of Baroda: Baroda Scholar
• Bank of Baroda Retail Loan Interest Rates
• HDFC Credila
• Avanse Education Loan Interest Rates
• Prodigy Finance
• MPOWER Financing
• MPOWER Financing Repayment Examples
• Income Tax Department: Section 129
• PM-Vidyalaxmi Portal