Student-friendly Low-Interest Loans to Study Abroad

Students looking forward to studying abroad face the biggest challenges when it comes to financing their education.

This is one of the biggest roadblocks to studying abroad as universities and visa authorities check up on your financial background well in advance.

With high tuition fees and the expenses of your lifestyle, paying interest on your student loan only adds to the costs.

The cost of tuition fees alone at prestigious foreign institutes could exceed INR 20 lakhs.

In addition to this, having funds for your visa, accommodation and other utilities burden you with a large sum of money.

Considering these essential aspects of studying abroad, does it mean you must give up on your dreams? Or discount them for something cheaper?

Of course, not!

All you have to do is choose smart – choose the lowest education loan interest rate to cater to your needs.

This way you study abroad without piling a massive debt over your shoulders.

Suggestion: Apply for GradRight Scholarships

Low Interest Education Loans & What They Cover?

Low interest education loans are monetary assistance availed by students to meet the expenses related to their education, paying a comparatively low-interest rate.

These education loans cover the costs of your

  • Tuition fees
  • Living expenses
  • Travel expenses
  • Insurance
  • Cost of books, equipment, instruments, and uniforms (if any)
  • Cost of laptop covered (if required for the course)
  • Deposit money
  • Blocked amount (if required)
  • Any other expenses with the required proof to complete your desired course.

Note: Beware of potential scammers running amok promising low education loan interest rates. Always get your loans from trustworthy banks/lenders only.

Things You Need to Know Before Taking a low Interest Education Loan:

To opt for low interest education loans learn about the types of interest rates to make a sound decision.

Funding institutes impose two types of interest rates. Which are:

  1. Types of interest rates

Floating Interest Rate

  • The interest rate can decrease or increase during the loan tenure. It is highly dependent on market conditions.

Fixed Interest Rate

  • This type of interest rate stays the same throughout the loan tenure. Loans with a fixed interest rate would be a safer choice for students to opt for.
  1. Types of loans

In addition to interest rates, you must know that loans with collateral or secured loans have lower interest rates.

On the contrary, with an unsecured loan, you will not require any safety collateral or asset to back up the loan. However, unsecured loans impose higher interest rates.

Depending on the type, amount, course and country you will be studying in banks offer student loans with 8-10% interest.

The low interest education loans are usually offered in India by public banks with 8% interest.

Now, let’s get to the lenders that provide you lowest interest student loans.

Top Banks in India Offering Lowest Education Loan Interest Rates

Helping students fulfill their dreams of studying abroad, leading Indian banks offer low interest education loans.

Students can benefit from these lowest interest student loans and avail the additional benefits of taking a loan as well. For instance, maintaining a good credit score or saving on taxes.

Most of the low interest education loans can be repaid within 15 years after graduation.

The banks offering low interest education loans are:

Banks

Interest Rate

Processing fee

Loan Amount

Central Bank of India

Starts at 6.85%

1% of loan amount

Upto ₹ 20 lakh

State Bank of India

Starts at 6.70%

10,000 per application

₹7.50 lakh- ₹1.5 Crores

Union Bank of India

Starts at 6.80%

NIL

Upto 30 lakh

Punjab National Bank

Starts at 8.00%

1% of loan amount

Upto ₹ 60 lakh

Indian Bank

8.50%

NIL

₹ 4 lakh +

Bank of Baroda

Starts at 8.45%

NIL

₹ 7.5 lakh +

HDFC

9.55%-14%

1% of loan amount + tax

 ₹ 20 lakhs

The interest rates listed in the table above are recent and may be subject to change.

Apart from bank loans, you also have the exciting option of FundRight to assist you with your funds in a seamless fashion.

To take any of the low interest loans to study abroad, you must fulfill the eligibility checklist.

Tip: Calculate the Amount You Will Need to Study Abroad

Eligibility Requirements for Low Interest Education Loans

To successfully get your loan passed, you must be eligible to take a student loan.

These requirements slightly vary from bank to bank. However, some of the basic requirements are listed below.

 

  • One must be a resident of India.
  • The student’s age must be between 18 to 35; undergoing a graduate degree or postgraduate degree.
  • The student must have confirmed admission to an institute or university abroad.
  • The student must have a co-applicant eligible for an education loan in India.

Furthermore, students with excellent academic records and merit are bound to get lowest interest student loans approved quicker.

For students who have displayed average academic scores but have shone in extracurriculars too, there is a good chance of getting a low-interest loan.

Documents Required for  Lowest Education Loan Interest Rate

If you are eligible for a student loan, the next important thing for you is to gather the necessary documents.

To get a low-interest education loan from the banks mentioned above, students have to submit scanned copies of the following documents to their respective banks.

  • Admission or acceptance letter from the college or university
  • Two passport-size photographs
  • Transcripts of 10th, 12th and degree certificates
  • Permanent Account Number details (PAN)
  • Adhar Card
  • Passport
  • Voter ID Card
  • Bank passbook
  • Salary slips of the co-applicant
  • Income tax returns for the last two years of the co-applicant
  • Insurance
  • Bank statements
  • Collateral proof (if required)

Apart from your ID proofs, having insurance has become crucial to take a loan in the present.  

Loan Insurance for Low Interest Student Loans

Loan insurance helps secure loan repayment.

In any case of an unfortunate accident, the loan insurance company will pay back the entire education loan amount, instead of the co-applicants.

This can be a huge relief to the borrowers of government bank education loans, for which even retired parents are named as co-applicants.

However, it is not mandatory for every loan applicant to have a loan insurance. The requirement depends on the lender and the bank.  

It is usually recommended for student loans taken from a private bank without collateral.

How to Get Low Interest Education Loans in India?

You can apply for low interest education loans online or offline at the bank.

Applying Online: To apply online, you will have to fill out an online application form taken from the website of your desired bank. Along with the form, you will be required to submit the scanned copies of necessary documents on the portal, online.

Applying Offline: To apply for a low interest education loan offline, students can visit the nearest branch of their desired bank and fill out the hard copy of the application form. The documents should be submitted along with the form to the bank representative.

After you have initiated your bank application, the bank executives reach out to you and progress your loan accordingly.

Now that we’ve looked at low interest loans, eligibility and requirements; you can understand how the repayment of these loans works.

Education Loan Repayment Process of Low Interest Student Loans

Most education loans can be repaid within 15 years.

With that said, most loan repayments start 12 months after the completion of your course or six months after finding employment.

Note that banks offer varied moratorium periods for the repaying of loans. The loan repayment can be paid back in EMIs.

Some of the different modes of repayments available are

  • Internet banking: can be paid online through the lender’s website or mobile app.
  • Cheque: a good old-fashioned cheque can be dropped off at any of the branches.
  • Direct debit: you can set up a recurring payment for your EMI on the payment due date.
  • Demand draft

These are some of the common and accessible options made available to applicants by the lenders/banks.

However, the preferred method of repayment is up to the agreement between the lender and the applicant.

Therefore, students should thoroughly check the details of the loan and repayment before signing off on the loan.  

With the right lowest education loan interest rate, there is no stopping you and your dreams of getting your professional and academic goals.

You can also bid your loans on India’s top loan bidding platform Fundright and choose from a wide variety of lenders.

Even if you’ve been rejected or disappointed by reaching out to bank managers, FundRight professionals will knock on the right door for you.

If the only thing holding you back is the shortage of funds, the education loans mentioned above are your ticket to your ideal university abroad.

You can also talk to FundRight experts to guide you through your study abroad journey.

So dear students, better late than never to sign up on that low-interest education loan deal and go explore the world.

Frequently Asked Questions:

  1. Are there any education loans in India with zero interest?

Ans: There are no such education loans in India. However, the lowest education loan interest rates can be subsidized if you obtain some academic benefits.

  1. Which bank offers the lowest education loan interest rate for students?

Ans: Currently, the State Bank of India offers several education loans at interest rates starting at 6.70% for students studying abroad.

  1.  Can low interest education loans be obtained without security?

Ans: For loan amounts up to 7.5 lakhs, you do not need to provide security or collateral.

  1. Can a student be eligible for a lowest interest student loan without a co-applicant?

Ans: Most education loans require a co-applicant or co-borrower for the purpose of connectivity and security when you are studying abroad.

  1. What is the maximum amount of loan that can be acquired under the lowest education loan interest rate?

Ans: NRI students can obtain loans up to 30 lakhs for studies abroad. However,  the maximum amount of loans that can be obtained is decided by the bank based on the needs of the student. Currently, HDFC bank offers loans up to 1.5 crores for studies abroad.

  1. Can student loans be paid off early?

Ans: The repayment period for student loans starts 12 months after the completion of the course. The loan can be paid off within a period of 15 – 20 years, depending on the bank/lender. However, if you wish to pay off your loan sooner, you can do that too.

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