Home › Tools › Education Loan for Studying Abroad
Education Loan for Studying Abroad (2026): Secured vs Collateral-Free
A clear guide to funding your study abroad with an education loan from India — secured versus unsecured (collateral-free) loans, typical interest rates and limits, the moratorium, tax benefits, and how to pick the cheapest total option. Model your repayment free.
▶ Free education-loan EMI calculatorSecured vs collateral-free education loans
| Loan type | Typical interest | Typical limit | How it works |
|---|---|---|---|
| Secured (with collateral) | ~8.5–11% p.a. | Up to ~INR 1.5 crore | Property, FD or LIC policy pledged; lowest rates, highest limits |
| Unsecured (no collateral) | ~11–15% p.a. | Typically up to ~INR 40–75 lakh | No asset pledged; depends on university, course and co-applicant income |
| International lenders (no co-signer) | Varies (often higher) | Course-cost based | E.g. Prodigy Finance, MPOWER — for select universities, no Indian collateral/co-signer |
Rates and limits are indicative ranges for Indian students in 2026 and vary by lender, university, course and profile — always get current quotes from two or three lenders. Full walkthrough: education loan without collateral and education loan for study abroad.
The moratorium: pay less overall
Most education loans include a moratorium (repayment holiday) of your course duration plus 6–12 months. Full EMIs start after that. But interest still accrues during the moratorium — so paying at least the simple interest while you study can cut your total repayment substantially. See exactly how much with the EMI calculator.
Interest, tax and total cost
- Section 80E: the interest you pay is fully tax-deductible in India for up to 8 years — a real saving that lowers the effective rate.
- Compare total cost, not the headline rate: a slightly higher rate with no processing fee or with interest paid during study can be cheaper overall than a low advertised rate with high fees.
- Forex & proof of funds: a loan sanction letter can serve as proof of funds, and loans can fund a blocked account or GIC — check your destination's rule in the funding facts and the proof-of-funds calculator.
Which lenders to consider
- Public-sector banks (e.g. SBI Global Ed-Vantage, Bank of Baroda): lowest rates, usually need collateral for larger amounts.
- Private banks & NBFCs (Axis, ICICI, IDFC First; Avanse, Auxilo, InCred, HDFC Credila): faster processing and collateral-free options up to higher limits, at higher rates.
- International lenders (Prodigy Finance, MPOWER Financing): no Indian collateral or co-signer, for select universities — useful if you have neither.
LandingPrep is independent and does not sell loans or take lender commissions on this page — always compare current offers directly with the lenders.
A simple plan
- Estimate the total cost of your course with the cost-of-studying calculator.
- Decide secured vs collateral-free based on whether you can pledge an asset.
- Get quotes from 2–3 lenders and compare the total cost (rate + fees + moratorium terms).
- Model the EMI and see the saving from paying interest during study — EMI calculator.
- Keep Section 80E in mind when you start repaying.
Last updated: 2026-07-17. This is general information, not financial advice; confirm current rates, limits and terms directly with lenders.
Frequently asked questions
- Is an education loan secured or unsecured?
- It can be either. A secured (collateral) loan is backed by an asset — property, a fixed deposit or an LIC policy — and carries the lowest interest (about 8.5–11% p.a.) and the highest limits. An unsecured (collateral-free) loan pledges no asset and is approved on the strength of your university, course and co-applicant's income, at a higher rate (about 11–15% p.a.) and a lower limit. Many students take an unsecured loan when they don't have collateral to pledge.
- Can I get an education loan without collateral for studying abroad?
- Yes. Private banks and NBFCs (such as Avanse, Auxilo, InCred and HDFC Credila) offer collateral-free education loans up to roughly INR 40–75 lakh, depending on the university, course and your co-applicant's income. International lenders like Prodigy Finance and MPOWER Financing lend to select universities with no Indian collateral or co-signer. Rates are higher than secured loans — compare the total cost, not just the headline rate.
- Do I pay EMIs while I'm still studying?
- Usually not in full. Most education loans give a moratorium (repayment holiday) covering your course plus 6–12 months. Interest still accrues during this period, so paying at least the simple interest while you study meaningfully reduces your total repayment. Model it with the free EMI calculator.
- What tax benefit does an education loan give?
- Under Section 80E of the Indian Income Tax Act, the interest paid on an education loan is fully deductible from your taxable income for up to 8 years (there is no upper limit on the interest amount). The principal is not deductible. This applies to loans taken for higher education for yourself, your spouse or your children.
- How much can I borrow, and what do lenders check?
- Limits range from a few lakh up to about INR 1.5 crore with strong collateral. Lenders weigh your university's ranking and the course's employability, your academic record, the co-applicant's income and stability, and the collateral offered. A strong admit to a well-ranked, employable course improves both your approval odds and your rate.