Studying abroad often comes with a significant financial burden from tuition fees and living expenses to travel, insurance, and more.
While education loans have made higher studies more accessible, not every student or family has the assets to pledge as security. This is where education loans without collateral come in.
Also known as unsecured education loans, these are designed for students who have strong academic potential but may lack property or financial backing.
These loans don’t require you to pledge any assets, making them a lifeline for many middle-income households and first-generation learners.
This blog covers how study abroad education loans without collateral work, their eligibility, application process, top lenders and key benefits for students pursuing higher education abroad without financial strain.
What Is a Loan to Study Abroad Without Collateral?
An international education loan without collateral does not require the student or their family to pledge any personal assets, such as property, fixed deposits, or gold, as security while you decide to study abroad.
These loans are also known as unsecured education loans. They are granted primarily based on the student’s academic record, the reputation of the university/course, and the financial standing of the co-applicant (usually a parent or guardian).
These loans benefit students who may not have access to high-value assets but still want to pursue higher education abroad. With faster processing, minimal documentation, and no legal property verification, education loans without collateral are becoming an increasingly popular option among middle-income families and first-generation learners.
While the loan amount may be comparatively limited and interest rates slightly higher, this type of loan provides access to quality education without the burden of asset-based risk.
Types of Education Loans
Education loans can be classified based on various factors, such as whether you are studying abroad, the course type, the presence or absence of collateral, and the type of lender (bank, NBFC, or fintech).
Education Loan With Collateral (Secured Loan)
The borrower must pledge a property, fixed deposit, or house as security for these loans. The lender holds this asset until the loan is fully repaid.
Education Loan Without Collateral (Unsecured Loan)
No asset or security needs to be pledged. Instead, the loan is sanctioned based on your academic profile, university/course ranking, co-applicant’s financial background and future earning potential.
Eligibility Criteria For Education Loans Without Collateral
To secure an education loan without collateral for studying abroad, students and their co-applicants must meet specific academic, financial, and documentation-related requirements.
While these criteria may vary slightly depending on the lender, here are the standard benchmarks:
- Income Requirements: The co-applicant’s annual income after liabilities and expenses should typically exceed Rs. 4 lakh.
- Credit Score: The co-applicant must have a good credit history, usually a CIBIL score above 700 is required. Depending on the lender, some banks accept a minimum score of around 600.
- Citizenship: Both the applicant and the co-applicant must be Indian citizens.
- Academic Performance: Minimum academic performance criteria may be required, such as at least 60% marks in higher secondary and graduation.
- Co-applicant Relationship: The co-applicant should be an immediate family member, such as a parent, guardian, sibling, or spouse. The applicant’s parents must own their own residential home.
- GRE Scores: Students applying to study in the USA must have a GRE score of 300 or more.
Process To Apply For An Education Loan Without Collateral To Study Abroad
Applying for a collateral-free education loan has become easier and more accessible, especially with the rise of online lending platforms and fintech partners.
Here’s a step-by-step breakdown of how students can apply for an unsecured education loan for abroad studies:
1. Research and Shortlist Lenders
Begin by identifying banks, NBFCs, or loan aggregators that offer unsecured education loans. Look for lenders that support your country of study, chosen university, and course type. Leading providers include private banks, NBFCs, and digital loan platforms.
2. Check Your Eligibility
Before applying, review the lender’s eligibility criteria such as academic scores, GRE (if applicable), university ranking, and your co-applicant’s income and credit score. This helps avoid unnecessary rejections.
3. Gather the Required Documents
- Keep the following documents ready for a smooth application process:
- Student and co-applicant KYC (ID & address proof)
- Academic records (mark sheets, certificates)
- A letter of admission from the school or university Course fee structure or invoice
- Co-applicant’s income proof (salary slips, bank statements, ITR)
- Recent passport-size photos
- Credit report of the co-applicant
4. Submit Your Loan Application
The majority of lenders accept applications online via their official websites or mobile apps. Fill in the form, upload documents, and submit for initial review. If you need guided support, you can also visit a branch or connect with an education loan advisor like Unicreds.
5. Loan Evaluation by the Lender
- The bank or NBFC evaluates your profile based on:
- Your academic track record
- University/course credibility
- Country of study
- Earning potential after graduation
- Co-applicant’s financial background and credit history
6. Loan Sanction and Disbursement
The lender sends you a sanction letter outlining the terms and the amount of the loan once your application is approved. The disbursed funds are usually sent directly to the educational institution as per the fee schedule.
7. Additional Formalities (if applicable)
If you are applying for study abroad, you may be asked to submit:
- Documents for Visa Approval Documentation of travel or lodging Insurance or foreign remittance forms
- Top Lenders Offering Education Loans Without Collateral To Study Abroad
- Several public and private banks offer unsecured education loans to international students pursuing higher studies.
These loans are granted based on academic merit, university/course reputation and the co-applicant’s financial profile, without requiring any collateral.
Public Sector Banks
State Bank of India (SBI): Offers up to ₹7.5 lakh without collateral for domestic education and up to ₹1.5 crore for premier foreign institutes under specific schemes. Interest rates range from 8.30% to 11.50%.
Punjab National Bank (PNB): Provides unsecured loans up to ₹1 crore. Interest rates for unsecured loans are slightly higher than the average 8.55% to 11.25% offered for secured loans.
Bank of Baroda: Offers up to ₹80 lakh without collateral for overseas studies with interest rates ranging from 9.10% to 12.45%.
Bank of India: Provides up to ₹1 crore in unsecured loans for foreign education. Interest rates range from 8.25% to 11.60%.
Private Sector Banks
HDFC Credila: Offers unsecured education loans up to ₹75 lakh with no margin money and zero collateral required. Loan tenure extends up to 15 years, with early repayment allowed without charges. Covers living expenses and charges a nominal processing fee of 0.85% to 1%.
ICICI Bank: Offers unsecured education loans up to ₹1 crore with no margin money and zero collateral required. Loan tenure goes up to 14 years, with early repayment allowed at no extra cost. Covers living expenses and has a low processing fee of 0.5% to 1%.
Axis Bank: Provides unsecured education loans up to ₹75 lakh with no margin money and no collateral required. Loan tenure is up to 15 years, with zero charges on early repayment. Covers living expenses and has a processing fee between 0.5% and 1%.
Loan amounts, eligibility, and interest rates may vary based on the university, country of study, and co-applicant’s financials.
What does an Unsecured Education Loan Cover?
Unsecured education loans for studying abroad are designed to cover a broad range of expenses associated with overseas education.
While the exact coverage may vary by lender, the following are the most commonly included expenses:
Tuition Fees: Full or partial tuition fees can be covered depending on the loan amount and other factors.
Living Expenses: Loans typically cover living costs such as accommodation (on-campus or off-campus), food, and daily expenses. The extent of this coverage may differ between lenders, so it’s essential to clarify with your bank or NBFC.
Travel Expenses: Most education loans include travel expenses or passage money for a one-way ticket to the country of study. Some lenders may require you to request the inclusion of airfare specifically.
Books, Equipment, and Study Materials: Most loans include the cost of purchasing textbooks, laptops, equipment, and other study materials necessary for your course.
Health and Travel Insurance: Many lenders, especially private banks and NBFCs, include health and travel insurance as part of the loan package. Nationalised banks may not always cover these, but you can request their inclusion.
Visa Fees: Some private banks and NBFCs include visa fees in their list of covered expenses, but not all public sector banks do. Always confirm with your lender if this is included.
Fees for Exams, Library Use, and Laboratory Access: Generally, fees for exams, library use, and laboratory access are covered by the university or college. Benefits Of Education Loans Without Collateral
Non-collateral education loans are an excellent option for students who don’t have assets to pledge but still want to pursue higher education abroad.
These unsecured loans make quality education more accessible and less stressful for students and their families by providing generous funding, covering a wide range of costs, and flexible repayment options.