financial documents

How to Finance Your Education with an Education Loan

Dilip Oak's Academy
Education Loan

If you’re planning to study abroad for Fall 2025, probably you must have already received admission offers or must be waiting for them. Either way, one big question on your mind may be: “How do I pay for my education?” Don’t worry, this blog will help you understand everything about an education loan—what does it cover, who can apply, and how to get one. Let us break it down!

What does an education loan cover?

An education loan helps you pay for:

  1. tuition fees
  2. living expenses (rent, food, transport, etc.)
  3. health insurance
  4. other study-related costs (books, laptop, etc.)

Who provides an education loan?

You can apply for an education loan from:

  1. Nationalised Bank like State Bank of India, Canara Bank
  2. Private Bank like HDFC Bank, ICICI Bank
  3. Cooperative Bank like Cosmos Bank, Saraswat Bank
  4. NBFC (Non-Banking Finance Corporation) like Credila Financial Services, InCred finance

Who is eligible for an education loan?

Each bank has different rules, but the common requirements are as below:

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  • The applicant and co-applicant (usually parents/guardian) should be citizens of India and over 18 years of age.
  • Student should have a confirmed admission from an accredited and recognised overseas university.
  • The co-applicant should have a regular source of income and security to offer if it is a secured loan
  • The co-applicant should have a good CIBIL score, generally 750 and above.

What is the maximum amount of loan one can avail of?

The maximum loan amount you can avail of depends on several factors, including:

  • Your profile
  • The university you are applying to
  • Your financial background

That being said:

  • Secured loans (with collateral): Many lenders offer loans without an upper limit if you provide sufficient collateral.
  • Unsecured loans (without collateral): The maximum loan amount typically ranges from Rupees 45 to 50 lakhs.

It is important to note that these amounts can vary depending on the lender and other specific conditions.

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What is the tenure of a student loan? 

The tenure of an education loan typically ranges from 10 to 14 years, depending on the lender and the loan amount. In addition, most of the loan providers offer a moratorium (or grace) period of about 2 to 3 years, during which you are not required to repay the loan, often allowing you time to complete your studies and settle into your career.

How much time is required for processing an education loan?

Under normal conditions, student loans are processed in 15 to 30 days.

Documents required for applying for an education loan:

  1. Duly filled application form
  2. Passport-sized photographs of the applicant and the co-applicant
  3. Photo ID: PAN/ Passport/ Driving License/ Aadhaar Card of the applicant and co-applicant
  4. Proof of Residence.
  5. Academic documents:
    • HSC Mark sheet
    • Mark sheet of subsequent years of graduation
    • Mark sheet of entrance exams like GRE, IELTS, TOEFL etc. 
    • Scholarship documents (if applicable) 
  6. Proof of admission: Printed admission letter/I-20 form received from the college or university
  7. Bank statements of co-applicant: Usually statements of the last 8 to 12 months 
  8. Income proof of co-applicant:
    • For a salaried person:
      • The last three salary slips
      • Form 16 of the last two years
    • For a self-employed person:
      • Income Tax returns of the last two years
      • Financial statements of the last two years certified by CA
      • Proof of office (Lease deed, a Title deed, Utility bill etc.) 
  9. Collateral documents:
    • Property title deed
    • 7 / 12 extracts in case of land
    • Registered sale deed.

The list above is for reference purposes only. Requirements may vary depending on the financial institution. Therefore, it’s always a good idea to verify the specific requirements with an authorized representative of the institution in question.

Frequently Asked Questions:

Can I apply for a loan even if my admission is yet to be confirmed? 

Yes, you can! Most banks accept loan applications even if your university admission is yet to be confirmed or is still in process. This is called Pre-Sanction of loan Here’s how it typically works:

  • Application assessment: The loan application will be evaluated based on your overall student profile, which includes:
    • Academic performance
    • Other factors such as the credit profile of your co-applicant
  • Approval process: The bank may approve the loan and issue a sanction letter, but it will typically include the condition that:
    • Admission must be confirmed before the loan is disbursed.

This way, you can proceed with your loan application even before your admission is finalized.

Is there any tax benefit on availing of student loans? 

Yes, there is! Under Section 80E of the Income Tax Act of India, 1961, individuals can claim a tax deduction on the interest paid on student loans. This benefit applies if the individual is filing their Income Tax Return only under the old tax regime.

What is acceptable as collateral?

Collateral can be classified into two categories:

  • Movable Assets:
    • Financial assets such as fixed deposits in the respective bank.
  • Immovable Property:
    • Flat, house, or non-agricultural land.

These are the common forms of collateral that banks typically accept when securing a loan.

Final Thoughts

An education loan can make studying abroad possible, even if you don’t have all the funds right now. The key is to apply early, compare options, and be prepared with all documents. Wishing you all the best for your studies and future!

As India’s leading Study Abroad Consultant, Dilip Oak’s Academy offers a comprehensive suite of services, including TOEFL, IELTS, GRE coaching, as well as GRE Self Prep. Furthermore, our admission counseling services can guide you through the entire process, from Shortlisting Universities to Visa Counseling. With our expertise, we have successfully sent 32,000 students to various prestigious American universities like MIT, Stanford, Cornell, and Carnegie Mellon. To enroll in our comprehensive overseas education consultancy services, book a free consultation or call us at 91-20-67444222.

Received an Admission for Fall 2025! What to Do Next?

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Many Students have already submitted their applications for Fall (August) 25. Of course, many universities are still accepting applications since their deadlines are available until March 31, 2025. However, since universities process applications on a rolling basis, students have already started receiving admissions and will continue getting decisions till May/June 2025.

Congratulations on receiving admission offers for Fall 2025. Having achieved this huge milestone, you are now entering the crucial phase of planning your next steps till your Visa is approved.

Selection of Final University

Once you have received an offer, here’s what you need to do next:

  • Evaluate the university’s ranking, course curriculum, job opportunities, and tuition fees before making a decision.
  • Consider factors like location and cost of living.
  • Check for merit-based scholarships and assistantships (RA/TA positions) at your university.
  • Part-time on-campus jobs can help cover living expenses.

Types of Admission Offers

Each university follows a different process when it comes to issuing admission letters and the I-20 form, a crucial immigration document that is necessary for obtaining a student visa. Here are the most common types of admission offers you might receive:

1. Admission Letter with I-20 Form

  • Some universities issue both the admission letter and the I-20 form simultaneously.
  • This is the most convenient scenario, as you can accept the admission and still wait for responses from other universities before making your final decision.

2. Admission Letter Without I-20 Form

  • In some cases, universities send an acceptance letter but will not issue the I-20 until you formally accept their offer.
  • You can accept their offer, request to issue the I-20 form and keep your options open while you wait for decisions from other universities.

3. I-20 to be issued Based on Financial Documents

Some universities require proof of financial capability before issuing the I-20. Students must submit a bank certificate or a letter of a sanctioned education loan to demonstrate sufficient funds.

  • The required amount should cover two semesters of tuition, one year of living expenses and other costs, if any.
  • You can include funds in Savings Bank account, Fixed Deposits and Public Provident Fund. Some universities also accept funds in the General Provident Fund.
  • Students can also temporarily borrow funds from family or friends to obtain a bank certificate and repay the amount immediately after issuance of the bank certificate.
  • Since students apply to multiple universities, it is advisable to get around eight copies of the bank certificate, which is valid for three months. The bank certificate should be equal to the cost of the most expensive university among your options so that it can be used for all the universities you have applied.
  • If personal funds cannot be arranged, a loan sanction letter from a bank or non-banking financial institution (NBFC) can be submitted instead.

4. Non-Refundable Deposit Requirement

  • Some universities require a non-refundable deposit (ranging from $100 to $750) as a confirmation of admission before issuing the I-20.
  • If you are unsure about enrolling at that university, it is better to delay the payment.
  • However, if the university is your preferred choice, paying the deposit within the deadline is advisable.

Cost of Education:

Studying for a master’s in the USA is a significant financial investment. Unlike domestic students who may qualify for in-state tuition, international students must pay out-of-state tuition fees, which are typically higher.

For example, if the annual in-state tuition fee is $10,000, the out-of-state tuition fee can go up to $25,000 or more. Additionally, due to the appreciation of the USD and increasing living costs in the U.S., education costs have risen further.

On average, a master’s degree from a decent university can cost between ₹45–50 lakhs, including tuition, living expenses, and other fees.

Education Loans for MS in the USA

Due to the high cost, many students choose to fund their education through education loans. These loans can be obtained from:

  • Nationalized Banks (State Bank of India,Bank of Baroda, etc.)
  • Private Banks (HDFC Bank, ICICI Bank, Axis Bank, etc.)
  • Cooperative Banks (Cosmos Bank, Saraswat Bank etc.)
  • NBFCs (Non-Banking Financial Institutions) (Credila Financial Services, etc.)

Interest Rates and Loan Benefits

  • Education loan interest rates generally range between 8.50 to 12%.
  • Nationalized and Cooperative banks usually offer lower interest rates compared to private banks and NBFCs.
  • Female students can benefit from a 0.5% interest rate discount at Nationalized and Cooperative banks.

Loan Sanction Process
To get your loan approved, you need:

  • Admission letter from the university
  • KYC documents (passport, ID proofs)
  • Academic transcripts and test scores (GRE, TOEFL/IELTS)
  • Income proof of co-applicant (if applicable)
  • Collateral (for secured loans)

However, before the loan is disbursed, the student must submit the I-20 form issued by the university and a photocopy of the F1 Visa approved by the US consulate.

Apply for Your Student Visa (F-1 Visa)

  • Once you receive your I-20 form, pay the SEVIS fee ($350) and fill out the DS-160 visa application form.
  • Schedule your visa interview at the U.S. embassy or consulate.

For a detailed guide on Student Visa, wait for our next blog.

If you need personalized guidance on university selection, loan applications, or visa preparation, our counseling team is here to help!

Stay tuned for more updates and expert tips on your study abroad journey with one of the best abroad educational consultants!

As India’s leading Study Abroad Consultant, Dilip Oak’s Academy offers a comprehensive suite of services, including TOEFL, IELTS, GRE coaching, as well as GRE Self Prep. Furthermore, our admission counseling services can guide you through the entire process, from Shortlisting Universities to Visa Counseling. With our expertise, we have successfully sent 32,000 students to various prestigious American universities like MIT, Stanford, Cornell, and Carnegie Mellon. To enroll in our comprehensive overseas education consultancy services, book a free consultation or call us at 91-20-67444222.