How Can I Get Government Loan for Study Abroad?

Studying abroad is a dream for many Indian students, but the cost can be a major hurdle. Fortunately, the Indian government provides education loans through nationalized banks under various schemes to support overseas studies. This blog explains how you can apply for a government loan, eligibility criteria, required documents, interest rates, repayment, and tips to improve your chances of approval.

Why Choose a Government Education Loan for Study Abroad?

Studying abroad opens doors to global career opportunities, world-class education, and exposure to diverse cultures. However, pursuing higher education overseas can cost anywhere from ₹15 to ₹60 lakhs depending on the course and country. That’s where government education loans come into play. These loans, offered through banks under government schemes, help students finance their tuition, living expenses, travel, and other costs without burdening their families.

Let’s explore how Indian students can get a government-backed education loan to make their dream of studying abroad a reality.

What is a Government Education Loan?

A government education loan for studying abroad is a financial assistance provided by nationalized banks under schemes regulated by the Government of India and the Reserve Bank of India (RBI). These loans typically fall under:

• Credit Guarantee Fund Scheme for Education Loans (CGFSEL) – Under the Model Education Loan Scheme by the Indian Banks’ Association (IBA). 
• Vidya Lakshmi Education Loan Portal – A government platform to apply to multiple banks. 
• Padho Pardesh Scheme (recently discontinued but worth mentioning for context) – Interest subsidy scheme for minority students (no longer active since 2022). 

These loans are extended by banks such as SBI, Bank of Baroda, Punjab National Bank, Union Bank of India, Canara Bank, and others.

Eligibility Criteria for Government Education Loans

To apply for a government-supported education loan for abroad studies, you must meet the following criteria:

Student Eligibility

• Must be an Indian citizen. 
• Must have secured admission to a recognized foreign university/institution. 
• Must have completed 10+2 or equivalent. 
• Should pursue a graduate, postgraduate, or professional course. 

Course Eligibility

Courses eligible for loans include:

• Graduate and postgraduate degrees (MS, MBA, MBBS, etc.) 
• Professional and technical courses. 
• Ph.D. or research-based courses from recognized universities abroad. 

Institute Eligibility

• Foreign institutions must be recognized and reputable. 
• Admission must be confirmed through merit or entrance examination. 

Expenses Covered Under Government Education Loans

Government loans generally cover the following expenses:

• Tuition fees 
• Hostel fees 
• Travel and passage expenses 
• Examination, library, and lab fees 
• Purchase of books, equipment, laptop, etc. 
• Insurance premium for the student 
• Miscellaneous living expenses 

Top Government Banks Offering Education Loans

Several government banks in India provide education loans for abroad studies under the IBA model scheme:

State Bank of India (SBI – Global Ed-Vantage Scheme)

• Loan amount: Up to ₹1.5 crore 
• Interest rate: ~10.5% (with concessions for girls) 
• Repayment: 15 years after the moratorium 
• Processing time: Fast-track processing 

Bank of Baroda (Baroda Scholar)

• Loan amount: Up to ₹80 lakhs (higher for premium institutes) 
• Interest rate: 9.85% – 10.5% 
• Moratorium period: Course duration + 1 year 
• No collateral for loans up to ₹7.5 lakhs 

Punjab National Bank (PNB Udaan)

• Designed for students pursuing higher studies abroad 
• Loan amount: Up to ₹1 crore 
• Interest rate: 10%–11.5% 
• Collateral required above ₹7.5 lakhs 

Documents Required for the Application

To apply for a government education loan, you will need the following documents:

For Student

• Passport-size photos 
• Aadhaar card & PAN 
• Admission letter from foreign university 
• Academic records (10th, 12th, graduation certificates) 
• Entrance test scores (IELTS, TOEFL, GRE, GMAT) 

For Co-Applicant (usually parent/guardian)

• Income proof (salary slips/ITR) 
• PAN and Aadhaar 
• Bank statements 
• Property documents (if offering collateral) 

Additional Documents

• Loan application form 
• Cost of education estimate from the university 
• Proof of relationship with co-borrower 

Loan Amount & Collateral Requirements

Loan Amounts

• Up to ₹7.5 lakhs – No collateral required. 
• Above ₹7.5 lakhs – Tangible collateral security required (property, fixed deposits, etc.). 

Collateral Options

• Immovable property (house/land) 
• Fixed deposit 
• Government bonds 
• Life insurance policies 

Interest Rates and Repayment Terms

Interest Rates

• Generally range from 9% to 11.5% 
• Concessions for girl students (0.5% less in most banks) 
• Simple interest charged during the moratorium period (course duration + 1 year) 

Repayment

• Repayment starts after the moratorium period 
• Tenure: Up to 15 years after course completion 
• Prepayment is allowed without penalty in most cases 

How to Apply for a Government Education Loan

You can apply through the following methods:

A. Vidya Lakshmi Portal (www.vidyalakshmi.co.in)

• A government-run single-window platform. 
• Register and fill the Common Education Loan Application Form (CELAF). 
• Apply to multiple banks with a single application. 
• Track application status online. 

B. Direct Bank Application

• Visit the nearest branch of SBI, PNB, BOB, etc. 
• Fill out the loan form and submit documents. 
• Some banks offer online applications on their websites. 

Tips to Improve Chances of Loan Approval

• Secure admission first: Loan application is valid only with a confirmed offer letter. 
• Maintain good academic record: Higher scores improve credibility. 
• Apply early: Start at least 3–6 months before your course begins. 
• Choose reputed universities: Well-known institutions improve the bank’s confidence. 
• Strong co-applicant profile: A stable income source or good credit history of the guarantor helps. 
• Prepare accurate documents: Incomplete files lead to rejections or delays. 

What if My Loan is Rejected? Alternatives

In case your application is rejected, you can consider:

• NBFCs (e.g., HDFC Credila, Avanse, InCred) – Offer flexible options but higher interest. 
• Scholarships & Grants – Indian and foreign universities offer merit-based aid. 
• Crowdfunding or sponsorships – A rising trend, especially for research courses. 
• Education Loan Consultants – Help you approach banks with stronger applications. 

Important Government Schemes to Know

Although some schemes have ended, it’s useful to be aware of historical or complementary initiatives:

• Vidya Lakshmi Scheme – Central portal for loan application. 
• Padho Pardesh Scheme (Discontinued) – Provided interest subsidy for minorities. 
• Dr. Ambedkar Interest Subsidy Scheme – For OBC & EBC students pursuing post-graduation abroad. 
• National Overseas Scholarship (NOS) – Scholarship for SC/ST candidates pursuing higher studies abroad. 

FAQs – Frequently Asked Questions

1. Can I get 100% education loan for study abroad?
   Yes, some banks offer up to 100% coverage including tuition and living expenses, especially if collateral is provided.
2. Do I need a co-applicant for a government education loan?
   Yes, a co-applicant (usually a parent or guardian) is mandatory for most loans.
3. What happens if I am unable to repay the loan?
   Banks offer flexible repayment options, but defaulting can affect credit score and lead to legal actions. You may request restructuring in hardship.
4. Can I apply for more than one bank through Vidya Lakshmi?
   Yes, up to three banks with a single form.

Conclusion: Take the First Step Toward Your Global Dreams

A government education loan can be the key to unlocking your global academic journey. With structured schemes, reasonable interest rates, and a wide network of public-sector banks, Indian students have strong financial backing to study abroad. Start with the Vidya Lakshmi portal, gather your documents, and approach banks confidently.

Education abroad is no longer out of reach – with the right loan and planning, your dream can become a funded reality.