Education Loan for Studying Abroad Without Collateral: A Practical Guide for Indian Families
Last updated: 14 November 2026 · By the UniCoach Team · Scheme details checked against official bank, NBFC and government sources
Short answer
Yes, you can get an education loan for studying abroad without collateral. Public sector banks normally give up to about Rs 7.5 lakh without any security, under the IBA Model Education Loan Scheme and the government credit guarantee that sits behind it. Private banks, NBFCs and international lenders go much higher than that without property, sometimes to several tens of lakhs, but they look harder at the university you got into, your course, and your co-applicant's income and CIBIL score. Nothing here is a promise. Every lender decides case by case.
Key takeaways
• Rs 7.5 lakh is the usual collateral-free line at public sector banks. Above that, most of them ask for property or a fixed deposit worth 100 percent of the loan.
• Private banks and NBFCs lend much more without collateral, but at a higher interest rate, and only if your university and your co-applicant's income fit their list.
• Your co-applicant matters as much as your marks. A parent with steady income and a clean credit record is often the single biggest factor.
• There is no central government interest subsidy for studying abroad for the general student today. Padho Pardes was discontinued from 2022-23, and the new PM Vidyalaxmi scheme is for study in India only.
• Section 80E lets you claim the full interest paid on an education loan, with no upper limit, for up to 8 years. It is available under the old tax regime.
• TCS is nil when the money abroad comes from an education loan taken from a Section 80E lender. Without a loan, education remittances above Rs 10 lakh in a year attract TCS. Keep the sanction letter ready.
Secured vs unsecured loan
A secured loan is backed by something the bank can sell if the loan is not repaid: a house, a plot, or a fixed deposit. An unsecured loan has no such backing, so the lender takes more risk and prices it higher. Here is the practical difference:
| What it means | Typical limit | Interest rate range | Processing time | When it makes sense | |
|---|---|---|---|---|---|
| Secured (with collateral) | You pledge property, a plot or a fixed deposit. The lender values it and keeps the papers until the loan is repaid. | Public sector banks lend well past Rs 50 lakh for study abroad when collateral covers the full loan. Some schemes go higher for listed premier universities. | Usually the lowest rates in the market. Public sector bank rates are normally linked to the bank's repo-linked lending rate and change with RBI policy. | Slower. Property valuation and legal check often add 2 to 4 weeks. | You have property in the family, the course is expensive, and you want the lowest interest over 10 to 15 years. |
| Unsecured (no collateral) | Only your parent or guardian signs as co-applicant, plus assignment of your future income. No property is pledged. | About Rs 7.5 lakh at public sector banks. Private banks, NBFCs and international lenders go much higher for strong profiles. | Higher than a secured loan, because the lender carries more risk. The gap is usually a few percentage points. | Faster. NBFCs often sanction in a few working days once documents are in. | You have no property to pledge, the admission deadline is close, or the funding gap is small. |
Who gives education loans without collateral
Four kinds of lenders work in this market. They are not competing for the same student, so it is worth understanding which one your profile fits.
| Lender type | Typical unsecured limit | Interest rate range | What they look at |
|---|---|---|---|
| Public sector bank | Normally up to about Rs 7.5 lakh. Above that, most schemes need collateral covering 100 percent of the loan, even for a good university. | Lowest in the market. Rates move with the bank's repo-linked rate, so they change when RBI policy changes. | The IBA Model Education Loan Scheme rules, your admission letter, the co-applicant's income and the credit guarantee cover up to Rs 7.5 lakh. |
| Private bank | Higher than public sector banks for selected universities and courses, often into the tens of lakhs. Each bank has its own list. | Higher than public sector banks, lower than most NBFCs. Floating in most cases. | The university ranking list the bank uses, the course, the co-applicant's income and CIBIL score, and your academics. |
| NBFC (education finance company) | The highest unsecured amounts in the Indian market for strong profiles, often several tens of lakhs and sometimes more. | Highest of the Indian lenders. Many are fixed or semi-fixed rates, so compare the total interest and not just the monthly amount. | University and course first, then co-applicant income and credit score. Some weigh test scores and the admit strongly. Watch the processing fee. |
| International lender | Lends in foreign currency against your admission, with no Indian co-applicant and no collateral, for a limited list of universities and courses. | Usually the highest, because the loan is unsecured and in foreign currency. Currency movement adds to the real cost. | The university and programme must be on their approved list. Your Indian family's income is often not considered at all. |
What decides your loan amount
Two students with the same marks can get very different sanctions. These are the things lenders actually weigh:
• The university and course ranking list the lender uses. Most private banks and NBFCs keep an internal list of universities grouped into tiers. A top-tier university can mean a larger unsecured loan at a lower rate. A university that is not on the list may mean collateral or a rejection.
• Co-applicant income. The lender checks whether the family income can service the EMI after the moratorium. Salaried income with ITRs and salary slips is read more easily than cash business income.
• Co-applicant CIBIL score. A clean repayment record on existing loans and credit cards helps. Missed EMIs, settled accounts or a low score can shrink the amount or raise the rate.
• Your academic record. Consistent marks, no large unexplained gaps, and test scores that match the course.
• The country. Lenders look at post-study work rules and job outcomes in that country, because that is what repays the loan.
• STEM or management. Courses with clear employment outcomes, such as engineering, computer science, data, health and management, usually get larger unsecured sanctions than short diplomas or courses with no work pathway.
If your profile is weak on one of these, you can often fix it by adding a second co-applicant, bringing in a part-collateral, or choosing a university that sits higher on the lender's list. Our counsellors look at this before you apply, because a rejection leaves a mark on your file. Career counselling comes first, then the loan.
Documents you need
Keep two sets ready, one for you and one for your co-applicant. Lenders ask for roughly the same things.
For the student:
• Admission letter or offer letter from the university
• Fee structure or cost of attendance letter from the university
• Class 10, 12 and degree marksheets and certificates
• IELTS, PTE, TOEFL, GRE or GMAT scorecard, if the course needs it
• Passport, Aadhaar and PAN
• Passport size photographs
• Gap certificate, if there is a break in studies
• Any scholarship letter, so the lender funds only the gap
For the co-applicant (parent, guardian or spouse):
• Aadhaar and PAN
• Income proof: last 2 to 3 years of ITR with computation, and Form 16 or salary slips for the last 3 to 6 months
• Bank statements for the last 6 to 12 months of the main account
• Business proof, if self employed: GST returns, shop licence or balance sheets
• Proof of residence
• Existing loan statements, if any
If you are also pledging security, add the property papers, the chain of title and the latest tax receipt. Scan everything once, in good light, and keep it in one folder. It saves days.
Government help: subsidy and schemes
This part is where most families are misinformed, so here is the honest position as of November 2026.
Model Education Loan Scheme (IBA). This is the common framework most banks follow. It sets out the usual structure: a parent or guardian as joint borrower, no collateral up to Rs 7.5 lakh, collateral covering the full loan above that, a moratorium of the course period plus one year, and repayment of up to 15 years after the moratorium. Margin money of about 15 percent is common for study abroad above Rs 4 lakh. Each bank adapts this within its own scheme, so read the bank's own page.
Credit guarantee behind the Rs 7.5 lakh. The reason a bank can lend up to Rs 7.5 lakh without security is a central government credit guarantee fund for education loans. The guarantee is capped at Rs 7.5 lakh. That is why that number keeps appearing.
Vidya Lakshmi portal. A government portal where you fill one common education loan application form and send it to banks, then track the status online. It is free to use. It is a front door to bank schemes, not a loan or a subsidy by itself.
PM Vidyalaxmi (approved November 2024). This is the scheme people most often confuse. It gives collateral-free and guarantor-free loans with a central credit guarantee on loans up to Rs 7.5 lakh, plus interest subvention for eligible families. But the Ministry of Education guidelines say the benefit is for study in India only, at Indian higher education institutions on the quality list. Foreign institutions, foreign campuses of Indian institutions and Indian campuses of foreign institutions are not covered. It does not fund your degree abroad.
Padho Pardes. This interest subsidy on education loans for overseas study by minority community students was discontinued from 2022-23 by the Ministry of Minority Affairs. Students who were already beneficiaries as on 31 March 2022 continued to receive the subsidy. Do not plan around it. The National Minorities Development and Finance Corporation separately offers education loans for study abroad to minority community students at a concessional rate, through state channelising agencies.
Dr Ambedkar interest subsidy for overseas studies (OBC and EBC). This Ministry of Social Justice and Empowerment scheme subsidises interest during the moratorium on overseas education loans. Bank notices have said that fresh applications were put on hold and only existing beneficiaries with a 31 March 2022 cut-off were being considered. We could not confirm a later order reopening it. If you belong to these categories, check directly with the Ministry of Social Justice and Empowerment and with the nodal bank before you count on it.
What this means in practice. For most Indian families sending a child abroad today, there is no general central interest subsidy. Treat the full interest as a real cost and plan the EMI accordingly. State governments and community trusts sometimes run their own schemes, so it is worth asking locally.
Tax benefit: Section 80E
Section 80E of the Income Tax Act allows a deduction for the interest paid on an education loan taken for higher education. Three things to know:
• There is no upper limit on the amount of interest you can claim. The principal is not deductible.
• You can claim it for up to 8 years, starting from the year you begin paying the interest, or until the interest is fully paid, whichever comes first.
• The loan must be from a bank, a notified financial institution or an approved charitable institution. A loan from a relative or a friend does not qualify. It can be claimed by the student, parent, guardian or spouse who is repaying, and it covers higher education abroad as well as in India.
One catch families miss: this deduction is part of the old tax regime. If you file under the new regime, you normally cannot claim it. Ask your CA which regime leaves your family better off before the first repayment year.
TCS on money sent abroad
When you send money out of India under the Liberalised Remittance Scheme, the bank collects Tax Collected at Source. This is a real cash outgo at the time of transfer, even though you get it back later, so plan for it.
| How the education money is funded | Threshold in a financial year | TCS rate |
|---|---|---|
| Funded by an education loan from a lender covered under Section 80E | Any amount | Nil |
| Self funded, not from such a loan | Up to Rs 10 lakh | Nil |
| Self funded, not from such a loan | Above Rs 10 lakh | TCS applies on the amount above Rs 10 lakh. Banks have published this as 5 percent for remittances from 1 April 2025 and 2 percent for remittances from 1 April 2026. The rate is higher if the PAN is inoperative. |
Two practical points. First, TCS is not an extra tax you lose. It shows in your Form 26AS and you adjust it against your income tax or claim a refund. Second, to get the nil rate on a loan funded remittance, the bank will usually want a copy of the loan sanction letter at the time of transfer. Carry it with every remittance, not just the first.
Mistakes to avoid
• Applying too late. Start the loan file when you start the applications, not after the offer arrives. A secured loan can take a month on valuation alone.
• Going for the visa without a sanction letter. Most student visa applications need proof of funds, and a sanction letter from a recognised lender is accepted by many countries as part of that proof. Check the exact requirement of your country, because the rules differ and change.
• Paying an agent to "arrange" a loan. No agent can approve a loan. Banks and NBFCs do not charge a commission to an agent for sanctioning your loan. Pay fees only to the lender, on a receipt, in the lender's name.
• Signing blank forms. Never sign a blank loan application, a blank cheque or an undated document. Read the sanction letter: rate type, processing fee, prepayment rules, moratorium, insurance, and whether the interest during the moratorium is simple or gets added to the principal.
• Borrowing only for tuition. Living cost, airfare, insurance and the laptop add up. Ask the lender to include them so you are not short in the first semester.
• Taking the first sanction you get. Compare at least two or three lenders on the total interest over the full term, not on the EMI alone.
Where UniCoach fits
We are a career counselling and study abroad guidance team based in Panipat. We do not lend money and we do not take a commission from any lender. What we do is look at your profile early, tell you honestly whether a collateral-free loan is realistic for the universities on your list, and help you shortlist courses and countries where the numbers actually work. If the funding gap is too big, it is better to know that in September than in June.
Read our education loan guidance page for how we help with the file, use Search Programs to see courses and costs, or start with career counselling if the course is still open.
UniCoach, 1st Floor, Gali No. 4, Sahil Colony, Jattal Road, Sondhapur, Panipat 132105. Monday to Saturday, 10 AM to 7 PM. The first consultation is free. Bring your marksheets and your parent's income papers and we can tell you where you stand in one sitting.
FAQs
Can I get an education loan without collateral for abroad studies? Yes. Public sector banks normally lend up to about Rs 7.5 lakh for study abroad without any security, with a parent or guardian as co-applicant. Private banks, NBFCs and international lenders go higher without collateral, but only for universities and courses on their approved list and with a co-applicant who has steady income and a good credit score. No lender guarantees approval. How much education loan can I get without security? At a public sector bank, usually up to about Rs 7.5 lakh, because the central credit guarantee for education loans is capped at that amount. Private banks and NBFCs sanction much larger unsecured loans for strong profiles, often several tens of lakhs, at a higher interest rate. The exact amount depends on your university, your course and your co-applicant income, so ask each lender for a written sanction. What CIBIL score is needed for an education loan? There is no single number fixed by rule. Lenders look at the co-applicant's credit record more than the student's, since most students have no credit history. A clean record with no missed EMIs, no settled accounts and low existing debt helps most. A weak score does not always mean rejection, but it can reduce the amount or raise the rate. Check your co-applicant's report before applying and fix any error. Do I need a sanction letter before the visa? In most cases yes. Student visa applications ask for proof that you can pay tuition and living costs, and many countries accept an education loan sanction letter from a recognised lender as part of that proof. Requirements differ by country and change, so check the official visa page of the country you are applying to, and get the sanction letter well before the visa appointment. Is there any subsidy on education loans for studying abroad? For most students today, no. Padho Pardes, the interest subsidy for minority students studying abroad, was discontinued from 2022-23. PM Vidyalaxmi, approved in November 2024, is for study in India only and does not cover foreign institutions. The Dr Ambedkar interest subsidy for OBC and EBC students studying overseas has had fresh applications on hold, so check the current position with the Ministry of Social Justice and Empowerment and the nodal bank. Plan on paying the full interest. How much TCS do I pay on money sent abroad for studies? If the money comes from an education loan taken from a lender covered under Section 80E, TCS is nil, whatever the amount, as long as you give the bank the loan sanction letter. If you are self funding, there is no TCS up to Rs 10 lakh in a financial year. Above that, banks have published 5 percent for remittances from 1 April 2025 and 2 percent from 1 April 2026, charged only on the amount above Rs 10 lakh. Confirm the rate with your bank on the day you remit, and remember TCS is adjustable against your income tax.Sources: Indian Banks' Association Model Education Loan Scheme as published on lender pages (Canara Bank, Bank of Baroda); Credit Guarantee Fund Scheme for Education Loans (CGFSEL); Ministry of Education, PM Vidyalaxmi Scheme Guidelines (study in India only); Ministry of Minority Affairs replies in Parliament on the discontinuation of Padho Pardes from 2022-23; Ministry of Social Justice and Empowerment, Dr Ambedkar Central Sector Scheme of Interest Subsidy on Educational Loans for Overseas Studies; Vidya Lakshmi portal (vidyalakshmi.co.in); Income Tax Act, Section 80E; bank LRS and TCS rate pages published after CBDT guidance. Interest rates, loan limits, scheme status and TCS slabs change. Confirm every figure with the lender or the official department before you act. This guide is general information only. It is not financial, tax, legal or immigration advice, and it is not a recommendation of any lender. We do not guarantee loan approval or a visa.
Last updated: 14 November 2026 · By the UniCoach Team · Scheme details checked against official bank, NBFC and government sources
Short answer
Yes, you can get an education loan for studying abroad without collateral. Public sector banks normally give up to about Rs 7.5 lakh without any security , under the IBA Model Education Loan Scheme and the government credit guarantee that sits behind it. Private banks, NBFCs and international lenders go much higher than that without property, sometimes to several tens of lakhs, but they look harder at the university you got into, your course, and your co-applicant's income and CIBIL score . Nothing here is a promise. Every lender decides case by case.
Key takeaways
• Rs 7.5 lakh is the usual collateral-free line at public sector banks. Above that, most of them ask for property or a fixed deposit worth 100 percent of the loan.
• Private banks and NBFCs lend much more without collateral, but at a higher interest rate, and only if your university and your co-applicant's income fit their list.
• Your co-applicant matters as much as your marks. A parent with steady income and a clean credit record is often the single biggest factor.
• There is no central government interest subsidy for studying abroad for the general student today. Padho Pardes was discontinued from 2022-23, and the new PM Vidyalaxmi scheme is for study in India only.
• Section 80E lets you claim the full interest paid on an education loan, with no upper limit, for up to 8 years. It is available under the old tax regime.
• TCS is nil when the money abroad comes from an education loan taken from a Section 80E lender. Without a loan, education remittances above Rs 10 lakh in a year attract TCS. Keep the sanction letter ready.
Secured vs unsecured loan
A secured loan is backed by something the bank can sell if the loan is not repaid: a house, a plot, or a fixed deposit. An unsecured loan has no such backing, so the lender takes more risk and prices it higher. Here is the practical difference:
General comparison, not an offer. Limits, rates and timelines differ by lender and change often. Confirm on the lender's own page or sanction letter. What it means Typical limit Interest rate range Processing time When it makes sense Secured (with collateral) You pledge property, a plot or a fixed deposit. The lender values it and keeps the papers until the loan is repaid. Public sector banks lend well past Rs 50 lakh for study abroad when collateral covers the full loan. Some schemes go higher for listed premier universities. Usually the lowest rates in the market. Public sector bank rates are normally linked to the bank's repo-linked lending rate and change with RBI policy. Slower. Property valuation and legal check often add 2 to 4 weeks. You have property in the family, the course is expensive, and you want the lowest interest over 10 to 15 years. Unsecured (no collateral) Only your parent or guardian signs as co-applicant, plus assignment of your future income. No property is pledged. About Rs 7.5 lakh at public sector banks. Private banks, NBFCs and international lenders go much higher for strong profiles. Higher than a secured loan, because the lender carries more risk. The gap is usually a few percentage points. Faster. NBFCs often sanction in a few working days once documents are in. You have no property to pledge, the admission deadline is close, or the funding gap is small.
Who gives education loans without collateral
Four kinds of lenders work in this market. They are not competing for the same student, so it is worth understanding which one your profile fits.
Rates and limits are not fixed and change through the year. We do not name specific rates for specific lenders because those numbers go stale fast. Ask each lender for its current rate in writing before you decide. Lender type Typical unsecured limit Interest rate range What they look at Public sector bank Normally up to about Rs 7.5 lakh. Above that, most schemes need collateral covering 100 percent of the loan, even for a good university. Lowest in the market. Rates move with the bank's repo-linked rate, so they change when RBI policy changes. The IBA Model Education Loan Scheme rules, your admission letter, the co-applicant's income and the credit guarantee cover up to Rs 7.5 lakh. Private bank Higher than public sector banks for selected universities and courses, often into the tens of lakhs. Each bank has its own list. Higher than public sector banks, lower than most NBFCs. Floating in most cases. The university ranking list the bank uses, the course, the co-applicant's income and CIBIL score, and your academics. NBFC (education finance company) The highest unsecured amounts in the Indian market for strong profiles, often several tens of lakhs and sometimes more. Highest of the Indian lenders. Many are fixed or semi-fixed rates, so compare the total interest and not just the monthly amount. University and course first, then co-applicant income and credit score. Some weigh test scores and the admit strongly. Watch the processing fee. International lender Lends in foreign currency against your admission, with no Indian co-applicant and no collateral, for a limited list of universities and courses. Usually the highest, because the loan is unsecured and in foreign currency. Currency movement adds to the real cost. The university and programme must be on their approved list. Your Indian family's income is often not considered at all.
What decides your loan amount
Two students with the same marks can get very different sanctions. These are the things lenders actually weigh:
• The university and course ranking list the lender uses. Most private banks and NBFCs keep an internal list of universities grouped into tiers. A top-tier university can mean a larger unsecured loan at a lower rate. A university that is not on the list may mean collateral or a rejection.
• Co-applicant income. The lender checks whether the family income can service the EMI after the moratorium. Salaried income with ITRs and salary slips is read more easily than cash business income.
• Co-applicant CIBIL score. A clean repayment record on existing loans and credit cards helps. Missed EMIs, settled accounts or a low score can shrink the amount or raise the rate.
• Your academic record. Consistent marks, no large unexplained gaps, and test scores that match the course.
• The country. Lenders look at post-study work rules and job outcomes in that country, because that is what repays the loan.
• STEM or management. Courses with clear employment outcomes, such as engineering, computer science, data, health and management, usually get larger unsecured sanctions than short diplomas or courses with no work pathway.
If your profile is weak on one of these, you can often fix it by adding a second co-applicant, bringing in a part-collateral, or choosing a university that sits higher on the lender's list. Our counsellors look at this before you apply, because a rejection leaves a mark on your file. Career counselling comes first, then the loan.
Documents you need
Keep two sets ready, one for you and one for your co-applicant. Lenders ask for roughly the same things.
For the student:
• Admission letter or offer letter from the university
• Fee structure or cost of attendance letter from the university
• Class 10, 12 and degree marksheets and certificates
• IELTS, PTE, TOEFL, GRE or GMAT scorecard, if the course needs it
• Passport, Aadhaar and PAN
• Passport size photographs
• Gap certificate, if there is a break in studies
• Any scholarship letter, so the lender funds only the gap
For the co-applicant (parent, guardian or spouse):
• Aadhaar and PAN
• Income proof: last 2 to 3 years of ITR with computation, and Form 16 or salary slips for the last 3 to 6 months
• Bank statements for the last 6 to 12 months of the main account
• Business proof, if self employed: GST returns, shop licence or balance sheets
• Proof of residence
• Existing loan statements, if any
If you are also pledging security, add the property papers, the chain of title and the latest tax receipt. Scan everything once, in good light, and keep it in one folder. It saves days.
Government help: subsidy and schemes
This part is where most families are misinformed, so here is the honest position as of November 2026.
Model Education Loan Scheme (IBA). This is the common framework most banks follow. It sets out the usual structure: a parent or guardian as joint borrower, no collateral up to Rs 7.5 lakh, collateral covering the full loan above that, a moratorium of the course period plus one year, and repayment of up to 15 years after the moratorium. Margin money of about 15 percent is common for study abroad above Rs 4 lakh. Each bank adapts this within its own scheme, so read the bank's own page.
Credit guarantee behind the Rs 7.5 lakh. The reason a bank can lend up to Rs 7.5 lakh without security is a central government credit guarantee fund for education loans. The guarantee is capped at Rs 7.5 lakh. That is why that number keeps appearing.
Vidya Lakshmi portal. A government portal where you fill one common education loan application form and send it to banks, then track the status online. It is free to use. It is a front door to bank schemes, not a loan or a subsidy by itself.
PM Vidyalaxmi (approved November 2024). This is the scheme people most often confuse. It gives collateral-free and guarantor-free loans with a central credit guarantee on loans up to Rs 7.5 lakh, plus interest subvention for eligible families. But the Ministry of Education guidelines say the benefit is for study in India only , at Indian higher education institutions on the quality list. Foreign institutions, foreign campuses of Indian institutions and Indian campuses of foreign institutions are not covered. It does not fund your degree abroad.
Padho Pardes. This interest subsidy on education loans for overseas study by minority community students was discontinued from 2022-23 by the Ministry of Minority Affairs. Students who were already beneficiaries as on 31 March 2022 continued to receive the subsidy. Do not plan around it. The National Minorities Development and Finance Corporation separately offers education loans for study abroad to minority community students at a concessional rate, through state channelising agencies.
Dr Ambedkar interest subsidy for overseas studies (OBC and EBC). This Ministry of Social Justice and Empowerment scheme subsidises interest during the moratorium on overseas education loans. Bank notices have said that fresh applications were put on hold and only existing beneficiaries with a 31 March 2022 cut-off were being considered. We could not confirm a later order reopening it. If you belong to these categories, check directly with the Ministry of Social Justice and Empowerment and with the nodal bank before you count on it.
What this means in practice. For most Indian families sending a child abroad today, there is no general central interest subsidy. Treat the full interest as a real cost and plan the EMI accordingly. State governments and community trusts sometimes run their own schemes, so it is worth asking locally.
Tax benefit: Section 80E
Section 80E of the Income Tax Act allows a deduction for the interest paid on an education loan taken for higher education. Three things to know:
• There is no upper limit on the amount of interest you can claim. The principal is not deductible.
• You can claim it for up to 8 years, starting from the year you begin paying the interest, or until the interest is fully paid, whichever comes first.
• The loan must be from a bank, a notified financial institution or an approved charitable institution. A loan from a relative or a friend does not qualify. It can be claimed by the student, parent, guardian or spouse who is repaying, and it covers higher education abroad as well as in India.
One catch families miss: this deduction is part of the old tax regime. If you file under the new regime, you normally cannot claim it. Ask your CA which regime leaves your family better off before the first repayment year.
TCS on money sent abroad
When you send money out of India under the Liberalised Remittance Scheme, the bank collects Tax Collected at Source. This is a real cash outgo at the time of transfer, even though you get it back later, so plan for it.
Rates as published by banks on their LRS pages, following CBDT guidance. TCS slabs have changed more than once in recent years, so confirm the current rate with your bank on the day you remit. How the education money is funded Threshold in a financial year TCS rate Funded by an education loan from a lender covered under Section 80E Any amount Nil Self funded, not from such a loan Up to Rs 10 lakh Nil Self funded, not from such a loan Above Rs 10 lakh TCS applies on the amount above Rs 10 lakh. Banks have published this as 5 percent for remittances from 1 April 2025 and 2 percent for remittances from 1 April 2026. The rate is higher if the PAN is inoperative.
Two practical points. First, TCS is not an extra tax you lose. It shows in your Form 26AS and you adjust it against your income tax or claim a refund. Second, to get the nil rate on a loan funded remittance, the bank will usually want a copy of the loan sanction letter at the time of transfer. Carry it with every remittance, not just the first.
Mistakes to avoid
• Applying too late. Start the loan file when you start the applications, not after the offer arrives. A secured loan can take a month on valuation alone.
• Going for the visa without a sanction letter. Most student visa applications need proof of funds, and a sanction letter from a recognised lender is accepted by many countries as part of that proof. Check the exact requirement of your country, because the rules differ and change.
• Paying an agent to "arrange" a loan. No agent can approve a loan. Banks and NBFCs do not charge a commission to an agent for sanctioning your loan. Pay fees only to the lender, on a receipt, in the lender's name.
• Signing blank forms. Never sign a blank loan application, a blank cheque or an undated document. Read the sanction letter: rate type, processing fee, prepayment rules, moratorium, insurance, and whether the interest during the moratorium is simple or gets added to the principal.
• Borrowing only for tuition. Living cost, airfare, insurance and the laptop add up. Ask the lender to include them so you are not short in the first semester.
• Taking the first sanction you get. Compare at least two or three lenders on the total interest over the full term, not on the EMI alone.
Where UniCoach fits
We are a career counselling and study abroad guidance team based in Panipat. We do not lend money and we do not take a commission from any lender. What we do is look at your profile early, tell you honestly whether a collateral-free loan is realistic for the universities on your list, and help you shortlist courses and countries where the numbers actually work. If the funding gap is too big, it is better to know that in September than in June.
Read our education loan guidance page for how we help with the file, use Search Programs to see courses and costs, or start with career counselling if the course is still open.
UniCoach , 1st Floor, Gali No. 4, Sahil Colony, Jattal Road, Sondhapur, Panipat 132105. Monday to Saturday, 10 AM to 7 PM. The first consultation is free . Bring your marksheets and your parent's income papers and we can tell you where you stand in one sitting.
FAQs
Sources: Indian Banks' Association Model Education Loan Scheme as published on lender pages (Canara Bank, Bank of Baroda); Credit Guarantee Fund Scheme for Education Loans (CGFSEL); Ministry of Education, PM Vidyalaxmi Scheme Guidelines (study in India only); Ministry of Minority Affairs replies in Parliament on the discontinuation of Padho Pardes from 2022-23; Ministry of Social Justice and Empowerment, Dr Ambedkar Central Sector Scheme of Interest Subsidy on Educational Loans for Overseas Studies; Vidya Lakshmi portal (vidyalakshmi.co.in); Income Tax Act, Section 80E; bank LRS and TCS rate pages published after CBDT guidance. Interest rates, loan limits, scheme status and TCS slabs change. Confirm every figure with the lender or the official department before you act. This guide is general information only. It is not financial, tax, legal or immigration advice, and it is not a recommendation of any lender. We do not guarantee loan approval or a visa.