The UK’s prestigious universities and array of opportunities make it a highly sought-after study destination for students from around the world. But it can be expensive to study in the UK. The shorter length of most master’s courses—one year on average—is one appealing feature. The cost of tuition varies, but for international students, it typically costs about EUR 35,000. One excellent way to pay for living expenses and tuition is to apply for an education loan for UK. The application process for UK student visas is made simpler by the fact that these loans can also be used as evidence of funds.
Type of education loan for UK
In general, one can apply for two different kinds of education loan for UK. These are –
- An educational loan for UK with collateral, or a secured loan for the UK, requires the borrower to submit an application for a loan along with some form of security or collateral. A home or multiple properties can be used as collateral. Discover more about: Collateral security types accepted for student loans.
- An educational loan for UK without collateral from the borrower is an unsecured education loan. As a result of the increased risk involved, these loans typically have high interest rates. Moreover, co-applicants or co-signers are usually needed for these loans.
Education loan for UK via public banks:
Many leading public banks such as State Bank of India, Bank of Baroda and Union Bank of India provide abroad education loan for UK with collateral. Union Bank of India, a leading public bank provides up to INR 40 Lakh without collateral also.
| Feature | Description |
| Lenders | SBI, BOB, UBI, PNB |
| Loan quantum | 7.5 Lakh – 2 cr |
| Interest rates | 9.60 – 11.5% |
| Margin money | 10% – 15% |
| Repayment tenure | 12-15 years |
Education loan for UK via private banks
Apart from public banks, several private banks also provide education loan for UK. Students who lack collateral can seek public banks for loans.
| Feature | Description |
| Lenders | ICICI Bank, IDFC First Bank, Axis Bank |
| Loan quantum | Up to 80 Lakh |
| Interest rates | 11.5%- 13% |
| Margin money | Nil |
| Repayment tenure | 12-15 years |
Education loan for UK via NBFCs:
If a student fails to fulfill the eligibility requirements set by public and private banks, then NBFCs are there to help them with education loan for UK with and without collateral. NBFC stands for Non Banking Financial Companies, that provide financial services to the customers.
| Feature | Description |
| Lenders | HDFC Credila, Avanse Financials, InCred, Auxilo |
| Loan quantum | Up to 70 Lakh |
| Interest rates | 12% – 14% |
| Margin money | Nil |
| Repayment tenure | 12-15 years |
Securing an education loan for UK is a critical step for many Indian students. With various options available from public banks, private banks, and NBFCs, aspiring students can choose the best-suited option based on their needs and circumstances. It is essential to thoroughly understand the terms, interest rates, and repayment plans offered by each institution before making a decision. By navigating through these options, Indian students can turn their dreams of studying in the UK into a reality, ensuring a brighter future filled with knowledge and opportunities.
Education loan for UK – Expenses covered
Following approval of your education loan for UK, you can choose to get the money through a disbursement. Depending on your needs, you have the option to withdraw the entire authorised amount at once or in installments. Because the interest charged will only apply to the disbursed amount and not the entire approved amount, it is generally advised to choose partial disbursement. If you opt for partial disbursement instead of taking out the entire amount at once, you can save money on interest.
Expenses covered:
- Tuition fees
- Travel cost
- Living cost
- Health insurance
- Visa costs
- Study related expenses
- Bills for utilities
Education loan for UK – Documents required
Students should make sure they have the necessary documentation before applying for an education loan in order to study in the UK. Typical documents needed to get an education loan for UK includes:
- Loan application form
- Passport-size photographs
- Applicant’s KYC documents (Aadhar card, PAN card etc)
- Fees structure from the university
- Standardized test scores – GMAT or GRE
- Academic transcripts (School and Bachelor’s)
- Resident proof of the applicant
- English proficiency test score – IELTS or TOEFL or Duolingo
- Proof of admission: admission letter from university/institution
- Income proof of the co-applicant (for unsecured education loan)
- Collateral based documents (For secured loans)
The United Kingdom, with its prestigious universities and globally recognized degrees, is a beacon for Indian students seeking quality education. However, the financial investment required for international studies often deters many aspiring minds. Education loan for UK are dreams enabled, not just means of subsistence. It is essential for an Indian student hoping to study in the UK to be aware of the subtle differences between each lending option. Students can confidently start their educational journey and realise their dreams by making an informed choice and selecting the appropriate financial partner. Keep in mind that investing in your future and opening up a world of opportunities through education is more important than simply paying back the loan.
How to choose the right lender for education loan for UK?
By carefully evaluating these factors, you can make an informed decision that aligns with your unique needs and financial circumstances.
Factors to Consider while choosing an education loan for UK:
- Interest Rate:
Look beyond the surface-level interest rates. Understand if the rates are fixed or floating and consider the impact on your repayments over time.
- Processing Fee and Time:
Compare processing fees across lenders, and factor in the time taken for loan approval. Faster processing can be crucial, especially when dealing with admission deadlines.
- Margin Money:
Determine the margin money requirement. Some lenders cover the entire cost of education, while others may require a certain percentage to be borne by the student or their family.
- Moratorium Period:
Assess the moratorium or grace period offered before the commencement of repayments. A longer moratorium can provide you with valuable time to settle into your post-graduation life.
- Tax Benefit:
Inquire about tax benefits on education loan for UK Some countries, including India, offer tax deductions on the interest paid, reducing your overall financial burden.
Experts emphasize the significance of not merely choosing the lender with the lowest interest rate but selecting one that offers a holistic and student-friendly approach to financing education.
