Most students start with an education loan from a public sector bank, a large private bank or an NBFC. On paper, all of them offer “up to Rs 1 crore” for overseas studies. In reality, the final amount depends on three things: the university, the course and the parents’ financial profile.
A postgraduate STEM degree from a well-known US, UK, Canada or European university is usually easy to fund. A niche or very new course may need more explanations and sometimes a higher margin from the family. Lenders look at past academic record, entrance tests, existing family loans and the parents’ income before they decide how much they are comfortable lending.
Most public banks will sanction higher amounts if you are willing to offer property as collateral. Private banks and NBFCs are faster and more flexible with documentation, but their interest rates are often one to two percentage points higher, and charges add up quietly if you are not paying attention.
Collateral, co-borrowers and margin money
Once the loan amount crosses a certain level, almost every bank will ask for something more than just a signature. This is where collateral and co-borrowers come in. Parents usually become co-borrowers, and a flat, house or plot is offered as security if the loan is big enough.
Many families forget about “margin” until the last minute. Banks rarely fund 100 per cent of the cost. Ten to fifteen per cent is commonly expected from the family, sometimes more if the loan is unsecured. This margin needs to be ready before fee deadlines, so it has to be built into your savings plan, not pulled out in a rush.
Interest rates, moratorium and repayment
Education loans come with a moratorium, which usually covers the study period plus six to twelve months. During this time, you are not forced to repay the principal. Interest, however, is quietly ticking in the background.
Two students with the same loan amount can end up with very different EMIs depending on what they do during the course. If the family pays at least the interest every month while the student is still studying, the final loan burden is much lighter. If everything is left to compound, the EMI after graduation can feel punishing, especially in the first few years of work.
Most banks link their education loan rates to an external benchmark and then add a spread based on the student’s profile. A small concession is sometimes available for women borrowers or for admission to certain top-ranked universities. It is worth asking explicitly, because it is rarely advertised.
Timing the disbursement with university schedules
Foreign universities work on very clear timelines. Your offer letter, I-20 or CAS, visa appointment and fee deadlines are all tightly linked. Banks, on the other hand, work on file movement, verification calls and internal approvals.
Once you have the final admission letter and the fee schedule, it helps to sit with the bank and map out when each tranche is needed. Most lenders will send fees directly to the university in foreign currency, but they do it only after you submit specific requests. Missing one internal form or giving an outdated fee invoice can delay a transfer by a week, and that can be the difference between a smooth registration and a panicked email to the admissions office.
Managing forex for day-to-day expenses
After the first semester is paid, the focus shifts to rent, groceries, local travel and small academic expenses. Here, your forex choices start to matter as much as the loan itself.
Forex cards remain the default option for most families. They are easy to load from India, you know the rate upfront and the student can swipe or withdraw cash abroad. International debit cards linked to an NRE or savings account are convenient too, but they can carry higher mark-ups and ATM fees if you are not careful.
For regular family support, many parents prefer monthly wire transfers for rent and large costs, and keep a forex card for daily spending. The important thing is to compare the full cost: exchange rate, loading fee, cross-currency charges, ATM withdrawal costs and any annual fee. A slightly better rate on a flashy card is useless if every small swipe comes with hidden charges.
Keeping an eye on tax collection at source
When you send money abroad under the Liberalised Remittance Scheme, tax collection at source can apply above certain limits. The rules have changed several times in the last few years, and many parents only discover this when their bank suddenly collects a large amount upfront.
This TCS is not an extra tax in the long run; it can be adjusted against your final income tax. But it is still real cash leaving your account at the time of remittance, so it needs to be part of the budgeting conversation from day one. Ignoring it can blow up a carefully planned fee or rent transfer.
Putting it together in a simple plan
In practice, families that handle overseas education comfortably usually do a few basic things right. They shortlist lenders early instead of waiting for the visa. They understand what part of the cost will come from savings and what part from the loan. They pick one main forex solution and learn how it works instead of juggling three different cards and accounts.
The emotional side of sending a child abroad is heavy enough. If you invest a bit of time upfront in understanding how education loans really work and how to handle foreign exchange month after month, the money side does not have to feel like a constant crisis. You still have to repay the loan and watch the rupee-dollar rate, but you are doing it with a plan, not with guesswork.
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