Here’s How You Can Avail A Secured Student Loan When Planning To Go Abroad For Your Master’s Degree

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What are Secured Student Loans?

Secured student loans are educational loans that require collateral as security.

Collateral can be in the form of tangible assets like property or intangible assets like fixed deposits or stocks. The collateral serves as a guarantee to the lender that the loan will be repaid.

Secured education loans come with several advantages that make them an attractive option for Indian students planning to pursue master’s courses abroad.

1. Higher Loan Amounts: With secured student loans, you can avail higher loan amounts compared to other types of loans. This ensures that you have sufficient funds to cover tuition fees, living expenses, travel costs, and other study-related expenses during your time abroad. Consider optimising your spending abroad with Niyo’s Zero Forex card for students, which eliminates the need to convert currency, pay forex charges, and carry large amounts of cash while also providing additional security features.
2. Lower Interest Rates: One of the biggest advantages of secured education loans is the lower interest rates they offer. These loans come with attractive interest rates, starting from as low as 7.5%.
3. **Longer Repayment Tenure:**Secured student loans also offer longer repayment tenures, often up to 15 years. This extended duration allows you to repay the loan in comfortable monthly instalments, reducing the financial burden on you while you focus on your studies and career.
4. **Tax Benefits:**Another advantage of secured education loans is that they offer tax benefits under Section 80E of the Income Tax Act. Additionally, there are TCS benefits. You only have to pay 0.5% TCS instead of 20% on funds obtained from education loans. This provision allows you to claim a deduction on the interest paid towards the loan, reducing your overall tax liability.

Who is eligible for a secured education loan?

Before applying for a secured education loan, it’s important to understand the eligibility criteria set by financial institutions. While these criteria may vary slightly depending on the lender, here are some common requirements:

1. Indian Nationality: To be eligible for a secured student loan, you must be an Indian citizen. Non-resident Indians (NRIs) holding Indian passports are also eligible for these loans.
2. Admission to a Recognized Institute: To be eligible for a secured education loan, you need admission to a recognized institute abroad. Lenders typically require your acceptance letter or offer of admission as part of the loan application.
3. Academic History: Lenders often consider the applicant’s academic track record when sanctioning an education loan. Good academic performance, especially in your undergraduate studies and GMAT and GRE tests, can increase your chances of loan approval.
4. Collateral Documentation: To secure a secured student loan, gather all required collateral paperwork, such as property documents, fixed deposit receipts, and other relevant documents.
5. Co-Applicant: You would also need one of your parents or first-level blood relatives as a co-applicant. A co-applicant is someone who applies jointly with you for a loan or finances. Both of you will share equal responsibility for repayment, combining your financial strength and credit histories to enhance the application.

Which Banks Offer Secured Education Loans for Master’s Courses Abroad?

When it comes to securing a student loan for master’s programs abroad, several financial institutions in India provide attractive options. Here are the three types of lenders offering secured student loans:

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Lenders	Popular Banks/Institutions	Starting Interest Rates
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Private Banks
Non-Banking Financial Companies (NBFC)

It is essential to research the different lenders and loans available to get the best possible terms that serve you. Each bank offers different benefits and has differing loan amounts and margins. For example, the State Bank of India (SBI) offers concessions for female candidates and students availing of the Rinn Raksha Loan Insurance Scheme. While Punjab National Bank/PNB’s Udaan Scheme offers need-based finance for all expenses related to studying abroad.

How to Apply for a Secured Education Loan?

• Secured student loans offer higher loan amounts and lower interest rates compared to unsecured loans.
• Eligibility criteria include Indian nationality, admission to a recognized institute, and possession of collateral documents.
• Top financial institutions offering secured education loans include SBI, BOB, PNB, and Canara Bank.
• The application process involves careful research, documentation, and collateral evaluation.