Studying in the UK can cost you anywhere between ₹9.5 lakhs to ₹36 lakhs. The biggest expenses are tuition fees, accommodation, and living expenses. A great way to fund your overseas education would be to apply for a UK education loan for international students.
In India, you have an option to go for Indian and international lenders to accomplish their dreams. Let’s decode the details of UK education loan for international students.
Understanding UK Education Loans for International Students
Education loans can be used to sponsor your entire education and living expense in the UK. Education loans are a means to pay for your education by borrowing money from a reputed lender at an affordable interest rate.
Education loans are the most affordable way to finance your way through college. The terms of education loans are favorable for students; an education loan can only be used for education. You cannot take it to pay for your house or personal expenses. Here are the special features of a student loan:
- Education loans have low interest rates starting at 8.05% p.a. to 14% p.a.
- There is a moratorium period offered to students to focus on their education.
- Repayment tenure expands to 14 years for some students.
- The main applicant is the student, and the co-applicant can be your parent or a blood relative to support you in the journey.
- Students have the option to go for collateral and non-collateral education loans.
- Students opting for education loans do not need a confirmed acceptance letter.
Education loans for studying in the UK are not very different from taking an education loan for any other country. The process is the same. However, the terms and conditions for each applicant are different, and the country, college, and course you choose may affect your loan terms.
The UK is a preferred destination for most lenders and getting an education loan for it is smooth. Let’s understand the cost breakdown to help you get a complete picture.
Breakdown of Costs to Study in UK
Tuition fees for UK universities are not consistent; they differ based on the program and university. For example, let’s compare the cost of studying MSc Economics at UK’s top universities such as the University of East Anglia and University of Leeds.
The cost of studying MSc Economics at University of East Anglia for the year 2025/26 is £22,700 for international students.
The cost of studying MSc Economics at University of Leeds for the year 2025/26 is £28,750 for international students.
The cost of living differs based on the student, their city and their lifestyle. For instance, London is considered the most expensive city. The average cost of living in London for a single person is £2,892 per month, compared to the UK average of around £2,000.
- Tuition fees for Masters for international students may vary from £9,000 – £30,000.
- Living expenses can cost you £2400-£2800 per month in London or £1800-£2000 in the rest of the UK to cover your accommodation, bills, groceries, transportation and more.
All these expenses are covered by the UK education loan for international students. Here is a list of expenses that an education loan provider can cover for you.
- Tuition Fees: The biggest expense is tuition fees for any student. An education loan covers your fees and helps you focus on your studies.
- Living Expenses: Accommodation, food supplies and travel are also covered by education loans. Accommodation can be a huge expense, and this coverage is a major relief for students who can’t rely on their savings.
- Health Insurance: Insurance may be covered by an education loan too. Some countries have mandatory insurance policies that every student needs to take in order to study in that country.
- Visa Fees: Student visa fees can also be covered under education loan expenses.
- Air Ticket: Flights are also a huge expense that some education loans are willing to bear for the student. The one-way fare for some countries can easily cross ₹1 lakh so this coverage is extremely helpful.
- Study Expenses: There are more expenses like books, laptop expenses or tab/ipads that students may need for their education.
Eligibility Criteria for UK Education Loans for International Students
Requirements for international students applying for education loans in the UK.
The eligibility criteria for an education loan is straightforward. A few details may vary slightly between lenders, but some general requirements hold true across the board. These include:
- Academic Performance: Banks and lenders typically look for students with a strong academic record. This demonstrates your commitment to your studies and increases the likelihood of securing a well-paying job after graduation, which will help you repay the loan smoothly.
- Admission to a Recognized Institution: You’ll need to provide proof of admission to a reputable university or educational institution recognized by the lender. This could include an official acceptance letter or enrollment confirmation.
- Credit Score and Financial Background: While a credit history may not be a mandatory requirement for all lenders, a good credit score can significantly improve your chances of loan approval and potentially secure a more favorable interest rate. If you don’t have a credit history yet, building a strong financial background through responsible savings habits can benefit your application.
- Co-Applicant Requirements: In most cases, an overseas education loan will require a co-applicant, typically a parent or guardian with a stable source of income. The co-applicant’s income and creditworthiness will be considered alongside yours, strengthening your application and providing additional security for the lender.
- Age Limit and Other Specific Criteria: Lenders typically set a minimum age limit, often 16 years old, for loan applicants. They may also have specific eligibility criteria related to the chosen course of study, the destination country, or the loan amount.
Ideal Loan Profile
- 60% marks throughout 10th, 12th, bachelors, a good score in entrance exams (IELTS, GMAT, etc)
- The USA, Australia, UK, Canada, Ireland, Germany, France and more are the preferred location for studying abroad for the lenders.
- An issued admit letter from a premier university recognized by the lenders.
- STEM and management courses are preferred by lenders.
- Good work experience and good CTC.
- The good credit history of the applicant is more important than the co-applicant’s. A single delay or repayment lapse can affect your loan approval.
- Co-applicant profile can strengthen the loan application and collateral issued also increases the chances of getting a loan.
Application Process for an Education Loan for UK
Here are the steps to help you navigate this journey:
- The first step in the application process for education loans to study in the UK is to figure out the education loan providers and their terms. All lenders in India offer an education loan for the UK and you will have to compare interest rates, terms, and eligibility criteria from various banks, financial institutions, and government-backed loan providers.
a) You will have to consider factors like repayment terms, moratoriumeriods, and processing fees.
- The second step is to gather the documents to help expediate the process of getting an education loan. Every lender needs a series of documents to support your claim to get your loan approved on time. Here are some documents you need:
a)Admission letter: From your chosen UK university or college.
c)Course fee structure: Detailed breakdown of tuition fees, living expenses, and other costs.
d)Financial documents: Income proof (salary slips, tax returns), bank statements, property documents (if applicable), and other relevant financial information.
d)Identity proof: Passport, Aadhaar card, or other government-issued identification.
- The third step is to provide accurate and complete information about your personal details, academic background, financial situation, and loan requirements. Attach all necessary documents as per the lender’s guidelines and complete the application.
- The fourth step is to submit the completed application form along with supporting documents to the lender either in person, by post, or online.
- The fifth step requires waiting for the verdict. The lender will review your application and verify the authenticity of your documents. They may conduct credit checks to assess your creditworthiness. If your application is approved, you’ll receive a loan sanction letter outlining the loan amount, interest rate, repayment terms, and other conditions.
- The last step is disbursement. The loan amount will be disbursed in installments as per the agreed-upon schedule. The funds will typically be transferred directly to the university or college to cover tuition fees and other expenses.
Timeline for Application and Disbursement
The entire process can take anywhere from a few weeks to a few months. It’s advisable to start applying for the loan well in advance of your planned departure to the UK to ensure timely disbursement.
Starting early is essential because it allows you to negotiate a better deal. If you apply at the last moment, you are more likely to accept the first offer. This offer may not be favorable for your future self.
Required Documentation
4 sets of documents you need for an education loan in India to study in the UK:
Personal Documents
- Loan application form
- Passport-size photos
- PAN card and Aadhar card
- Indian passport
Academic and Professional Documents
- Marksheets for 10th, 12th & graduation
- Entrance exam results (like IELTS, GMAT, GRE, TOEFL, etc.)
- College prospectus
- Statement of cost of study/ Schedule of expenses
- Offer letter or a conditional admission letter (if received)
- Work experience proof (if any)
Financial Documents of the Applicant
- A/C statement for last 1 year in case of any previous loan from other Banks/Lenders
- Updated Income Tax Returns (ITR) with income for past 2 years
Financial Documents of the Co-applicant
In case of salaried co-applicant
- 6-month bank statements of salary account of the co-applicant
- 2-year ITR / FORM 16 co-applicant
- 3-month salary slips
- Collateral documents (if needed)
In case of self-employed co-applicant
- 8-months bank statements of savings & current account
- 2- years ITR statement
- Collateral documents (if needed)
Types of Education Loans
Secured Education Loans
Secured education loans, also known as collateral education loans, are loans where the student pledges collateral to secure funds for higher education. Collateral refers to valuable asset that you own. It can be a property or fixed deposit, to the lender as a guarantee for repayment.
Contrary to popular belief, gold jewelry cannot be pledged as collateral for education loans. Check this article to find out what asset is accepted as collateral for education loans in India.
Features of Secured Education Loans
Lower Interest Rates: Secured education loans often come with lower interest rates compared to unsecured loans. The lender has security that gives them confidence in the student loan profile.
Higher Loan Amounts: You can typically borrow larger amounts with a secured loan because the lender has an asset to fall back on in case of non-repayment.
Longer Repayment Tenure: Secured loans often offer longer repayment periods, giving you more time to repay the loan.
Moratorium Period: Many lenders provide a moratorium period for secured education loans, during which you don’t have to make any repayments. This typically starts after completing your course and can last for a few months or years.
Loan Terms and Conditions
Interest Rates
Different lenders offer different education loan rates to applicants. The interest rate is determined by your loan application details and it is not uniform. For example, if you and your friend both may be applying to the same university, same course with the same lender, but your interest rate may be different. This is because interest rates are determined by a host of factors – which includes your credit history, your co-applicant’s credit history, and loan amount. The interest rates can range from 11% to 14% per annum, depending on the bank and the borrower’s credit profile.
Loan Amounts
Loan amounts differ based on the individual profile and the lender. Some lenders offer complete financing to students headed abroad while others may offer ₹40 to 50 lakhs to cover the cost of education. Loan amounts are also subjective and is changed based on the borrower and their needs. For example, the maximum limit for an unsecured educational loan with Axis Bank is up to ₹75 lakh, whereas there is no upper limit for a secured education loan.
Repayment Terms
Repayment terms are not uniform. Every lender has their own conditions based on the individual profile. The minimum loan repayment tenure for some lenders is 12 months, and maximum loan repayment tenure goes up to 12 years. Similarly, some lenders offer moratorium period to their borrowers.
Margin Money
Margin money is the amount the applicant has to pay to get his/her education loan sanctioned. Margin money for an education loan is a certain percentage of the complete cost of education the borrower is required to pay for with his/her own funds. Some lenders waive off margin money, while some may charge 10% of margin money. For instance, if the loan margin is set at 20%, you would be able to avail an education loan towards the balance 80% of your expenses.
Impact of Currency Exchange Rates
Currency fluctuations can significantly impact the amount of a loan and its repayments for Indian borrowers. Make sure you keep up with the exchanges and borrow in your local currency, that is, INR, so that you are able to pay off your education loan hassle-free.
Repayment Options
Before taking a loan, it’s crucial to comprehend the repayment obligations. Most loans involve Equated Monthly Installments (EMIs), which are fixed monthly payments that cover both principal and interest. Some loans may also offer grace periods, during which the borrower is not required to make repayments. However, interest may still accrue during this period. Understanding the repayment plan, including the EMI amount, tenure, and any applicable grace periods, helps borrowers budget effectively and avoid financial difficulties. Failing to understand these obligations can lead to missed payments, penalties, and potential damage to credit scores.
Conclusion
If you are planning to get the UK education loan for higher education, then feel free to connect with our experts and get the best education loan at zero extra charges. The loan process can be overwhelming, and the right guidance can help you get the right loan for your profile.
