The number of Indian students studying in Germany has been growing over the years. A statement from DAAD – German Academic Exchange Service revealed that 34,134 students went to Germany in 2021-22, 42,997 in the 2022-23, and most recently 49,483 in the 2024-24 winter semester year. Indians form the largest group of international students enrolled at German universities today. The demand for Germany has risen and so has demand for education loans for Germany. In this blog, let’s look at everything you need to know before applying for an education loan for Deutschland!
You can apply for two kinds of education loans for Germany. Unsecured education loans and secured education loans. Unsecured education loans are loans without any collateral, offer higher interest rates and loan amount go up to ₹2 crores depending upon the profile. Secured education loans are loans with collateral; these loans may offer lower interest rates and have no cap on the loan amount due to the added security for lenders.
Education loans for Germany cover all kinds of expenses such as tuition fees, hostel fees and living expenses. Let’s look at the eligibility criteria for education loans to study in Germany!
Eligibility Criteria for Education Loans for Germany
Requirements for international students applying for education loans for Germany:
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 education loan for Germany 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 basic eligibility criteria for a co-applicant is that they must be a blood relative. 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 for an education loan in India is 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 Education Loan for Germany Profile
- 60% marks throughout 10th, 12th, bachelors, a good score in entrance exams (IELTS, GMAT, etc)
- The USA is 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.
- No backlogs in the student’s academic history
- 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.
Available Types of Education Loans for Germany
As discussed above, there are two major types of education loans – secured and unsecured available for Germany.
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. The collateral acts as a security for lenders. Collateral refers to valuable asset that you own. It can be a property or fixed deposit, to the lender as a guarantee for repayment. If you fail to repay the loan, the lender can seize your collateral.
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.
Unsecured Education Loan
An unsecured education loan is a loan that does not require any collateral. Most students flying abroad from India opt for this type of education loan. Unsecured education loans or non-collateral education loans are a huge relief for students who do not have collateral to pledge in lieu of a loan.
It is also a good option for students who do not want to burden their parents. These loans are higher risk loans for the lender, which means that your application will be scrutinized and verified. The student profile is extremely important for an unsecured education loan.
Features of Unsecured Education Loan
- Higher Interest Rates: Unsecured loans generally have higher interest rates than secured loans due to the increased risk for the lender.
- Lower Loan Amounts: The maximum loan amount for an unsecured loan is typically lower than for a secured loan. However, it depends on the student profile and the lender. Some lenders in India offer loan amounts for unsecured loans that go to ₹2 crores.
- Shorter Repayment Tenure: Unsecured loans often have shorter repayment periods.
- Limited Moratorium Period: If a moratorium period is available, it’s usually shorter than for secured loans.
- Eligibility Requirements: Unsecured loans may have stricter eligibility requirements, such as a higher credit score or a co-signer.
Government Schemes
BAföG, the Federal Training Assistance Act, is a German government program that provides financial support to students pursuing vocational training or higher education. To qualify, non-EU students must have a valid residence permit for study purposes, have completed at least two years of secondary education in Germany, and demonstrate financial need. The chosen course of study must be recognized as a regular degree program in Germany. The amount is not fixed, and funding is determined based on individual circumstances, including parental income and living expenses.
Private International Loan Options
There are certain international lenders based in Germany that you can consider for your education loan. Popular options like KfW Student Loan, which provides affordable interest rates and flexible repayment terms. Deutsche Bank also offers student loans with competitive interest rates and the possibility of deferring repayments during study periods. These loans often require collateral or a guarantor, and eligibility criteria may vary based on individual circumstances.
Application Process for Education Loans for Germany
The first step in the application process for education loans to study in the Germany is to figure out the education loan providers and their terms. All lenders in India offer an education loan for the Germany and you will have to compare interest rates, terms, and eligibility criteria from various banks, financial institutions, and government-backed loan providers. Check your eligibility now.
You will have to consider factors like repayment terms, moratorium periods, 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:
- Admission letter: From your chosen German university or college.
- Course fee structure: Detailed breakdown of tuition fees, living expenses, and other costs.
- Financial documents: Income proof (salary slips, tax returns), bank statements, property documents (if applicable), and other relevant financial information.
- 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 Germany 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 Germany:
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)
Costs Associated with Studying in Germany
Germany is an affordable destination for Indian students planning to study abroad. On average, students are expected to spend 1,150 euros a month. This monthly expense includes your semester fee, tuition fees, health insurance, and living costs (rent, food, clothing, books, telephone)
| Items | Monthly Expenses |
| Accommodation | 290 and 560 euros |
| Semester Fees | 100 to 350 euros |
| Tuition Fees | 1,500 euros – 10,000 euros per semester |
| Health Insurance | 110 euros per month |
To apply for a German student visa as an Indian student, you’ll need to show that you have enough money to cover your living costs while in Germany. The amount you need to prove is 11,904 euros per year, or 992 euros per month. This is deposited in a blocked account at a German bank before you arrive in the country.
Impact of Currency Exchange Rates on Education Loans for Germany
A single euro 1 Euro equals to 90.64 in INR. The value of INR has consistently plummeted in face of Euro. While budgeting, please ensure that you take into account inflation and rising costs of education and living. These will impact your lifestyle, and your education loan needs in the future.
Repayment Options for Education Loans for Germany
Taking an education loan is a big responsibility. Please ensure that you discuss the terms and conditions with your lender as well as your co-applicant. The tenure for an education loan lasts anywhere between 10 to 14 years. This means that paying off your loan obligations will be a huge part of your financial life. Discuss your payments and options with your lender extensively so you understand the depth of your decision before signing any papers.
Conclusion
Education loans for Germany are easily available for Indian students. The country is a favorite among engineering and management students due to its technical universities. If you are interested in studying in Germany and are looking for low-interest education loans, then get in touch with EduFund!
