Education Loan for Study in the UK

Quality education has an important role in shaping your future. However, quality education does not come cheap. Indian students who are driven by ambition and brighter career prospects are increasingly seeking to study at the top UK universities. There are a plethora of options when it comes to higher educational institutes abroad. Though getting the right education loans options for the UK remains a crucial aspect of selecting a course. This is where grants, scholarships, and student loans for education in the UK can play a significant role. On average the monthly cost of living for an international student in the UK can broadly be divided into 5 categories: Tuition fee, accommodation, food, transport and miscellaneous.

Here’s the good news! 

Indian students can get education loans of attractive amounts with and without a collateral to study in the UK. The United Kingdom is one of the most sought-after study abroad destinations by Indian students. Education loan options with and without collateral make it practical for everyone to study in the UK.

With the easy availability of education loans, the flow of Indian students into the UK for higher studies and settling witnessed a steep rise post the Covid pandemic. Are you excited to study in the UK but concerned about expenses and available education loans? Read on for a comprehensive understanding of various student education loans with and without collateral to study in the UK.

How much education in the UK can cost?

Education costs in the UK include course expenses and living costs. These costs vary across the UK, depending upon the course, college, and area.

 

• The average living costs can be between £1,290 and £1,840 (INR 1,29,920-1,85,313) per month in 2023-24, as per the estimation of the British Council.
   
• According to the British Council, the tuition fee levied from international students for undergraduate courses is £11,400 - £38,000 (INR 11,46,821-38,23,157). The average undergraduate cost for an international student in the UK is  £22,200 (INR 22,31,855.28) per year.
   
• International students must pay postgraduate tuition fees between £9,000 - £30,000 (INR 9,05,629-30,17,938), and the average cost is estimated to be around £17,109(INR 17,21,427) per year.

Let’s look at the approximate cost of some popular programs at the undergraduate and postgraduate level in the U.K. Universities.

• Undergraduate tuition fee in the University of Oxford for overseas students is between £28,950 and £44,240(INR 29,12,618-44,52,817).
  
   
• University of Cambridge charges a tuition fee between £24,507 to £63,990 (INR 24,68,453-64,45,168) from international students for various courses.
  
   
• The University of Cambridge has an annual tuition fee of £32,214 for an undergraduate program in Chemical Engineering, Computer Science Engineering, Management Studies, and an annual tuition fee of £45,660 for MPhil in Engineering.
  
   
• Fee for studying MBA at the University of Cambridge is £57,000. International students who wish to study the four-year undergraduate engineering program in Software Engineering have to pay £31,750 per year and £33,250 annually for a two-year Master’s program in Computing.
  
   
• A full-time MBA costs £53,500 to international students and a one year MS in Business Analytics has a tuition fee of £29,500.

We can see that the cost of education in the U.K. is quite high, and many Indian students drop their plans to study in the U.K. But no need to worry since education loans are there for the rescue.
 

Why an education loan for the UK?
 

Before learning about the various education loan options with and without collateral, it is ideal to learn why an education loan is needed for studying in the UK. As is evident from the above numbers, the cost of studying in the U.K. is quite steep, and students and parents must invest their savings to fund it.

At such a stage, taking an education loan will help reduce the financial burden on the students and let them chase their dream of studying in the U.K. You are allowed to work part-time in the UK. So if you have a loan EMI for every month, it can be paid off easily. Therefore, an education loan is practical and comfortable for the students.

Education loan options for students to study in the UK 

Students applying for an educational loan for studying an undergraduate or postgraduate program in the U.K. can get two types of loans - secured loan or loan with security and unsecured loan or loan without security or collateral.

1. A secured education loan is a loan wherein the applicant has to attach collateral while applying for the loan. 
2. The collateral can be any tangible or intangible assets, such as plots, immovable property, FDs etc.
3.  An unsecured loan, on the other hand, is an education loan in which the applicant does not have to attach any collateral while applying for the loan.

Who are the education loan lenders in India?
 

There are three major education loan lenders in India- public banks, private banks, and NBFCs (Non-Banking Financial Companies). They offer secured and unsecured loans based on the student’s eligibility and requirements.

Among the three, public banks offer the lowest interest rates for education loans with collateral, which is less than or equal to 10%. At the same time, you cannot expect a public bank to fund more than 7.5 lakhs in education loans without collateral. In such cases approaching private banks and NBFCs will be helpful. Depending on your financial need, they offer education loans without collateral up to 40-60 lakhs or more. NBFCs often give education loans without a cap (limit) or *margin. 

*Margin- It is the portion of the total expenses that a borrower must fund. The banks decide the margin money and excludes it while disbursing the loan amount.  

What are the different education loan options for the UK?
 

Secured and unsecured education loans are available from the public/private banks,NBFCs, and international lenders for studying in the UK. The loan terms and conditions vary with the loan lender and type of education loan. International lenders offer unsecured loans only. 

Confused? The following tables compare different lenders in education loans with and without collateral:

Educational Loan Options - Without Collateral 

Education Loan Options to Study in UK - With Collateral 

Repayment period, processing time, expenses covered, etc. vary from lender to lender. Let’s look at these:

 

• Repayment period: Private banks have a repayment period of up to 10-12 years while public banks give 10-15 years to repay the loan. Students who wish to extend their repayment period can get in touch with Zoom Abroad. We coordinate with the lender and try to get an extension for our students.
  
   
• Processing time: The processing time of NBFCs is the shortest. They take 4-5 days for processing an unsecured loan up to INR 40-60 lakhs and 9-10 days to process a secured loan up to 1 crore.  A secured loan takes more time for processing as the lender needs more time to verify the documents related to the collateral. Hence, public banks which do not offer unsecured loans more than INR 7.5L take much more time than NBFCs to process loans (at least 12 days).
  
   
• Expenses covered: NBFCs cover 100% of the study expenses, while public bankscover 90% and private banks cover 85% of the study-related expenses.
  
   
• Co-applicant’s income required: For loan without collateral, NBFCs consider the co-applicant’s income even. However, for US loans amounting to INR 20L, the co-applicant income should be around INR 60K per month. If students are taking a loan with collateral, this income is not mandatory by any lender. It should also be remembered that the income requirement may vary from case to case.
  
   
• Common decline reason: Low CIBIL score of the applicant and insufficient income of the co-applicant are the common reasons for declining the education loans. An application for a secured loan gets rejected because of incomplete documents related to the collateral or poor CIBIL score.

Students who are worried about their loan application getting rejected can take the help of Zoom Abroad and increase their loan acceptance chance by 50%. We assign a dedicated loan counselor who guides the students at every stage of the loan application process. 

Tips for making Most of UK Education Opportunities:

How can students fund their studies?

UK student finance
 

• UK government student loans tend to depend on residency, so many international students are ineligible for them.
• Find out more about what options are available in each of the four UK countries: England, Scotland, Wales and Northern Ireland here.
  
   

Family and savings
 

Most international students in the UK are self-funded. Any money you currently have coming in will count towards your income, and that includes any funds you can save, as well as any funds that parents and relatives are able and willing to provide.

Part-time work in the UK
 

• Between your lectures and the time you spend studying independently, you may need to make time for a part-time job. Getting some work while in the UK is a great way to enhance your experiences of the UK, as well as top up your income.
  
   
• Find out more about work opportunities from the careers team your university, and before arriving do some research on what part-time jobs are available. Universities will also have some information on the UK national minimum wage and national living wage rates and tax.
  
   
• You should also look at the rules your university has on the number of hours students should work during term time and ensure that you understand any limits on part-time work as part of visa-related conditions.

External scholarships
 

While the UK government and universities do offer scholarships, don’t count on getting a full scholarship that covers all tuition and living costs. Most scholarships will cover only a percentage of the total cost of study. 

Scholarships are usually highly competitive and often aimed at postgraduate students. Undergraduate scholarships are rarer, although a number are offered by UK universities and colleges. In most cases, you will have to gain an offer of a place on a course at a UK university before you are eligible to apply for any scholarship.

That being said, it’s always worth exploring what you may be eligible for. Here are some useful resources:

• The British Council’s website lists a selection of scholarships available for students of certain nationalities, known as GREAT Scholarships.
  
   
• The Scottish Government lists scholarships for study in Scotland; and Study in Wales lists scholarships for study in the UK (including Wales).
  
   
• Chevening Scholarships – funded by the Foreign and Commonwealth Office for postgraduate courses at universities in the UK.
  
   
• Marshall Scholarships – for American students looking to study in the UK.
  
   
• Commonwealth Scholarships – for students from Commonwealth countries.

University scholarships
 

Lots of universities offer fully funded postgraduate studentships. You can learn more from your chosen university or from specialist websites such as Postgraduate Studentships and Prospects, or you can check out THE Student’s list of scholarships for international students in the UK.

Make a budget

Once you have a good understanding of your costs and income, the next challenge will be to make a budget. This doesn’t need to involve complicated spreadsheets and formulas, but it must be honest. Here is a guide on how to create a budget as an international student.

You should plan for an additional year’s worth of living costs, not just the first year of your course. This will help you to see how careful you need to be with your finances for the duration of your course, and whether you will need some savings for later down the line.

What is the UK’s Graduate Immigration Route (GIR)?
 

On 11 September 2019, the UK government announced the Graduate Immigration Route (GIR), which will enable students to stay up to 2 years in the UK post their graduation to work or look for work at any skill level.

This  is in  action from 2021.The route, however, does not count towards permanent settlement. The graduate immigration route will require a valid Tier 4 visa and a new application, which will include payment of the visa fee and Immigration Health Surcharge.

Since students will be able to stay and earn in the UK for a longer period of time, they will also repay a major chunk of the education loan. This will directly improve the approval rate for education loans for the UK.

Eligibility for a student loan to study in the UK in 2023

To begin with, you first need to check if you are eligible to apply for an education loan for education in the UK or not. Below are the basic criteria that most of the Indian banks follow for checking the eligibility of the student loan applications for studying in the UK:

 

• The applicant should be a citizen of India.
  
   
• The applicant must have attained the age of 18 else his/her parents will have to take the loan
  .
• A good academic background.
  
   
• Admission letter from a recognised foreign university/institution/college.

Latest list of documents required for the UK education loan

Before applying for an education loan for the UK, the applicant must be thorough with the documentation. Following documents are required to apply for a successful student loan application for the UK:

• Duly filled application form
  
   
• Passport size photographs of the applicant and the co-applicant.
  
   
• Photo ID of the applicant and the co-applicant. It could be a PAN card, driving license, Voter ID card, Aadhar Card, or Passport.
  
   
• Resident proof of the applicant and the co-applicant

Academic documents:

• Mark sheets and transcripts of the applicant
  
   
• GRE, GMAT, TOEFL, IELTS certificate ( whichever is applicable)
  
   
• Admission letter issued by the university or college.
  
   
• Bank statement of last 6 months of borrower and co-borrower
  
   
• Income proof
  
   
• In the case of collateral (immovable property), it could be flat, home, or non-agriculture land the following documents are required:
  
   
• Property title deed
  
   
• Foreign exchange permit copy
  
   
• The co-borrower will have to submit a brief statement of their assets and liabilities.
  
   
• NOC for a mortgage from a builder or society

Step by Step procedure of applying for an education loan from India for the UK 

From application to loan disbursement, the entire student loan process is time-consuming, so it is always desirable to apply beforehand. Below is the step-wise guide, that will help you with the education loan for the UK from India.

1. Check whether the course you are going to study abroad is recognised by the banks.
2. Calculate how much loan would you need to fund your education in the UK.
3. Compare the student loan for the UK provided by different banks only and go for the one which tailors to your needs.
4. After finalising the bank and the loan amount, fill out the loan application form.
5. When the loan is approved, the bank will issue a loan document that includes various elements of the loan.
6. After signing the loan document, the bank will disburse the amount in instalments or as requested by the university.

Top banks that provide the best Education Loans options for the UK in detail! 

State Bank of India
 

SBI offers a maximum amount of INR 30 lakhs as a student loan for education in the UK a loan margin of 15%. The Interest rate on the loan amount is up to 2% on base rate of SBI. Moreover, the loan repayment tenure can be 1 year to 15 years.

Bank of Baroda
 

The bank offers an attractive scheme called Star Education Loan. The scheme offers up to 20 lacs of loans to international students. The borrowers can use this scheme to study UG or PG courses in the UK or USA.

HDFC Bank

HDFC Bank is one of the largest private banks offering education loan options for the UK. The maximum loan amount offered by the bank is up to INR 20 lakhs. If you want to avoid the last-minute rush, HDFC offers student loans even before the student has secured admission at the university.


 

Punjab National Bank
 

The bank offers the base rate as the interest rate on the student loan amount taken for pursuing an education at the top 200 universities across the world.

Study Abroad Education Loan from NBFCs (Non-banking financial companies in detail )

Apart from the nationalised and private banks, student loan options for the UK can also be taken from non-banking financial companies/institutions (NBFCs). Mortgagors need to provide collateral as security to the banks as the loan amount is generally more than INR 7.5 Lacs. Some of the known NBFCs options are:

 

• Credila: Credila is part of the renowned HDFC bank and provides student loan options for the UK to Indian students. The loans are given at a competitive floating rate of interest and can be repaid within a period of 10 years.
  
   
• Avanse: Part of the DHFL group, it is considered one of the most popular NBFC institutions in India. Education loans for the UK from Avanse can take care of the complete tuition fees and other expenses. Apart from this, the interest rates are floating and the dispensation fee can go up to 1 to 2 percent of the loan amount.
    
• Global Student Loan Corporation (GSLC): The GSLC offers education loan options for international students to pursue their higher studies in the US without the requirement of any co-signer.

Points to remember before applying for an education loan to study in the UK in 2023
 

• Cessation period: This is the time period during which the borrower need not make any repayment to the bank. This period varies from bank to bank and could last up to some time after completion of the course.
  
   
• Loan Margin: Usually, banks do not provide the complete amount i.e. 100 %amount needed to fund the education. The majority of the public sector banks issues close to 90% of the total amount, the remaining 10% must be arranged by the applicant.
  
   
• Effect of Exchange Rate: Always calculate the amount you will receive at the time of loan disbursement, as any change in the exchange rate can affect the disburse amount drastically.

FAQ’s related to education loans for studying in the UK

Ques 1. What is Collateral?

 

Ans. Any property whether movable or immovable, which can be offered to a bank as a security for a loan is collateral. Most Indian banks demand collateral as security in order to reduce the risk involved in paying off the credit. Any type of liquid assets like bonds, FD, shares, or any immovable property like the house, any commercial property or just land can be classified as collateral. One important point to keep in mind is that agricultural land is not accepted as collateral.

Ques 2. How much can you borrow against collateral?

 

Ans. If you want to take the loan against your immovable property as collateral, in that case, the bank’s representative will verify your property and prepare a report on whether it can be mortgaged or not. Then the representative will assess your property. Based on this report, the loan amount will be approved.

Ques 3. For which type of courses, banks offer education loans for studying abroad?

 

Ans. Usually, banks and NBFCs prefer to give loans for undergraduate and postgraduate courses. Also, the majority of banks prefer to give education loans abroad for pursuing job oriented and professional courses because the repayment assurance increases.

Ques 4. How do I apply for an education loan to study in the UK?

 

Ans. You directly apply to the lender or contact Zoom Abroad to apply. When you apply directly to lenders, the application processes can be pretty complex. The lender will take more time to process your loan application. Sometimes you may lack some relevant documents, which leads to unexpected delays. When you contact Zoom Abroad, we evaluate your profile and connect you with the best lender in the market. We give you a customized list of documents to be submitted. We have agents to pick up the documents from your home for metropolitan cities, and for other cities, we will contact the regional lender offices.

Ques 5. What are the eligibility requirements for an education loan to study in the UK?

 

Ans. Eligibility requirements differ with the lender and type of loan the applicant opts for. For collateral education loans from public banks, the applicant’s academic track, college of admission and course, the value of the collateral, etc., matters. Public and private banks are concerned with the student’s academic track, whereas NBFCs and international lenders do not give much importance to academic merit. Unsecured loans are disbursed primarily based on the CIBIL score of the co-applicant. 

Ques 6. What are the different types of student loans to study in the UK?

 

Ans. Two types of education loans are available to study in the UK: collateral and without collateral loans. These loans, also known as secured and unsecured loans, are offered by public and private banks, NBFCs, and international lenders. 

Ques 7. How can I get an education loan without collateral in the UK?

 

Ans. You can apply without collateral loans to public and private banks, NBFCs, and international lenders. Public banks offer only 7.5 lakhs without collateral. Private banks offer up to 50 lakhs without collateral. NBFCs give up to 40-60 lakhs without collateral, and international lenders give 75-82 lakhs without collateral. In unsecured education loans, the co-applicant’s CIBIL score, income proof, and other financial documents play a vital role in loan sanctioning.

Ques 8. Which is best for a non collateral education loan?

Ans. A private bank is the best option for an unsecured education loan if the applicant satisfies the eligibility criteria. If you are not eligible for education loans from private banks or need more money than a private bank offers, NBFCs can be your best option. In terms of interest rates, a private bank is the best option for a without-collateral education loan. A private bank's maximum amount for unsecured education loans can be 50 lakhs. However, private banks disburse education loans only to select courses and colleges, and there are other requirements regarding the applicant's academic track. NBFCs offer loans up to 60 lakhs and are relaxed in terms of countries, courses, and the applicant's academic track. The co-applicant's financial profile is the key player for an unsecured education loan from an NBFC.

Ques 9. How much interest will  be charged on a student loan for the UK?

Ans. The interest rate varies with the type of loan and lenders. Public banks offer the lowest interest rates, which are less than or equal to 10% for secured loans and up to 12% for unsecured education loans. Private banks charge 10-15% interest and NBFCs charge 11-15%+ spread for education loans with or without collateral. International lenders charge 11-13% interest in USD, which is higher on conversion into INR.

Ques 10. Can I reapply if my application for a student loan to study in the UK is rejected?

Ans. Reapplication to the same lender who rejected the early loan application is ordinarily impossible. But Zoom Abroad could get an education loan for a once-rejected application in exceptional cases. Usually, the application gets rejected due to poor CIBIL score of the applicant or the co-applicant, insufficient documents, and similar other reasons. We at Zoom Abroad analyze the situation and provide the best suggestions possible. 

Ques 11. What are the repayment criteria for education loans to study in the UK?

Ans. The repayment rules vary with different lenders. For education loans from public banks, the student need not repay anything during the moratorium period. Private banks demand the repayment of simple interest during the moratorium period. NBFCs and international lenders require the student to repay the EMI monthly once the education loan is sanctioned.

Tier4 UK Student VISA

To apply for a UK student visa, check the documents listed below for a seamless process.

 

• letter of acceptance from the university you have been accepted to (CAS)
• Proof of funds.
• A valid passport and recent photographs.
• Details of your university and accommodation.
• Report of your health checkup
• A valid passport. (keep a page blank for the visa)
• Original mark sheets/transcripts

After collecting all the documents, Follow the steps below to apply for a UK student’s Visa.

 

• Sign up and submit your visa application form online. It is advisable to check the online appointment calendar to book an appointment. After submission, you will get an email with an application number.
  
   
• After receiving the email, Pay the fees, and collect the receipt.
  
   
• Now appear for the visa interview as per the scheduled appointment and submit the necessary biometrics, photograph, application, and other documents.

Recap: things to keep in mind while looking for an education loan for the UK
 

There are different loan options for studying in the UK. The student can go for a loan that matches their needs and concerns. A concise understanding of the loan terms and conditions is crucial, and the following are some must-know facts about education loans to study in the UK:

1. An education loan is a wise move, and you need not hesitate.
   
    
2. Ensure you get a part-time job in the UK if you must repay monthly EMIs.
   
    
3. A secured education loan from public banks is the best option for students. Only a secured education loan can cover the necessary expenses to study in the UK. There will be interest subsidies, lower interest rates, and tax benefits (Section 80 E) for education loans from public banks.
   
    
4. If you get admission to premier institutes( Oxford, Cambridge, London School of Economics, University of Manchester, etc.), getting an education loan from public banks is easy.
   
    
5. An education loan from private banks can be the second concern. They fund up to 40-50 lakhs for selected colleges and courses. However, some private banks give loans to courses and colleges outside their list. Interest subsidies and tax benefits are available for education loans from private banks.
   
    
6. NBFCs must be the third option for an education loan to study in the UK. NBFCs require the borrowers to start EMI payments once the education loan is disbursed. Since their interest rates are comparatively higher, it might be difficult for you to concentrate only on your studies.
   
    
7. Apart from the fixed criteria, there are exceptional cases where you may get a loan from the bank, depending on your situation and the bank. You must contact an expert education counselor to explore your loan possibilities.

An expert education counselor can get you the best education loan for studying in the UK. Being India’s top most  education abroad marketplace, Zoom Abroad can guide you to the perfect lender. Our counselors would keep in touch with you, evaluate your profile, and would get the best loan possible.

Zoom Abroad is a great platform that can help you find the most suitable program/course for you in the UK. Register here and create your profile today to get matched with the right advisor who can help you choose the best course for you in the UK. You can book a 30 mins FREE consultation with an expert advisor today and choose from wide range of courses like Medicine, Engineering, Management and, even specialisations within Management like Marketing, International Business, Pr & Journalism to figure out which one is the most suitable based on your profile and long term goals.