Education Loan Without Collateral and Co-Applicant: A Complete Guide

While studying abroad may be a prestigious experience, funding can be challenging, especially for students without collateral or a co-applicant. Fortunately, banks and other financial organizations offer loans to international students without the need for a co-signer or any collateral. These international student loans allow students to pursue academic goals without financial barriers in their path.

In this guide, we will explore the best abroad education loans, eligibility criteria, interest rates, and how Student Cover can help you secure the right overseas student loan effortlessly.

What is a Collateral-free Education Loan To Study Abroad?

A collateral-free education loan is an unsecured loan that helps students to cover their study expenses abroad without putting up assets as collateral. Unlike secured loans for study abroad, these loans are granted based on:

• The student's academic background
• Credit Score of the Applicant and the Co-Applicant
• The student’s future earning potential

These foreign student loans offer assistance for the following things: living costs, travel expenses, visa charges, and additional expenses. An education loan without collateral comes with some core pros and cons, too. For example, eligibility criteria are the core matter to consider while applying for an unsecured education loan. 

Find out about it in detail below:

Who Can Apply for an Abroad Education Loan?

If you’re looking for an international student loan, you must meet the following eligibility criteria:

• You must be an Indian citizen applying for higher studies abroad.
• Your university must be recognized by lenders for unsecured loans.
• Your course should be in STEM, management, medicine, or other professional fields.
• Your academic profile should be strong to increase loan approval.

Comparison of Secured vs. Unsecured Education Loans

Loan Amount and Coverage

Most students who apply for abroad education loan can expect collateral coverage for:

• Tuition fees and other university expenses
• Living costs, including rent and daily expenses
• Travel and insurance costs
• Study materials, laptops, and other essentials

Banks and NBFCs typically offer overseas student loans ranging from ₹40 lakhs to 1Cr depending on the institution. However, the loan amount can also go up to ₹1.5 Cr.

Top Banks and Financial Institutions Offering This Loan

If you are looking for an international student loan without collateral and a co-applicant, here are some of the top lenders:

1. IDFC First Bank

IDFC First Bank offers student loans for international students at top-ranked universities without asking for collateral. Students can borrow up to ₹1 Cr, with yearly interest rates between 9.25% and 12.25% (secured and unsecured loans included). The bank also offers a moratorium period covering the course duration plus six months, where you can pay PSI(Partial Simple interest)

2. Axis Bank

Axis Bank gives abroad education loans without collateral, with loan quantities of as much as 1CR, with interest rates ranging between 9.99%- 12.25%. The bank considers the scholar’s educational profile, too, also they check under which Category the University is listed as per their product

3. Credila Financial Services Limited

CREDILA focuses on International & Domestic student loans, providing customized financing solutions primarily based on the student’s university and financial background. The mortgage amount varies based on eligibility, and the prices vary from 10.25% to 12.75%. CREDILA also provides doorstep service for documentation and quick loan disbursement.

4. Incred Financial Services Limited

InCred NBFC offers non-collateral education loans up to ₹1 crore for PG STEM courses, with floating interest rates of 11.65%–13% and a 1%–2% processing fee. Loans cover the full COE, have up to a 15-year tenure, and include a moratorium with interest payments. However, for this kind of loan, strong academics and GRE/IELTS/TOEFL scores are required, boosting approval chances.

5. Avanse Services pvt Ltd

Avanse NBFC offers non-collateral education loans up to ₹90 lakhs for PG STEM programs, with floating interest rates between 11%–12.75% and a processing fee up to 1.25% + GST. Loans are granted based on academic background, GRE score, or top college admission—no income proof needed. A financial co-applicant (blood relative under 60) is required; a non-financial co-applicant owning a house can strengthen the application. The moratorium covers the course duration plus 6 months or 1 year, with only simple or partial interest payments. EMI begins afterward, with flexible repayment tenure of up to 17 years.

How to Repay: Flexible repayment options; in-school period minimum payment types are interest only.

5. Student Cover – Your Best Loan Partner

Instead of applying directly to banks and NBFCs, choosing Student Cover offers significant advantages:

• Compare Multiple Lenders: Get access to the best loans for study abroad from leading banks and NBFCs.
• Higher Loan Approval Rates: Student Cover assists in strengthening loan applications, increasing approval chances.
• Better Interest Rates: Negotiation with banks helps students secure lower interest rates.
• Faster Processing: End-to-end guidance ensures quick loan disbursement.
• Processing Fees Waiver options: Additional services like Processing fee waive off options are available for students, which means Students are not burdened with a high amount of hidden charges while applying for a study abroad loan.

Interest Rates and Repayment Terms

Interest rates for student abroad education loans without collateral vary depending on the education profile of the lender and the student.

• Private banks and NBFCS: Interest rates range from 10% to 13% per year.
• Reporting period: The payment period for the loan increases from 7 to 15 years.

Moratorium Period: Covers the entire course duration plus twelve months.

How to Get an Education Loan for Abroad Studies Without Collateral​

Step-by-Step Process:

Check Eligibility: Verify whether you qualify for a student abroad education loan.

Compare Loan Options: Use Student Cover to find the best overseas student loan.

Submit Documents: Upload necessary documents like university admission letter, academic records, and KYC details.

Get Loan Approval: Banks/NBFCs evaluate your profile and approve the international student loan.

Loan Disbursement: Upon signing the agreement, funds are disbursed to your university.

Documents Required:

• University admission letter
• Academic records (10th, 12th, graduation certificates)
• Passport & visa proof
• Income proof (if applicable)

Other Financing Choices if You Are Not Eligible

If you do not qualify for an education loan without collateral and a co-applicant, you can explore other options:

• Scholarships & Grants: Apply for merit-based or need-based scholarships to reduce loan requirements.
• Fixed Deposit Loans: Some banks allow loans against fixed deposits with low interest rates.
• Part-time Jobs: Many countries permit students to work part-time, covering living expenses.

Typical Obstacles and Solutions for Them

• High Interest Rates: Use Student Cover to compare lenders and secure better loan terms.
• Loan Rejection: Ensure your academic profile and university ranking match lender requirements.
• Processing Delays: Apply as soon as possible and provide the necessary paperwork for quicker approval.
• Cosigner Issues- Student might face issues in which co co-applicant is not there or the income does not matchable as per requirement of Banks

Frequently Asked Questions (FAQs)

Can I get a 100% overseas student loan without collateral?Yes, some banks fund the entire amount for top universities.

What happens if I default on loan repayment?It affects your credit score, and legal action may be taken.

Which countries allow easy approval for loans for study abroad?Top destination countries offer student loans for international students with easy approval, such as the United States of America, Ireland, the UK, Australia, and Germany.

Final Thoughts

Many banks and NBFCs now provide foreign student loans, making it easier to obtain an education loan without collateral or a co-applicant. As a result, selecting the right lender can be complicated. Instead of applying directly with each lender, Student Cover allows you to compare several options, negotiate lower interest rates, and get guidance throughout the loan process.

Things to check before availing a Loan?

Here are some of the things you must check before applying for a loan:

• Interest Rates are Floating, Fixed
• EMI is Flat or Reducing
• Interest rates will be charged on Compounding OR Simple Interest?
• Entire Charges of the Financial Institutions
• Pre-Closure Charges
• Moratorium Period - Do I have to pay Something during this period
• Does a Financial Institution Follow the RBI Repo Rate Formula