Get an Education Loan without Parental Income for Abroad

Studying abroad can be financially challenging, with substantial tuition fees and additional expenses to consider. In popular study destinations like the USA, UK, and Canada, tuition fees can reach approximately USD 42,000, USD 40,500, and USD 14,700 respectively. These figures only scratch the surface, as the cost of living must also be taken into account. To tackle these financial obstacles, obtaining an education loan for studying abroad is a viable solution to ease the burden and make studying abroad more attainable.

However, securing an education loan for studying abroad requires meeting strict eligibility criteria. One crucial requirement is demonstrating parental income or having a suitable financial co-applicant, especially for unsecured education loans. International students often rely on their parents as co-applicants to fulfill this requirement. But what if you cannot demonstrate parental income or your co-applicant has a low income? Can I get a student loan on my own? Does this mean you have to give up on your dream of studying abroad? Let's explore this predicament and seek a resolution.

Importance of Co-Applicant/Parental Income While Taking Education Loan

Before we start exploring the alternative options of getting an abroad education loan with low or no parental income at all, let’s first understand the importance of co-applicant/parental income. Parental income plays a significant role in obtaining an education loan for studying abroad for several reasons:

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  Financial security: Lenders view parental income as a measure of financial stability and the ability to repay the loan. Parents' income provides a guarantee to the lender that the borrower has a reliable source of repayment.

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  Creditworthiness: Parents' income and credit history contribute to the overall creditworthiness of the loan application. Lenders assess the parents' financial standing to determine the applicant's ability to manage and repay the loan.

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  Financial responsibility: Demonstrating parental income signifies a sense of financial responsibility on the part of the borrower. It reflects the ability to handle financial commitments and assures the lender.

Alternative Options for Education Loans With No Parental Income

Having a financially capable co-applicant, such as parents, is generally advantageous when applying for an abroad education loan. However, if your parents are ineligible or unable to fulfill this role due to limited or no income, there are alternative factors that can still enable you to secure an abroad education loan without relying on their financial strength.

Secured Education Loan:

The first alternative option is an education loan with collateral, where you pledge an asset as security against the loan amount. This eliminates the need for parental income as the collateral serves as a guarantee for repayment. The majority of the time a normal co-applicant is required but a financial co-applicant is not required. Lenders like SBI and UBI offer secured abroad education loans, providing up to 80% of the collateral's valuation as the loan amount. This allows you to access the funds needed for studying abroad without relying on parental financial support. 

Co-Applicant: Blood Relative:

When it comes to obtaining an education loan abroad with low or no parental income, one of the most viable options is an unsecured education loan. Private banks and Non-Banking Financial Companies (NBFCs) offer unsecured education loans with a loan quantum that can range between INR 30 - 70 Lakhs. This loan amount can vary because of several reasons like your profile as an applicant, chosen course, targetted university/college, and more.

While these loans generally require a financial co-applicant as security, it doesn't have to be limited to financially strong parents i.e. parental income. A close blood relative, such as a brother, can also serve as a co-applicant, as long as they meet the lender's minimum income requirement, which is around INR 35,000 - 40,000. The co-applicant must have no existing EMI obligations. In case there are certain EMI obligations then the minimum income criteria will be increased by the lender. Consider the table below for different lenders and eligible co-applicants in the case where the parental income is low or not at all present. 

Co-Applicant: Self:

One common question that comes to mind is - Can I get student loan on my own? The answer is that certain lenders offer abroad education loans that consider your professional experience as a basis for loan approval, eliminating the need for a traditional co-applicant thus not requiring any income i.e. it will not matter if your parents have a low income or no income at all. ICICI Bank is one such lender that provides education loans for studying abroad based on your professional experience. This unique approach allows you to secure a loan independently, leveraging your own qualifications and work history rather than parental income.

A few of the aspects of this experience-based product by ICICI Bank are -

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  This is best for those individuals who have a minimum of 3 years or more of professional experience.
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  You do not need a co-applicant for this loan product thus avoiding the need for parental income. 
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  You should have a minimum salary of INR 35,000 but this may differ as per the loan amount required. 
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  There is a restriction for universities/colleges to avail of this service.
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  You do not have to pay any amount during your moratorium period although you need to make it as FD as a security. The main benefit of this is that you will get regular interest on the same and you will get the locked amount in FD after the repayment period.

Thinking about studying abroad but worried about collateral for an education loan? Watch our video to discover how you can secure funding without collateral or a co-applicant!

Loan From International Lenders

In cases where you are unable to pledge collateral or arrange an alternative financial co-applicant as suggested earlier, there are still options available to pursue an abroad education loan with low or no parental income. International lenders such as MPOWER Financing and Prodigy Finance specialize in providing loans without the need for collateral or financial co-applicants i.e. skipping the factor of parental income altogether. These lenders can offer loans of up to 100,000 USD, providing a viable solution for students in need. However, it is important to carefully consider and adhere to any additional requirements or conditions set forth by these lenders when applying for an education loan.

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  Loan currency: These lenders provide loans in USD or CAD, not in Indian currency.

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  Interest rate: The interest rate for these loans generally ranges between 12% and 14%.

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  Processing fees/ Origination fees: The processing fees, also known as the origination fee, may be on the higher end, they are usually adjusted within the loan amount itself. Also, it will be charged with each disbursement of the loan.

Note: A strong applicant profile is imperative in all the options above, encompassing good academics, university admission proof, positive credit history, and other relevant factors.

Eligibility Criteria for No-Parental-Income Loans

If you are willing to apply for non-parental-income loans, then you must meet the following eligibility criteria since lenders also want security against advancing the education loans.

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  You must have a strong academic record.
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  You must have secured admission to a recognized university or institution abroad since lenders look for the possibility of repayment from the student. If you are enrolled in STEM courses or management courses, your chances of repayment increases. 
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  Some lenders require proof of previous work experience before advancing you the education loan.

Institution Providing Loans For Students With No Income

Can I get education loan without parents? This is a question that arises in the minds of many students. By now you have seen that there are several ways in which you can get an education loan without parental income. In order to provide you with a clearer idea here are some of the financial institutions that provide abroad education loans without parental income -

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  Public Banks - SBI, UBI, and more.

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  Private Bank - ICICI Bank

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  International Lender - MPOWER Financing and Prodigy Finance

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  NBFC - HDFC Credila, InCred, and more

Read more about:

• 
  Education loan for Canada
• 
  Education loan for MS in US
• 
  Education loan for Australia
• 
  Education Loan for NRI Applicants
• 
  Study Abroad Scholarships for Indian Students
• 
  Education loan vs Self funding
• 
  Education loan EMI calculator

Common Challenges and Way to Overcome Them

Students with low or zero parental income often face various challenges since the role of co-applicants in securing education loans is crucial as they provide security to the lender. 

Low Parental Income:

Students often face the risk of rejection of loans due to low parental income. As for unsecured loans, private lenders look for the co-applicant's income and CIBL score. However, If your parental income is low, then the feasible option is to get secured loans from public banks.

Weak Academic Profile:

Students with weak academic profiles often face the risk of rejection hence, it is advisable to maintain a good academic record if you are planning to study abroad with the help of an education loan.

Loan Limitations Based on University, Country, or Course:

Lenders may limit loans to certain universities, countries, or courses. Lenders generally offer high loan amounts to students flying for top study-abroad destinations and universities with good QS rankings. Thus, you should consider securing admission to a recognized university as it increases loan approval chances.

High Interest Rates:

If you do not have collateral to offer, then you might have to pay high interest rates as international lenders charge high interest rates against lending you without co-applicant and collateral. Hence, providing collateral or applying with a co-applicant can help secure lower interest rates and better loan terms.

Loan Repayment Options and Moratorium Periods

You can explore various options for international education loans with low parental income that offer flexible repayment options that align with your financial needs. Many lenders also provide the option of a moratorium period that generally covers the course duration plus 6 to 12 months, allowing students to focus on their studies without the stress of repayment. This section will provide you with an understanding of repayment options and which bank is the best bank for education loans that aligns with your needs.

Tips for Enhancing Loan Approval Chances

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  To increase your chances of loan approval, you must have a strong academic background. This provides security to the lender that the student would be able to repay the loan in the future.
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  You must have secured admission to a recognized institution so that your chances of success increases and so the possibility of repayment.
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  Having a back of the co-applicant with a stable financial background also increases the chances of loan approval significantly. This provides the lender security and helps in mitigating the risk of default.

Now that you are aware of the alternative options available to get an abroad education loan with low or parental income, you can carefully consider and shortlist suitable loan providers and alternative approaches mentioned. By exploring these possibilities, you can successfully obtain a loan for your abroad education, even if you don't meet the conventional eligibility criteria of having a parental income. If you need further guidance or assistance in choosing the best option for your situation, GyanDhan is here to help. Take advantage of their expertise, check your loan eligibility, and receive valuable advice for your abroad education loan.

Frequently Asked Questions