Student Loan in the UK: Top Options, Application Process, & Repayment

Broadly speaking, there are two types of education loan options for the UK – Secured and Unsecured. These options are offered by banks, NBFCs, and international lenders based on your eligibility and needs.

Types of Education Loans to Study in the UK

• Secured education loans: These are offered on the guarantee of collateral. The collateral can be a plot, a fixed deposit, a government bond, or anything acceptable to the lender. Secured loans have a lower interest rate compared to unsecured loans.
• Unsecured education loans: These require no collateral guarantee but a cosigner who earns more than the minimum prescribed income without past loan dues. Compared to secured education loans, unsecured loans have a higher rate of interest.

Indian Public Banks

Public banks like SBI, UBI, BoB, and Canara Bank offer secured education loans for students in the UK. Your university of admission must be recognized by the UK government. Abroad education loans from public banks in the UK are eligible for a tax deduction under Section 80 E, which saves your tax for the interest you pay for up to 8 years.

• Programs: The program must be supported by the bank. Usually, degrees in STEM and business fields are supported by most banks.
• Collateral or cosigner: Public banks provide secured loans. You can pledge collaterals such as a plot, building, fixed deposit, etc. Public banks give 70% – 100% of the collateral value with a margin of 5% – 10%, depending on your university in the UK.
• Loan amounts: Your loan amount is decided by the study expense in the UK. The bank will transfer the payment to the university account and your account to pay your living costs.
• Eligibility: To be eligible, you must:
  • Be an Indian student
  • Be admitted to a supported school and program
  • Have a cosigner with a good CIBIL score (750+)
  • English proficiency – IELTS, TOEFL, or PTE
  • GRE or GMAT, if required
• Interest rates: Out of all lenders, public banks charge the lowest interest rates for UK student loans. It is usually about 8% – 12% with applicable subsidies and tax benefits.
• Applying: You can start applying once you get the offer letter. Contact Nomad Credit – we will find the top bank options based on your eligibility and study requirements.

Indian Private Banks

Private banks like ICICI, Axis, and IDFC FIRST offer education loans abroad to the UK under various schemes. The interest rates are 9.5% – 12%, depending on your university and course in the UK. You can get tax benefits under Section 80 E of the Income Tax Act.

• Programs: Private banks support undergraduate and postgraduate programs in the UK in subjects like science and business. An MS, MBA, a Postgraduate Diploma, etc., are some of the courses supported in the UK.

• Collateral or cosigner: If your university in the UK is listed in a Premium category by a private bank, you can apply for special loan schemes with interest benefits.

• Loan amounts: The loan amount is decided after analyzing your course fee and living costs. There could be a 5% – 15% loan margin. The amount is transferred to the university account in specific installments.

• Eligibility:
  • Indian citizenship
  • Admission to a recognized program in the UK
  • A cosigner with a good CIBIL score (750+)
  • English proficiency – IELTS, TOEFL, or PTE
  • GRE or GMAT if required

• Interest rates: Private banks charge around 9.5% – 12% for education loans in the UK. The repayment starts after the moratorium period, 6 – 12 months after your graduation in the UK.

• Applying: We suggest you explore the special loan schemes and see if your university is listed by prominent private banks, such as ICICI, Axis, and IDFC FIRST. Ping Nomad Credit – we will do the work for FREE!

Indian NBFCs

An advantage of NBFCs over banks is the flexibility with university and course selection. If you can prove your creditworthiness, you can negotiate with the NBFCs for loan approval to study in the UK. Once Nomad Credit analyzes your application, we make the process smooth for your UK study goals.

• Programs: For the UK student loans, NBFCs have flexible university and course options. Programs like MS, MBA, and Diplomas (UG & PG) are supported in the UK.

• Collateral or cosigner: A strong cosigner is a mandate. Your cosigner must have a high CIBIL score, a good financial history, and no existing loan dues.

• Loan amounts: NBFCs give up to 100% of your expenses with 0% margin money. The amount is sent directly to your university account each semester.

• Eligibility: To be eligible, you must:
  • Have Indian citizenship
  • A cosigner with a high CIBIL score (750+)
  • Admission to a sponsored program in the UK
  • English proficiency – IELTS, TOEFL, or PTE
  • GRE or GMAT, if required

• Interest rates: NBFCs charge around 10% – 13.5% for student loans for the UK. The repayment starts when you study or after your course completion.

Applying: Which NBFC suits you best for studying in the UK? Find out the answer – connect with our counselor for free.