Rising tuition costs are pushing more students to manage their college fees with education loans. Tuition fees are soaring, with an IIT B.Tech costing INR 8–10 lakh, while an MBA from IIM often ranges between INR 17–25 lakh.
More students are depending on loans to make their dreams possible. Even with challenges like stricter visa rules, loans remain the most practical way to bridge the funding gap.
This guide covers everything you need to know, from eligibility and top lenders to the step-by-step process to apply. Keep reading to learn how you can secure the right support for your studies.
Why Choose To Pay College Fees with Education Loans?
Paying college fees with education loans is becoming the preferred route for many Indian students and their families because tuition fees at leading institutions are at an all-time high. According to the Reserve Bank of India, outstanding education loans in India touched ₹1.31 lakh crore in 2024, highlighting how widely students are depending on loans to fund their studies.
Here’s why paying college fees with an education loan is a practical choice in 2025:
1. Easy Access and Wider Availability
Banks and NBFCs are offering education loans more aggressively. Students can access loans not only for top Indian institutions but also for international universities, expanding opportunities.
2. Tax Benefits Under Section 80E
Borrowers can claim tax deductions on the interest paid under Section 80E of the Income Tax Act, easing the financial load during repayment.
3. Builds Financial Responsibility
Managing a loan instils a sense of responsibility in students. It helps them understand credit, repayment discipline, and money management, skills that are useful long after graduation.
4. Covers More Than Just Tuition
Education loans often include living expenses, exam fees, library charges, travel costs, and even laptop purchases. This ensures a student’s focus stays on academics rather than financial stress.
Choosing to pay college fees with an education loan eases financial pressure, widens access to quality education, and helps students plan their future confidently.
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How To Pay For College Fees with Education Loans?
Paying for your college fees through an education loan may seem complex, but breaking it down step by step makes it manageable and clear. With more banks and NBFCs offering student-friendly options, you can secure funding on time and concentrate on your education instead of worrying about finances.
Step 1: Compare and Choose the Right Lender
The first step in paying college fees with an education loan is finding the right lender. Each bank and NBFC offers different loan amounts, interest rates, and repayment options. By comparing lenders side by side, considering eligibility, approval speed, and total costs, you can identify the one that matches your study plans and repayment capacity.
The table below shows a quick comparison of some of the top lenders:
Step 2: Verify Eligibility Requirements
Before applying, it’s important to confirm if you meet the lender’s requirements. Most banks and NBFCs follow similar guidelines. Below are the common eligibility requirements:
- You must have a confirmed admission letter from a recognised Indian or overseas institution.
- A decent academic track record improves your approval chances.
- Most lenders require a parent or guardian with stable income as a co-applicant.
- Typically, applicants should be between 18–35 years.
- Professional, technical, or job-oriented courses are prioritised, whether in India or abroad.
- If applying for a secured education loan, property papers, fixed deposit certificates, or government bonds must be provided as security.
Some public banks, under the Credit Guarantee Fund Scheme for Education Loans (CGFSEL), also allow students to borrow up to ₹7.5 lakh without collateral. This widens access for families who may not have assets to pledge.
Step 3: Start Your Application
Once you’ve chosen the right lender and confirmed your eligibility, it’s time to begin your education loan application. Most banks and NBFCs now offer online application options, making the process faster and more convenient.
For example, SBI’s YONO app and the Vidyalakshmi portal allow students to submit forms, upload documents, and track their loan status digitally.
Here are the key steps to apply:
- Fill out the application form online or offline accurately.
- Submit the required documents, including admission proof, ID, academic records, income proofs, and collateral documents (if applying for a secured loan).
- Provide accurate information about your co-applicant (parent or guardian).
- Mistakes can delay approval, so review all entries carefully before submission.
With the government pushing for faster processing, many banks aim to approve applications within 15 days for standard loans.
Step 4: Review the Sanction Letter
After your education loan application is processed, the bank or NBFC will issue a sanction letter. This is an official document confirming the approved loan amount, interest rate, repayment tenure, and any specific terms or conditions.
Make sure to check the following details in your sanction letter:
- Approved Loan Amount – Ensure it covers your tuition and, if applicable, living expenses.
- Interest Rate & Type – Fixed or floating rates can affect your repayment in the long term.
- Repayment Tenure – Confirm the duration and whether moratorium periods (time before repayment starts) are included.
- Collateral & Conditions – For secured loans, check if collateral details are correctly mentioned.
- Disbursement Method – Funds are usually sent directly to the college, so ensure the process is clearly stated.
Carefully reviewing the sanction letter can prevent surprises later and ensure that your college fees with education loan are fully covered without hidden conditions.
Step 5: Complete Fee Payment
Once your education loan is sanctioned and disbursed, the next step is to pay your college fees. Typically, the loan amount is transferred directly to the institution, but some lenders may release funds in instalments depending on the course duration or fee structure.
With timely preparation and proper tracking, the entire process from application to fee payment can be completed efficiently and confidently.
If you’re looking for options that don’t require property or assets as security, check out Banks That Give Education Loans without Collateral for Abroad to explore lenders offering hassle-free funding for international studies.
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How to Secure the Best Education Loan?
Finding the right education loan deal can save you thousands of rupees over the repayment period and make your higher education more affordable. Here are some of the key tips to help you secure the best education loan deal:
1. Compare Interest Rates and Loan Terms
Different lenders offer varying interest rates and repayment options. Public banks like SBI offer rates starting from 9.15% for domestic studies, while NBFCs may range from 11–14% but provide flexible terms and faster processing.
2. Look for No-Collateral Options
If your loan amount is under ₹7.5 lakh, several public banks provide no-collateral loans. These loans remove the need to pledge property or other assets, making the process simpler for students.
3. Check Processing Fees and Hidden Charges
Some lenders may charge administrative or processing fees that can add to your loan cost. Always read the fine print and ask the bank about any additional charges before finalising the loan.
4. Evaluate Repayment Flexibility
Look for lenders who offer moratorium periods (time before repayment starts), partial prepayment options, and flexible EMI plans. This allows you to manage repayments without affecting your monthly budget.
5. Utilise Government Schemes and Subsidies
Schemes like Vidyalakshmi Education Loan Subsidy provide interest relief to eligible students, lowering the overall cost of borrowing. Keep updated with such schemes to maximise benefits.
6. Maintain a Good Credit Record
Banks and NBFCs consider your creditworthiness and your co-applicant’s financial history. A clean credit record can help secure loans at better rates and faster processing.
For students who face challenges with traditional banks, exploring NBFC Education Loan: Top Lenders, Interest Rates can help you find flexible options and faster approvals.
How to Pay International College Fees from India?
Paying fees for universities abroad can feel overwhelming due to currency conversion, banking regulations, and payment methods. However, with the right steps and planning, the process is simple and secure.
1. Check the College’s Payment Methods
Most international universities accept:
- Wire Transfer/Bank Transfer (SWIFT) – Direct transfer from your Indian bank account.
- Online Payment Portals – College-managed portals using credit/debit cards or international payment gateways.
2. Use Authorised Forex Channels
- Make international payments via authorised banks or RBI-approved Forex dealers to comply with Indian regulations (FEMA guidelines).
- Popular banks like SBI, HDFC, ICICI, and Axis Bank provide international wire transfer services for education fees.
3. Understand Currency Conversion and Charges
- Banks charge a conversion rate and transfer fees. Compare rates across banks to save money.
- Large transfers may also include handling fees or intermediary bank charges.
4. Plan for Timely Transfers
- International transfers can take 2–5 business days, depending on the bank and destination country.
- Ensure the transfer is done before the college deadline to avoid late fees or admission delays.
5. Keep Payment Proof
- Always retain the transaction receipt or SWIFT confirmation.
- Submit it to your college as proof of payment if required for enrollment or visa processes.
How to Minimise Fees and Taxes When Paying College Tuition Abroad? Reddit Insights!
When paying tuition fees abroad, it’s important to consider taxes, transaction fees, and the most efficient way to use your education loan. Real student experiences show how choosing between a forex card and a direct bank transfer can impact costs and convenience.
Reddit User shared:
“I received my loan of $20k through HDFC Credila via a Forex Card, but there’s 0.5% TDS on amounts above ₹7L. My semester fees are $15,000. Should I pay via the Forex Card or transfer to my US bank first?”
Insight: The student is concerned about minimising taxes and transaction fees while paying tuition abroad. Forex cards are convenient but may incur TDS or foreign exchange charges. Direct bank transfers can sometimes reduce additional charges but may involve conversion fees and longer processing times.
What do we infer from the above case?
- Always consider TDS and forex conversion fees when using a credit or debit card.
- Direct international bank transfers can sometimes be cheaper for large amounts.
- Communicate with your lender if possible to disburse funds directly to the foreign university account to simplify payment and reduce extra charges.
Tip: For high-value tuition payments, check with both your bank and the university about the most cost-effective method, and plan the transfer to avoid surprises with taxes or exchange rates.
Paying for higher studies doesn’t have to be stressful when you plan college fees with education loans wisely. With more banks offering flexible options, following the right steps, from choosing a lender to reviewing the sanction letter, can make the process smooth and hassle-free. By managing your loan carefully, you can focus on your studies and turn your dream of higher education into reality without financial worries.
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