Education Loans for Study Abroad from Kerala: Banks, Rates and Tax
How students in Kerala fund study abroad: education loans from SBI, Canara Bank, Union Bank and Federal Bank, collateral rules, TCS on remittances, government schemes, and how a loan counts for a UK visa.
By Al Ameen Mohammed Ali, Founder & CEO, AimBritz
Published 12 November 2026
Short answer
Most Kerala students combine family savings with a bank education loan. Public-sector banks lend for study abroad at roughly 9.5–10.5% a year (October 2026 rate sheets), usually with collateral above ₹7.5 lakh. Loan-funded fees sent abroad attract no TCS, and a qualifying loan letter counts as proof of funds for a UK student visa.
Loans from banks Kerala students use
Rates and limits below are from each bank's own website (checked 12 November 2026). Rates change with the bank's benchmark, so confirm before you apply.
| Bank and scheme | Amount | Collateral | Published rate |
|---|---|---|---|
| SBI Global Ed-Vantage | Above ₹7.5 lakh up to ₹3 crore | Required (collateral-free up to ₹50 lakh only for select premier institutions) | 9.65% (from 15 Oct 2026) |
| SBI Student Loan | Up to ₹7.5 lakh | Not required | 10.15%; 0.50% less for girl students |
| Canara Bank Vidya Sagar | Above ₹7.5 lakh | As per scheme | 9.50% |
| Union Bank — Union Education (abroad) | Up to ₹7.5 lakh / above ₹7.5 lakh | Not required up to ₹7.5 lakh | 9.75–10.25% / 9.50–10.00% (lower for women) |
| Union Bank — Premier Abroad (Category A institutes) | Up to ₹40 lakh | Not required | 9.50% |
| Federal Bank — Special Vidya Loan | Up to ₹20 lakh for study abroad | As per bank | Ask the bank |
What we see at AimBritz: who students borrow from, and how long it takes
Most of our students borrow from one of two groups: non-bank lenders that specialise in education loans, such as Credila (formerly HDFC Credila) and Avanse, or public-sector banks such as SBI, Union Bank of India and Punjab National Bank.
With complete documents, the sanction usually comes in about two weeks. Most delays we see come from missing or mismatched paperwork, not from the lender. Compare the rate, the processing fee and the collateral terms on each sanction letter before you choose.
- ·Your offer letter or CAS and the university's fee details.
- ·Mark sheets and certificates, plus your English test result.
- ·KYC (Aadhaar, PAN, passport) for you and your co-applicant, usually a parent.
- ·The co-applicant's income proof: salary slips or ITRs, and recent bank statements.
- ·Property documents, if the loan needs collateral.
How repayment works
Repayment usually starts after a moratorium of the course length plus up to a year (SBI: six months after the course; Canara and Federal: course plus one year), with up to 15 years to repay. Interest normally builds up during the moratorium, so paying the interest while you study reduces the total cost.
For loans above ₹4 lakh, banks typically ask you to fund a margin of about 15% yourself.
TCS on money sent abroad for education
When you send fees abroad, the bank may collect tax at source (TCS) under the Liberalised Remittance Scheme. You can claim TCS back against your or your parent's income tax.
| How the fees are paid | TCS |
|---|---|
| From an education loan by a financial institution | Nil |
| From your own or family funds | Nil up to ₹10 lakh a year; 2% on the amount above |
Government schemes: what applies to study abroad
- ·Central Sector Interest Subsidy (CSIS) and PM Vidyalaxmi: for study in India only — they don't cover a UK degree.
- ·Padho Pardesh (interest subsidy for minority students' overseas loans): discontinued from 2022–23, with no plans announced to restart it.
- ·Kerala's Unnathi scheme for SC/ST students, run through ODEPC, has funded overseas study — check the current cycle and eligibility on odepc.kerala.gov.in before relying on it.
Using your loan for the UK visa
A loan from a lender regulated for student loans counts as proof of funds if the letter is dated within 6 months of your visa application, shows the amount, and has no condition for release other than getting the visa. The 28-day rule doesn't apply to it. Ask your bank for the sanction letter in this format.
Common questions
How long does an education loan sanction take for study abroad?
About two weeks in our students' experience, when the documents are complete — offer letter or CAS, fee details, academic records, KYC for you and your co-applicant, and the co-applicant's income proof. Missing paperwork is the usual cause of delay.
Which lenders give education loans for study abroad from Kerala?
Our students mostly use education-loan lenders such as Credila (formerly HDFC Credila) and Avanse, or public-sector banks such as SBI, Union Bank of India and Punjab National Bank. Canara Bank and Federal Bank also have study-abroad schemes.
Can I get an education loan for study abroad without collateral?
Usually up to ₹7.5 lakh at public-sector banks. Some schemes go higher for select institutions — for example Union Bank's Premier Abroad (up to ₹40 lakh for Category A institutes) and SBI for select premier institutions.
Is TCS charged on education loan payments abroad?
No. Fees paid abroad from an education loan by a financial institution attract nil TCS. Self-funded remittances are nil up to ₹10 lakh a year and 2% above that, from 1 April 2026.
Does an Indian education loan count for UK visa funds?
Yes, if it's from a regulated lender and the letter meets the UK rules: dated within 6 months, showing the amount, released on getting the visa.
Is the Padho Pardesh scheme still available?
No. It was discontinued from 2022–23 and the government has said there is no proposal to restart it.
Official sources
- SBI — Global Ed-Vantage scheme
- SBI — Education loan interest rates
- Canara Bank — IBA model education loan scheme
- Union Bank of India — Education loan for abroad studies
- Federal Bank — Education and career loans
- PIB — Summary of Union Budget 2026-27 (TCS)
- Immigration Rules — Appendix Finance (FIN 8–9)
- ODEPC (Kerala Government)
This guide is general information, not legal or immigration advice. Rules and fees change, so confirm them on the official sources before you apply — or get your own case checked in a free session.
Free consultation
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